Document:

<PAGE>

                                                                     Exhibit 4.2

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

                              RELIANT ENERGY, INC.,

                                    as Issuer

                       6.75% SENIOR SECURED NOTES DUE 2014

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

                          FIRST SUPPLEMENTAL INDENTURE

                          Dated as of December 22, 2004

                                       To

                                SENIOR INDENTURE

                          Dated as of December 22, 2004

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

                            Wilmington Trust Company,

                                   as Trustee

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

<PAGE>

                             CROSS-REFERENCE TABLE*

<TABLE>
<CAPTION>
Trust Indenture                                                                 Supplemental Indenture
  Act Section                                                                           Section
<S>                                                                             <C>
310(a)(1)...................................................................             N.A.
     (a)(2).................................................................             N.A.
     (a)(3).................................................................             N.A.
     (a)(4).................................................................             N.A.
     (a)(5).................................................................             N.A.
     (b)....................................................................             N.A.
     (c)....................................................................             N.A.
311(a)......................................................................             N.A.
     (b)....................................................................             N.A.
     (c)....................................................................             N.A.
312(a)......................................................................             N.A.
     (b)....................................................................            14.03
     (c)....................................................................            14.03
313(a)......................................................................             N.A.
      (b)(1)................................................................             N.A.
     (b)(2).................................................................            10.06
     (c)....................................................................            14.02
     (d)....................................................................             N.A.
314(a)......................................................................      4.03;14.02; 14.05
     (b)....................................................................            10.06
     (c)(1).................................................................            14.04
     (c)(2).................................................................            14.04
     (c)(3).................................................................             N.A.
     (d)....................................................................            10.06
     (e)....................................................................            12.05
     (f)....................................................................             N.A.
315(a)......................................................................             N.A.
     (b)....................................................................            14.02
     (c)....................................................................             N.A.
     (d)....................................................................             N.A.
     (e)....................................................................             6.11
316(a) (last sentence)......................................................             N.A.
     (a)(1)(A)..............................................................             6.05
     (a)(1)(B)..............................................................             6.04
     (a)(2).................................................................             N.A.
     (b)....................................................................             6.07
     (c)....................................................................             N.A.
317(a)(1)...................................................................             6.08
     (a)(2).................................................................             6.09
     (b)....................................................................             N.A.
318(a)......................................................................            14.01
     (b)....................................................................             N.A.
     (c)....................................................................            14.01
</TABLE>

N.A. means not applicable.

* This Cross Reference Table is not part of the Indenture.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
<S>                                                                                                                <C>
                                                  ARTICLE 1.
                                        DEFINITIONS AND INCORPORATION
                                                 BY REFERENCE

Section 1.01       Definitions................................................................................       1
Section 1.02       Other Definitions..........................................................................      32
Section 1.03       Incorporation by Reference of Trust Indenture Act..........................................      33
Section 1.04       Rules of Construction......................................................................      33
Section 1.05       Relationship with Base Indenture...........................................................      34

                                                  ARTICLE 2.
                                                  THE NOTES

Section 2.01       Form and Dating............................................................................      34
Section 2.02       Execution and Authentication...............................................................      35
Section 2.03       Reserved...................................................................................      35
Section 2.04       Reserved...................................................................................      35
Section 2.05       Holder Lists...............................................................................      35
Section 2.06       Transfer and Exchange......................................................................      35
Section 2.07       Reserved...................................................................................      39
Section 2.08       Reserved...................................................................................      39
Section 2.09       Reserved...................................................................................      39
Section 2.10       Reserved...................................................................................      39
Section 2.11       Reserved...................................................................................      39
Section 2.12       Reserved...................................................................................      39
Section 2.13       Issuance of Additional Notes...............................................................      40
Section 2.14       Designated Senior Debt.....................................................................      40
Section 2.15       Reserved...................................................................................      40

                                                  ARTICLE 3.
                                          REDEMPTION AND PREPAYMENT

Section 3.01       Notices to Trustee.........................................................................      40
Section 3.02       Selection of Notes to Be Redeemed or Purchased.............................................      40
Section 3.03       Notice of Redemption.......................................................................      41
Section 3.04       Effect of Notice of Redemption.............................................................      41
Section 3.05       Deposit of Redemption or Purchase Price....................................................      42
Section 3.06       Notes Redeemed or Purchased in Part........................................................      42
Section 3.07       Optional Redemption........................................................................      42
Section 3.08       Mandatory Redemption.......................................................................      43
Section 3.09       Offer to Purchase by Application of Excess Proceeds........................................      43

                                                  ARTICLE 4.
                                                  COVENANTS

Section 4.01       Payment of Notes...........................................................................      45
Section 4.02       Maintenance of Office or Agency............................................................      45
Section 4.03       Reports....................................................................................      45
Section 4.04       Compliance Certificate.....................................................................      46
Section 4.05       Taxes......................................................................................      47
Section 4.06       Stay, Extension and Usury Laws.............................................................      47
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                                 <C>
Section 4.07       Restricted Payments........................................................................      47
Section 4.08       Dividend and Other Payment Restrictions Affecting Subsidiaries.............................      50
Section 4.09       Incurrence of Indebtedness and Issuance of Preferred Stock.................................      52
Section 4.10       Asset Sales................................................................................      56
Section 4.11       Transactions with Affiliates...............................................................      58
Section 4.12       Liens......................................................................................      59
Section 4.13       Line of Business...........................................................................      59
Section 4.14       Corporate Existence........................................................................      59
Section 4.15       Offer to Repurchase Upon Change of Control.................................................      60
Section 4.16       Limitation on Sale and Leaseback Transactions..............................................      61
Section 4.17       Payments for Consent.......................................................................      61
Section 4.18       Additional Note Guarantees.................................................................      62
Section 4.19       Changes in Covenants When Notes Rated Investment Grade.....................................      62
Section 4.20       Designation of Restricted and Unrestricted Subsidiaries....................................      62
Section 4.21       Reserved...................................................................................      63
Section 4.22       Insurance..................................................................................      63
Section 4.23       Subordination of Intercompany Indebtedness.................................................      63

                                                  ARTICLE 5.
                                                  SUCCESSORS

Section 5.01       Merger, Consolidation, or Sale of Assets...................................................      64
Section 5.02       Successor Corporation Substituted..........................................................      65

                                                  ARTICLE 6.
                                            DEFAULTS AND REMEDIES

Section 6.01       Events of Default..........................................................................      65
Section 6.02       Acceleration...............................................................................      67
Section 6.03       Reserved...................................................................................      67
Section 6.04       Waiver of Past Defaults....................................................................      67
Section 6.05       Reserved...................................................................................      67
Section 6.06       Reserved...................................................................................      67
Section 6.07       Reserved...................................................................................      67
Section 6.08       Collection Suit by Trustee.................................................................      68
Section 6.09       Reserved...................................................................................      68
Section 6.10       Priorities.................................................................................      68
Section 6.11       Reserved...................................................................................      68

                                                  ARTICLE 7.
                                     TRUSTEE'S COMPENSATION AND INDEMNITY

Section 7.01       Compensation and Indemnity.................................................................      68

                                                  ARTICLE 8.
                                   LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01       Option to Effect Legal Defeasance or Covenant Defeasance...................................      69
Section 8.02       Legal Defeasance and Discharge.............................................................      69
Section 8.03       Covenant Defeasance........................................................................      70
Section 8.04       Conditions to Legal or Covenant Defeasance.................................................      70
Section 8.05       Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
                   Provisions.................................................................................      72
Section 8.06       Repayment to Company.......................................................................      72
Section 8.07       Reinstatement..............................................................................      72
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                                <C>
                                                  ARTICLE 9.
                                       AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01       Without Consent of Holders of Notes........................................................      73
Section 9.02       With Consent of Holders of Notes...........................................................      74
Section 9.03       Compliance with Trust Indenture Act........................................................      75
Section 9.04       Revocation and Effect of Consents..........................................................      75
Section 9.05       Notation on or Exchange of Notes...........................................................      75
Section 9.06       Trustee to Sign Amendments, etc............................................................      76

                                                 ARTICLE 10.
                                           COLLATERAL AND SECURITY

Section 10.01      Security...................................................................................      76
Section 10.02      Collateral.................................................................................      76
Section 10.03      Further Assurances.........................................................................      77
Section 10.04      Collateral Trustee.........................................................................      78
Section 10.05      Security Documents and Guarantee...........................................................      78
Section 10.06      Release of Security Interests..............................................................      79
Section 10.07      Environmental Indemnity....................................................................      81

                                                 ARTICLE 11.
                                              COLLATERAL SHARING

                  Section 11.01      Equal and Ratable Lien Sharing by Holders of Notes and
          holders of other Parity Secured Debt.......................................................               82
Section 11.02      Reserved...................................................................................      82
Section 11.03      Enforcement of Security Interests..........................................................      82
Section 11.04      Amendment and Supplement...................................................................      82

                                                 ARTICLE 12.
                                               NOTE GUARANTEES

Section 12.01      Guarantee..................................................................................      83
Section 12.02      Limitation on Guarantor Liability..........................................................      84
Section 12.03      Execution and Delivery of Note Guarantee...................................................      84
Section 12.04      Guarantors May Consolidate, etc., on Certain Terms.........................................      85
Section 12.05      Releases...................................................................................      85

                                                 ARTICLE 13.
                                          SATISFACTION AND DISCHARGE

Section 13.01      Satisfaction and Discharge.................................................................      86
Section 13.02      Application of Trust Money.................................................................      87

                                                 ARTICLE 14.
                                                MISCELLANEOUS

Section 14.01      Trust Indenture Act Controls...............................................................      87
Section 14.02      Notices....................................................................................      88
Section 14.03      Communication by Holders of Notes with Other Holders of Notes..............................      89
Section 14.04      Certificate and Opinion as to Conditions Precedent.........................................      89
Section 14.05      Statements Required in Certificate or Opinion..............................................      89
Section 14.06      Rules by Trustee and Agents................................................................      89
Section 14.07      No Personal Liability of Directors, Officers, Employees and Stockholders...................      89
Section 14.08      Governing Law..............................................................................      89
Section 14.09      No Adverse Interpretation of Other Agreements..............................................      89
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                                                                 <C>
Section 14.10      Successors.................................................................................      89
Section 14.11      Severability...............................................................................      89
Section 14.12      Counterpart Originals......................................................................      89
Section 14.13      Table of Contents, Headings, etc...........................................................      90
</TABLE>

                                 EXHIBITS

<TABLE>
<S>               <C>
Exhibit A         Form of Note
Exhibit B         Form of Note Guarantee
Exhibit C         Form of Supplemental Indenture - Additional Subsidiary Guarantees
</TABLE>

                                       iv

<PAGE>

         FIRST SUPPLEMENTAL INDENTURE, dated as of December 22, 2004, by and
among Reliant Energy, Inc., a Delaware corporation (the "Company"), the
Guarantors (as defined herein) and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the "Trustee").

         The Company has heretofore executed and delivered to the Trustee a
Senior Indenture, dated as of December 22, 2004 (the "Base Indenture") providing
for the issuance from time to time of one or more series of the Company's
securities.

         The Company and the Guarantors desire and have requested the Trustee
pursuant to Section 901(7) of the Base Indenture to join with them in the
execution and delivery of this Supplemental Indenture in order to supplement the
Base Indenture as and to the extent set forth herein to provide for the issuance
and the terms of the Notes (as defined below).

         Section 901(7) of the Base Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee without the consent
of any Holders (as defined in the Base Indenture) to establish the form or terms
of Securities of any series as permitted by Sections 201 and 301 of the Base
Indenture.

         The execution and delivery of this Supplemental Indenture has been duly
authorized by a Board Resolution of the Company and each of the Guarantors.

         All conditions and requirements necessary to make this Supplemental
Indenture a valid, binding and legal instrument in accordance with its terms
have been performed and fulfilled by the parties hereto and the execution and
delivery thereof have been in all respects duly authorized by the parties
hereto.

         The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders (as
defined herein) of the 6.75% Senior Secured Notes due 2014 (the "Notes"):

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01 Definitions.

         For all purposes of the Supplemental Indenture, the following terms
shall have the respective meanings set forth in this Section.

         "Acquired Debt" means, with respect to any specified Person:

                  (1) Indebtedness of any other Person existing at the time such
         other Person is merged with or into or became a Subsidiary of such
         specified Person, whether or not such Indebtedness is incurred in
         connection with, or in contemplation of, such other Person merging with
         or into, or becoming a Restricted Subsidiary of, such specified Person;
         and

                  (2) Indebtedness secured by a Lien encumbering any asset
         acquired by such specified Person.

         "Act of Secured Debtholders" means, as to any matter, a direction in
writing delivered to the Collateral Trustee:

                                       1

<PAGE>

                  (1) at any time when no Actionable Default Period is
         continuing, by the Required Lenders; and

                  (2) at any time when an Actionable Default Period is
         continuing, by or with the written consent of the Required Secured
         Debtholders; provided, that (A) so long as no direction has been given
         by or on behalf of the Required Secured Debtholders and subject in all
         respects to any contrary direction at any time given by the Required
         Secured Debtholders, the Collateral Trustee shall act in accordance
         with instructions given to it from time to time by the Required Lenders
         and (B) the Required Secured Debtholders may not countermand, in whole
         or in part, a direction by the Required Lenders instructing the
         Collateral Trustee to foreclose or otherwise enforce the Collateral
         Trustee's liens or default remedies upon any Collateral.

         "Actionable Default" means (1) the failure to pay any payment of
principal of or interest on any Series of Secured Debt outstanding in the amount
of $50.0 million or more resulting in an event of default under the applicable
Series of Secured Debt after payment is due, including payments that are due (or
if any required offer had been timely made would be due) in respect of any
mandatory offer to purchase Parity Secured Debt resulting in an event of default
under the applicable Series of Secured Debt, (2) the failure to pay in full,
when due and payable in full (whether at maturity, upon acceleration or
otherwise), either the Existing Notes, the Credit Agreement Debt or any other
Series of Secured Debt (including the Notes and the Seward Guarantees)
outstanding in the amount of $50.0 million or more, (3) the exercise by the
Collateral Trustee or any of its co-trustees or agents (including the Credit
Agreement Agent) of any right or power that is exercisable by it only upon
default to take sole and exclusive dominion or control over any deposits in a
deposit account, commodity contract in a commodity account or financial asset in
a securities account constituting any Shared Collateral or the delivery of any
instructions to the Collateral Trustee directing it to foreclose or otherwise
enforce, or to disburse the proceeds of enforcement of, any Lien upon any
Collateral, or (4) the occurrence of any Event of Default under the Existing
Indentures or the Credit Agreement arising from the commencement of any
bankruptcy case, receivership or other insolvency or liquidation proceeding by
or against the Company or any of its Subsidiaries or any similar default
provision at any time in effect under any indenture or agreement governing any
Series of Secured Debt.

         "Actionable Default Period" means a period that commences on the date a
Notice of Actionable Default is delivered to the Collateral Trustee and
continues until the date (if ever) on which all notices of Actionable Default
are withdrawn or deemed withdrawn under the Collateral Trust Agreement.

         "Additional Notes" means additional notes (other than the Initial
Notes) issued from time to time under this Supplemental Indenture in accordance
with Section 2.13 hereof, as part of the same series as the Initial Notes.

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that a Person will be deemed to be an Affiliate
if the Company has knowledge that such Person beneficially owns 10% or more of
the Voting Stock of the Company; provided, further, that the Company shall only
be deemed to have knowledge of any Person beneficially owning 10% or more of the
Company's Voting Stock if such Person has filed a statement of beneficial
ownership pursuant to Sections 13(d) or 13(g) of the Exchange Act or has
provided written notice thereof to the Company. For purposes of this definition,
the terms "controlling," "controlled by" and "under common control with" have
correlative meanings. Notwithstanding the foregoing, no Person (other than the
Company or any Restricted Subsidiary of the

                                       2

<PAGE>

Company) in whom a Securitization Entity makes an Investment in connection with
a Qualified Securitization Transaction shall be deemed to be an Affiliate of the
Company solely by reason of such Investment.

          "Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.

         "Asset Sale" means:

                  (1) the sale, lease, conveyance or other disposition of any
         assets; provided that the sale, conveyance or other disposition of all
         or substantially all of the assets of the Company and its Restricted
         Subsidiaries taken as a whole shall be governed by the provisions of
         Section 4.15 and/or Section 5.01 and not the provisions of Section 4.10
         hereof; and

                  (2) the issuance of Equity Interests in any of the Company's
         Restricted Subsidiaries.

    Notwithstanding the preceding, none of the following items will be deemed to
be an Asset Sale:

                  (1) any single transaction or series of related transactions
         that involves assets having a Fair Market Value of less than $20.0
         million;

                  (2) a transfer of assets between or among the Company and its
         Restricted Subsidiaries;

                  (3) an issuance of Equity Interests by a Restricted Subsidiary
         to the Company or to a Restricted Subsidiary of the Company;

                  (4) the sale or lease of products, services or accounts
         receivable in the ordinary course of business and any sale or other
         disposition of damaged, worn out or obsolete assets or assets no longer
         used or useful in the Company's or any of its Restricted Subsidiaries'
         business;

                  (5) the sale or other disposition of cash or Cash Equivalents;

                  (6) sales of accounts receivable, equipment and related assets
         (including contract rights) of the type specified in the definition of
         Qualified Securitization Transaction to a Securitization Entity;

                  (7) a Restricted Payment that is permitted by the provisions
         of Section 4.07 hereof or a Permitted Investment;

                  (8) [Reserved];

                  (9) a disposition resulting from any condemnation or other
         taking, or temporary or permanent requisition of, any property, any
         interest therein or right appurtenant thereto, or any change of grade
         affecting any property, in each case, as the result of the exercise of
         any right of condemnation or eminent domain, including any sale or
         other transfer to a Governmental Authority in lieu of, or in
         anticipation of, any of the foregoing events; provided that if such
         disposition involves assets having a Fair Market Value in excess of
         $20.0 million, that any cash proceeds received in connection therewith
         are treated as Net Proceeds of an Asset Sale;

                                       3

<PAGE>

                  (10)the disposition by Reliant Energy Wholesale Generation,
         LLC of the substation at the Bighorn generating facility (and the
         related real property assets) to be conveyed to Nevada Power Company
         pursuant to the terms and provisions of that certain EPC Agreement
         dated December 18, 2002 between Reliant Energy Wholesale Generation,
         LLC (as successor by merger to Reliant Energy Bighorn, LLC) and Nevada
         Power Company; and

                  (11) a disposition of assets (other than any assets securing
         Secured Debt) in connection with a foreclosure, transfer or deed in
         lieu of foreclosure or other exercise of remedial action.

         "Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP; provided,
however, that if such sale and leaseback transaction results in a Capital Lease
Obligation, the amount of Indebtedness represented thereby will be determined in
accordance with the definition of "Capital Lease Obligation."

          "Base Indenture" means has the meaning set forth in the preamble to
this Supplemental Indenture, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.

         "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.

         "Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.

         "Capital Stock" means:

                  (1) in the case of a corporation, corporate stock;

                  (2) in the case of an association or business entity, any and
         all shares, interests, participations, rights or other equivalents
         (however designated) of corporate stock;

                  (3) in the case of a partnership or limited liability company,
         partnership interests (whether general or limited) or membership
         interests; and

                  (4) any other interest or participation that confers on a
         Person the right to receive a share of the profits and losses of, or
         distributions of assets of, the issuing Person, but excluding from all
         of the foregoing any debt securities convertible into Capital Stock,
         whether or not such debt securities include any right of participation
         with Capital Stock.

         "Cash Collateral Account" means a deposit account at all times under
the sole dominion and control of the Collateral Trustee (acting on its own or
through its agent, sub-agent, or co-trustee including Bank of America, N.A., as
collateral agent under the Credit Agreement or a successor collateral agent

                                       4

<PAGE>

under the Credit Agreement) that is being held by the Collateral Trustee or such
agent, sub-agent or co-trustee for the benefit of the holders of Secured Debt.

         "Cash Equivalents" means:

                  (1) United States dollars;

                  (2) securities issued or directly and fully guaranteed or
         insured by the United States government or any agency or
         instrumentality of the United States government (provided that the full
         faith and credit of the United States is pledged in support of those
         securities) having maturities of not more than one year from the date
         of acquisition;

                  (3) deposit accounts with any lender party to the Credit
         Agreement, Mellon Bank N.A., Wells Fargo Bank, N.A., Wachovia Bank,
         National Association, or any other bank that has a long-term debt
         rating at the time of investment of A+ or better by S&P and A1 or
         better by Moody's (an "Approved Bank");

                  (4) time deposits, certificates of deposit, acceptances or
         prime commercial paper issued by an Approved Bank at the time acquired
         or issued (as applicable and whichever is latest), in each case, having
         a maturity of not more than one year from the date of acquisition;

                  (5) repurchase obligations for underlying securities of the
         types described in clause (2) entered into with an Approved Bank at the
         time acquired, issued or entered into (as applicable and whichever is
         latest), in each case, having a maturity of not more than one year from
         the date of acquisition and secured by securities of the type described
         in clause (2), the market value of which (including accrued interest)
         is not less than the amount of the applicable repurchase agreement;

                  (6) commercial paper with a rating at the time of investment
         of A-1 by S&P and P-1 by Moody's and, in each case, maturing within one
         year after the date of acquisition; and

                  (7) money market funds which invest primarily in Cash
         Equivalents of the kinds described in clauses (1) through (6) of this
         definition.

         "CenterPoint" means CenterPoint Energy, Inc., a Texas corporation and
its successors.

          "Change of Control" means the occurrence of any of the following:

                  (1) the direct or indirect sale, transfer, conveyance or other
         disposition (other than by way of merger or consolidation), in one or a
         series of related transactions, of all or substantially all of the
         properties or assets of the Company and its Subsidiaries taken as a
         whole to any "person" (as that term is used in Section 13(d) of the
         Exchange Act, but excluding any employee benefit plan of the Company or
         any of its Restricted Subsidiaries, and any person or entity acting in
         its capacity as trustee, agent or other fiduciary or administrator of
         any such plan);

                  (2) the adoption of a plan relating to the liquidation or
         dissolution of the Company other than (A) the consolidation with,
         merger into or transfer of all or part of the properties and assets of
         any Restricted Subsidiary of the Company to the Company or any other
         Restricted Subsidiary of the Company and (B) the merger of the Company
         with an Affiliate solely for the purpose of reincorporating the Company
         or reforming the Company in another jurisdiction;

                                       5

<PAGE>

                  (3) the consummation of any transaction (including, without
         limitation, any merger or consolidation) the result of which is that
         any "person" (as defined above) becomes the Beneficial Owner, directly
         or indirectly, of more than 50% of the Voting Stock of the Company,
         measured by voting power rather than number of shares;

                  (4) the first day on which a majority of the members of the
         Board of Directors of the Company are not Continuing Directors; or

                  (5) the Company consolidates with, or merges with or into, any
         Person, or any Person consolidates with, or merges with or into, the
         Company, in any such event pursuant to a transaction in which any of
         the outstanding Voting Stock of the Company or such other Person is
         converted into or exchanged for cash, securities or other property,
         other than any such transaction where the Voting Stock of the Company
         outstanding immediately prior to such transaction is converted into or
         exchanged for Voting Stock (other than Disqualified Stock) of the
         surviving or transferee Person constituting a majority of the
         outstanding shares of such Voting Stock of such surviving or transferee
         Person (immediately after giving effect to such issuance).

         "Choctaw Facility" means the nominally rated 822 MW combined cycle
facility and related assets owned by Reliant Energy Wholesale Generation, LLC
and located, in French Camp, Choctaw County, Mississippi.

         "Collateral" means the Shared Collateral and the Separate Collateral.

         "Collateral Trust Agreement" means the Collateral Trust Agreement dated
July 1, 2003, executed and delivered by the Company, the Guarantors and the
Collateral Trustee, as amended, modified, renewed, restated or replaced, in
whole or in part, from time to time in accordance with its terms.

         "Collateral Trustee" means Wachovia Bank, National Association or one
of its affiliates, in its capacity as Collateral Trustee under the Collateral
Trust Agreement, together with its successors in such capacity.

          "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:

                  (1) an amount equal to any extraordinary loss plus any net
         loss realized by such Person or any of its Restricted Subsidiaries in
         connection with an Asset Sale or the disposition of any securities by
         such Person or any of its Restricted Subsidiaries or the extinguishment
         of any Indebtedness of such Person or any of its Restricted
         Subsidiaries, to the extent such losses were deducted in computing such
         Consolidated Net Income; plus

                  (2) provision for taxes based on income or profits of such
         Person and its Restricted Subsidiaries for such period, to the extent
         that such provision for taxes was deducted in computing such
         Consolidated Net Income; plus

                  (3) the Fixed Charges of such Person and its Restricted
         Subsidiaries for such period, to the extent that such Fixed Charges
         were deducted in computing such Consolidated Net Income; plus

                  (4) depreciation, depletion, amortization (including
         amortization of intangibles) and other non-cash expenses (excluding any
         such non-cash expense to the extent that it represents an accrual of or
         reserve for cash expenses in any future period) of such Person and its
         Restricted

                                       6

<PAGE>

         Subsidiaries for such period to the extent that such depreciation,
         amortization and other non-cash expenses were deducted in computing
         such Consolidated Net Income; plus

                  (5) accruals for payments to CenterPoint as required under
         Section 39.262 of the Texas Public Utility Regulatory Act to the extent
         by which the Company's affiliated retail electric provider's price to
         beat for providing retail electric service to residential and small
         commercial customers in CenterPoint's Houston service territory during
         2003 exceeds the market price of electricity, to the extent such
         accruals were deducted in computing such Consolidated Net Income; plus

                  (6) charges associated with fees and expenses, including
         professional fees, incurred prior to the Issue Date in connection with
         the modification of or preparation in connection therewith of
         Indebtedness of the Company that occurred prior to the Issue Date, to
         the extent such charges were deducted in computing such Consolidated
         Net Income; plus

                  (7) any fees payable pursuant to the Credit Agreement for
         failure to reduce Indebtedness below certain levels, to the extent such
         fees were deducted in computing such Consolidated Net Income; plus

                  (8) the upfront costs of any Hedging Obligations paid prior to
         the Issue Date to the extent such costs were deducted in computing
         Consolidated Net Income; plus

                  (9) cash received during such period related to mark-to-market
         activities; less

                  (10)cash paid during such period related to mark-to-market
         activities;

provided, however, that for purposes of this definition, any mark-to-market
earnings or losses shall be excluded from the calculation of Consolidated Cash
Flow to the extent taken into account in calculating Consolidated Net Income for
such period.

         "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:

                  (1) the Net Income of any Person that is not a Restricted
         Subsidiary or that is accounted for by the equity method of accounting
         shall be included only to the extent of the amount of dividends or
         similar distributions (including pursuant to other intercompany
         payments) paid in cash to the specified Person or a Restricted
         Subsidiary of the Person;

                  (2) for purposes of the provisions of Section 4.07 only, the
         Net Income of any Restricted Subsidiary shall be excluded to the extent
         that the declaration or payment of dividends or similar distributions
         by that Restricted Subsidiary of that Net Income is not at the date of
         determination permitted without any prior governmental approval (that
         has not been obtained) or, directly or indirectly, by operation of the
         terms of its charter or any agreement, instrument, judgment, decree,
         order, statute, rule or governmental regulation applicable to that
         Restricted Subsidiary or its stockholders;

                  (3) the cumulative effect of a change in accounting principles
         shall be excluded; and

                  (4) any non-cash impairment charges incurred subsequent to the
         Issue Date shall be excluded.

                                       7

<PAGE>

          "Consolidated Net Worth" means, with respect to any specified Person
as of any date, the assets of such Person less the liabilities of such Person
all as determined on a consolidated basis in accordance with GAAP.

          "Consolidated Senior Debt" means, as of any date, the sum, without
duplication, of:

                  (1) the amount that would be shown on a consolidated balance
         sheet of the Company and its Restricted Subsidiaries prepared as of
         such date in accordance with GAAP as the liability in respect of (A)
         all Secured Debt, (B) all other Indebtedness of the Company or any
         Guarantor that is secured by a Lien on any of their properties and (C)
         all Indebtedness of any Excluded Subsidiary (other than intercompany
         Indebtedness between or among the Company and any of its Restricted
         Subsidiaries); provided, however, that Hedging Obligations will be
         excluded for purposes of this definition; and

                  (2) to the extent not required to be reflected as a balance
         sheet liability, the aggregate maximum possible contingent
         reimbursement obligations of the Company and its Restricted
         Subsidiaries on such day in respect of all letters of credit and other
         extensions of credit that are then outstanding under any Credit
         Facility, secured by a Lien upon any of their properties, or incurred
         or Guaranteed by any Excluded Subsidiary.

         "Consolidated Senior Leverage Ratio" means, as of any date, the ratio
of (1) the Consolidated Senior Debt outstanding on such date after giving effect
to all incurrences and repayments of Indebtedness made or to be made on such
date to (2) the Consolidated Cash Flow of the Company for the most recently
ended four full fiscal quarters for which internal financial statements are
available.

    In addition, for purposes of calculating the Consolidated Senior Leverage
Ratio:

                  (1) acquisitions that have been made by the Company or any of
         its Restricted Subsidiaries, including through mergers or
         consolidations, or any Person or any of its Restricted Subsidiaries
         acquired by the Company or any of its Restricted Subsidiaries, and
         including any related financing transactions and including increases in
         ownership of Restricted Subsidiaries, during the four-quarter reference
         period or subsequent to such reference period and on or prior to the
         date on which the event for which the calculation of the Consolidated
         Senior Leverage Ratio is made ("Leverage Ratio Calculation Date") will
         be given pro forma effect in accordance with Regulation S-X under the
         Securities Act as if they had occurred on the first day of the
         four-quarter reference period; and

                  (2) the Consolidated Cash Flow attributable to discontinued
         operations, as determined in accordance with GAAP, and operations or
         businesses (and ownership interests therein) disposed of prior to the
         Leverage Ratio Calculation Date, shall be excluded.

         "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:

                  (1) was a member of such Board of Directors on the Issue Date;
         or

                  (2) was nominated for election or elected to such Board of
         Directors with the approval of a majority of the Continuing Directors
         who were members of such Board of Directors at the time of such
         nomination or election.

                                       8

<PAGE>

          "Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of December 22, 2004, among the Company, the other Loan
Parties named therein, the Lenders named therein, Bank of America, N.A., as
Administrative Agent, Collateral Agent and as an L/C Issuer, Barclays Bank, PLC
and Deutsche Bank Securities Inc., as Co-Syndication Agents, Barclays Bank, PLC
and Deutsche Bank AG, New York Branch, as L/C Issuers, Goldman Sachs Credit
Partners, L.P. and Merrill Lynch Capital Corporation, as Co-Documentation
Agents, Deutsche Bank Securities Inc., Barclays Capital and Banc of America
Securities LLC, as Joint Lead Arrangers for the Revolving Credit Facility,
Deutsche Bank Securities Inc., Barclays Capital, Banc of America Securities LLC,
Goldman Sachs Credit Partners, L.P. and Merrill Lynch Capital Corporation, as
Joint Bookrunners for the Revolving Credit Facility, Deutsche Bank Securities
Inc., Barclays Capital and Banc of America Securities LLC, as Joint Lead
Arrangers for the Term Loan Facility, and Deutsche Bank Securities Inc.,
Barclays Capital, Banc of America Securities LLC, Goldman Sachs Credit Partners,
L.P. and Merrill Lynch Capital Corporation, as Joint Bookrunners for the Term
Loan Facility, providing for up to $1.3 billion of term borrowings and $1.7
billion of revolving credit borrowings, $1.35 billion of which is available for
the issuance of letters of credit, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as the same may be amended, modified, restated, renewed, extended,
refinanced, or replaced, in each case, in whole or in part; provided, that a
refinancing or replacement of any such agreement will only be deemed a "Credit
Agreement" if so designated by the Company.

         "Credit Agreement Agent" means Bank of America, N.A., as administrative
agent and collateral agent under the Credit Agreement, together with any
successor or replacement agent in such capacity.

         "Credit Agreement Debt" means Indebtedness of the Company (and
guarantees thereof by any Guarantor) under the Credit Agreement. For purposes
only of the provisions of Section 4.10 hereof, the aggregate amount of Credit
Agreement Debt shall be the sum of the outstanding principal amount of any
loans, the aggregate face amount of any outstanding letters of credit, the
aggregate amount of any unreimbursed drawings under any letters of credit and
all unused commitments under the Credit Agreement that have not terminated.

         "Credit Agreement Documents" means the Credit Agreement and the
Security Documents.

         "Credit Agreement Obligations" means Credit Agreement Debt and all
Obligations in respect thereof under the Credit Agreement Documents.

         "Credit Facility" or "Credit Facilities" means, one or more debt
facilities (including, without limitation, the Credit Agreement) or commercial
paper facilities, in each case, with banks or other institutional lenders
(including PEDFA) providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced (including by means of sales of debt
securities to institutional investors), in each case, in whole or in part from
time to time.

         "Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.

         "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

         "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend.

                                       9

<PAGE>

          "Description of Notes" means the section titled "Description of Notes"
in the Prospectus Supplement, dated December 14, 2004, related to the issuance
and sale of the Initial Notes.

          "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of the Capital Stock),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with the provisions of Section 4.07 hereof. The amount of
Disqualified Stock deemed to be outstanding at any time for purposes of this
Supplemental Indenture shall be equal to the maximum amount that the Company and
its Restricted Subsidiaries may become obligated to pay upon the maturity of, or
pursuant to any mandatory redemption provisions of, such Disqualified Stock,
exclusive of accrued dividends.

         "Domestic Subsidiary" means any Restricted Subsidiary of the Company
that was formed under the laws of the United States or any state of the United
States or the District of Columbia or that guarantees or otherwise provides
direct credit support for any Indebtedness of the Company.

         "Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any Governmental Authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law; (ii) in connection with any
Hazardous Material or any actual or alleged Hazardous Materials Activity; or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.

         "Environmental Laws" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities relating to (i)
environmental matters, including those relating to any Hazardous Materials
Activity; (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials; or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to the Company or any of its Restricted Subsidiaries or
any Facility.

         "Equally and Ratably" means, in reference to sharing of any Liens on
Shared Collateral or proceeds thereof as among the holders of Note Obligations,
the holders of Credit Agreement Obligations and the holders of other Parity
Secured Obligations in respect of any other Series of Secured Debt, after
allowing for the payment priorities in the Order of Application, that such Liens
or proceeds:

                  (1) shall be allocated and distributed to the Trustee for
         account of the Holders of Notes, to the Credit Agreement Agent for
         account of the holders of Credit Agreement Debt and to the Secured Debt
         Representative for each other Series of Secured Debt for account of the
         holders of such Series of Secured Debt, ratably in proportion to the
         principal, interest, fees and premium (if any) outstanding, when the
         allocation or distribution is made, on the Notes, Credit Agreement Debt
         (including Hedging Obligations and amounts payable to a lender in
         connection with a bank account or any other banking services, in each
         case, that are required by the Credit Agreement to be secured on an
         equal and ratable basis with the Credit Agreement Debt) and all other
         Series of

                                       10

<PAGE>

         Secured Debt (allocated proportionately to the Secured Debt
         Representative for each other Series of Secured Debt if there is more
         than one), respectively; and thereafter

                  (2) shall be allocated and distributed (if any remain after
         payment in full of all of the principal, interest, fees and premium (if
         any) outstanding on the Notes, Credit Agreement Debt, including the
         Hedging Obligations and other amounts payable to a lender referred to
         in clause (1), and each other Series of Secured Debt) to the Trustee
         for account of the holders of any remaining Note Obligations, to the
         Credit Agreement Agent for account of the holders of any remaining
         Credit Agreement Obligations and to the Secured Debt Representative for
         each other Series of Secured Debt for account of the holders of any
         remaining Parity Secured Obligations in respect of such Series of
         Secured Debt, ratably in proportion to the aggregate unpaid amount of
         such remaining Note Obligations, Credit Agreement Obligations and other
         remaining Parity Secured Obligations, respectively, that are due and
         demanded prior to the date such distribution is made.

         For this purpose:

                  (1) Unfunded commitments to extend credit shall not be counted
         as outstanding debt;

                  (2) Obligations of the Company or any Guarantor in respect of
         outstanding letters of credit, bank guarantees, bankers' acceptances or
         other similar instruments shall be counted as outstanding debt (whether
         or not contingent), except that if any such instrument thereafter
         expires without being funded, an equitable adjustment shall be made in
         any future distribution so that the aggregate amount distributed is
         distributed Equally and Ratably as if such instrument had never been
         outstanding (but all distributions shall be final and non-refundable
         when made);

                  (3) During the pendency of any Actionable Default, and subject
         to the Order of Application, if any payment or distribution is made in
         cash to holders of Credit Agreement Obligations or any other holders of
         Parity Secured Obligations from or on account of Separate Collateral by
         reason of enforcement of Liens or realization in a bankruptcy case,
         receivership or other insolvency or liquidation proceeding, then any
         concurrent or subsequent payment or distribution that is to be made in
         cash to such holders from or on account of Shared Collateral by reason
         of any such enforcement or realization shall be reduced, and any
         concurrent or subsequent payment or distribution that is to be made in
         cash to the remaining holders of Parity Secured Obligations from or on
         account of Shared Collateral by reason of any such enforcement or
         realization shall be increased, to the extent necessary to cause the
         aggregate amount of all payments and distributions made in cash to all
         holders of Parity Secured Obligations (whether made from or on account
         of Separate Collateral or from or on account of Shared Collateral) by
         reason of any such enforcement or realization to be distributed Equally
         and Ratably as fully as if the Separate Collateral had been Shared
         Collateral; and

                  (4) All amounts apportioned and distributed to the Credit
         Agreement Agent or the Secured Debt Representative for any other Series
         of Secured Debt may be allocated, apportioned and distributed by it in
         accordance with the applicable provisions of the Credit Agreement or
         the indenture or agreement governing such other Series of Secured Debt,
         including to give effect to any payment priorities provided for therein
         as among the holders of Obligations outstanding thereunder.

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

                                       11

<PAGE>

         "Equity Offering" means a public or private sale for cash of Capital
Stock (other than Disqualified Stock).

         "Excluded Orion Power Subsidiaries" means Orion Power Capital LLC and
each of its Subsidiaries for so long as each such Person has not guaranteed or
otherwise provided direct credit support for any other Indebtedness of the
Company or any of its other Restricted Subsidiaries.

         "Excluded Proceeds" means any Net Proceeds of Asset Sales that are
designated by the Board of Directors of the Company as "Excluded Proceeds;"
provided, that not more than $300.0 million of such Net Proceeds from Asset
Sales may be designated as "Excluded Proceeds" during any single calendar year.

         "Excluded Property" consists of:

         (1) [Reserved];

         (2) Capital Stock of Subsidiaries and intercompany notes that satisfy
the requirements of the defined term "Excluded Securities," provided that
property that is received by the Company or any of its Subsidiaries as proceeds
from the sale, exchange or other disposition of any Excluded Securities and
other proceeds of Excluded Securities (except proceeds from the foreclosure,
collection or other enforcement of Liens upon Excluded Securities) will not
constitute Excluded Property and will be part of the Shared Collateral, to the
extent such property otherwise constitutes Shared Collateral under the Security
Documents, unless the proceeds are themselves Excluded Securities; and

         (3) Separate Cash Deposits.

         "Excluded Securities" means debt or equity securities issued by any
Subsidiary of the Company other than Reliant Energy Retail Holdings, LLC, Orion
Power Holdings, Inc. and REMA (or their successors).

         "Excluded Subsidiaries" means each of the Excluded Orion Power
Subsidiaries, the Miscellaneous Orion Subsidiaries, Reliant Energy Mid-Atlantic
Power Holdings, LLC and its Subsidiaries, Reliant Energy Channelview, L.P.,
Reliant Energy Channelview (Delaware) LLC, Reliant Energy Channelview (Texas)
LLC, Reliant Energy Services Channelview LLC, Reliant Energy Services Canada,
Ltd., RE Retail Receivables, LLC, CapTrades GP, LLC and CapTrades, LP, in each
case, only if and for as long as it has not guaranteed or otherwise provided
direct credit support for any Indebtedness of the Company or any of its other
Restricted Subsidiaries.

          "Existing 2010 Notes Indenture" means the indenture between the
Company, the Guarantors and the Wilmington Trust Company, dated as of July 1,
2003, governing the Existing 2010 Notes.

         "Existing 2013 Notes Indenture" means the indenture between the
Company, the Guarantors and the Wilmington Trust Company, dated as of July 1,
2003, governing the Existing 2013 Notes.

          "Existing 2010 Notes" means the $550.0 million in aggregate principal
amount of the Company's 9.25% Senior Secured Notes due 2010, issued pursuant to
the Existing 2010 Notes Indenture on July 1, 2003, and any related exchange
notes.

                                       12

<PAGE>

         "Existing 2013 Notes" means the $550.0 million in aggregate principal
amount of the Company's 9.50% Senior Secured Notes due 2013, issued pursuant to
the Existing 2013 Notes Indenture on July 1, 2003, and any related exchange
notes.

          "Existing Convertible Notes" means the Company's 5.00% Convertible
Senior Subordinated Notes due 2010 in the aggregate principal amount of up to
$275,000,000 issued pursuant to the Existing Convertible Notes Indenture on June
24, 2003.

         "Existing Convertible Notes Indenture" means that certain indenture,
dated as of June 24, 2003, by and between the Company and Wilmington Trust
Company, as trustee, governing the Existing Convertible Notes.

         "Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Issue Date, until such amounts are
repaid; provided, however, that in no event will any Indebtedness that qualifies
for categorization as Permitted Debt under clauses (1) through (5) of the
definition of Permitted Debt be considered to be Existing Indebtedness.

          "Existing Indentures" means the Existing 2010 Notes Indenture and the
Existing 2013 Notes Indenture.

         "Existing Notes" means the Existing 2010 Notes and the Existing 2013
Notes.

         "Facility" means any real property (including all buildings, fixtures
or other improvements located thereon) now, hereafter or heretofore owned,
leased, operated or used by the Company or any of its Restricted Subsidiaries or
any of their respective predecessors or Affiliates.

         "Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving distress or necessity
of either party, determined in good faith by the chief financial officer or
Board of Directors of the Company (unless otherwise provided in this
Supplemental Indenture).

         "Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person for such period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases,
redeems, defeases or otherwise discharges any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment,
repurchase, redemption, defeasance or other discharge of Indebtedness, or such
issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.

    In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

                  (1) acquisitions that have been made by the specified Person
         or any of its Restricted Subsidiaries, including through mergers or
         consolidations, or any Person or any of its Restricted Subsidiaries
         acquired by the specified Person or any of its Restricted Subsidiaries,
         and including any related financing transactions and including
         increases in ownership of Restricted Subsidiaries, during the
         four-quarter reference period or subsequent to such reference period
         and

                                       13

<PAGE>

         on or prior to the Calculation Date shall be given pro forma effect in
         accordance with Regulation S-X under the Securities Act as if they had
         occurred on the first day of the four-quarter reference period and
         Consolidated Cash Flow for such reference period will be calculated on
         a pro forma basis;

                  (2) the Consolidated Cash Flow attributable to discontinued
         operations, as determined in accordance with GAAP, and operations or
         businesses (and ownership interests therein) disposed of prior to the
         Calculation Date, shall be excluded;

                  (3) the Fixed Charges attributable to discontinued operations,
         as determined in accordance with GAAP, and operations or businesses
         (and ownership interests therein) disposed of prior to the Calculation
         Date, shall be excluded, but only to the extent that the obligations
         giving rise to such Fixed Charges will not be obligations of the
         specified Person or any of its Restricted Subsidiaries following the
         Calculation Date; and

                  (4) if any Indebtedness that is being incurred on the
         Calculation Date bears a floating rate of interest, the interest
         expense on such Indebtedness shall be calculated as if the rate in
         effect on the Calculation Date had been the applicable rate for the
         entire period (taking into account any Hedging Obligations applicable
         to such Indebtedness, but only for such period of time as equals the
         then remaining term of such Hedging Obligations as of the Calculation
         Date).

         "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

                  (1) the consolidated interest expense of such Person and its
         Restricted Subsidiaries for such period, whether paid or accrued
         determined in accordance with GAAP, including, without limitation,
         amortization of debt issuance costs incurred on or after the Issue Date
         (but excluding (A) amortization of debt issuance costs incurred prior
         to the Issue Date and (B) charges associated with fees and expenses,
         including professional fees, incurred prior to the Issue Date in
         connection with the modification of or preparation in connection
         therewith of Indebtedness of the Company that occurred prior to the
         Issue Date) and original issue discount, non-cash interest payments,
         the interest component of any deferred payment obligations, the
         interest component of all payments associated with Capital Lease
         Obligations, imputed interest with respect to Attributable Debt created
         after the Issue Date, commissions, discounts and other fees and charges
         incurred in respect of letter of credit or bankers' acceptance
         financings, and net of the effect of all payments made or received
         pursuant to Hedging Obligations with respect to interest rates and net
         of interest income; plus

                  (2) the consolidated interest of such Person and its
         Restricted Subsidiaries that was capitalized during such period; plus

                  (3) any interest accruing on Indebtedness of another Person
         that is Guaranteed by such Person or one of its Restricted Subsidiaries
         or secured by a Lien on assets of such Person or one of its Restricted
         Subsidiaries, whether or not such Guarantee or Lien is called upon;
         plus

                  (4) the product of (A) all dividends, whether paid or accrued
         and whether or not in cash, on any series of preferred stock of such
         Person or any of its Restricted Subsidiaries, other than dividends on
         Equity Interests payable solely in Equity Interests of the Company
         (other than Disqualified Stock) or to the Company or a Restricted
         Subsidiary of the Company, times (B) a fraction, the numerator of which
         is one and the denominator of which is one minus the then

                                       14

<PAGE>

         current combined federal, state and local statutory tax rate of such
         Person, expressed as a decimal, in each case, on a consolidated basis
         and in accordance with GAAP; minus

                  (5) any charges associated with upfront payments with respect
         to interest rate hedges made prior to the Issue Date.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

         "Global Notes" means, individually and collectively, each of the Global
Notes substantially in the form of Exhibit A hereto issued in accordance with
Section 2.01 hereof.

         "Global Note Legend" means the legend set forth in Section 2.06(f),
which is required to be placed on all Global Notes issued under this
Supplemental Indenture.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of, or pertaining to,
government.

         "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

         "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).

         "Guarantors" means each of:

                  (1) the entities listed on Schedule I hereto; and

                  (2) any other Restricted Subsidiary of the Company that
         executes a Note Guarantee in accordance with the provisions of this
         Supplemental Indenture,

and their respective successors and assigns.

         "Hazardous Materials" means any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority or which may or could pose a hazard to the health and safety of the
owners, occupants or any Persons in the vicinity of any Facility or to the
indoor or outdoor environment.

         "Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, release, threatened release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition

                                       15

<PAGE>

or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.

         "Hedging Obligations" means, with respect to any specified Person, the
net obligations of such Person under:

                  (1) interest rate swap agreements (whether from fixed to
         floating or from floating to fixed), interest rate cap agreements and
         interest rate collar agreements;

                  (2) other agreements or arrangements designed to manage
         interest rate risk; and

                  (3) other agreements or arrangements designed to protect such
         Person against fluctuations in currency exchange rates.

         "Holder" means a Person in whose name a Note is registered.

         "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses or trade payables),
whether or not contingent (without duplication):

                  (1) in respect of borrowed money;

                  (2) evidenced by bonds, notes, debentures or similar
         instruments or letters of credit or reimbursement agreements in respect
         thereof;

                  (3) in respect of banker's acceptances;

                  (4) representing Capital Lease Obligations or Attributable
         Debt in respect of sale and leaseback transactions;

                  (5) representing the balance deferred and unpaid of the
         purchase price of any property or services due more than six months
         after such property is acquired or such services are completed; or

                  (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit,
Attributable Debt and Hedging Obligations) would appear as a liability upon a
balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term "Indebtedness" includes all Indebtedness of others secured by
a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the
Guarantee by the specified Person of any Indebtedness of any other Person. If
obligations of a Securitization Entity are Indebtedness, for the purposes of
calculating the amount of Indebtedness of a Securitization Entity outstanding as
of any date, the face or notional amount of any interest in receivables or
equipment that is outstanding as of such date shall be deemed to be Indebtedness
but any such interests held by Affiliates of such Securitization Entity shall be
excluded for purposes of such calculation.

         The amount of any Indebtedness outstanding as of any date will be:

                  (1) the accreted value of the Indebtedness, in the case of any
         Indebtedness issued with original issue discount;

                                       16

<PAGE>

                  (2) the principal amount of and premium (if any) on the
         Indebtedness, in the case of any other Indebtedness; and

                  (3) in respect of Indebtedness of other Persons secured by a
         Lien on the assets of the specified Person, the lesser of:

                           (a) the Fair Market Value of such asset at such date
                  of determination, and

                           (b) the amount of such Indebtedness of such other
                  Persons.

         "Indemnified Liabilities" means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
claims (including Environmental Claims), costs (including the costs of any
investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up or
abate any Hazardous Materials Activity), expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on Environmental Laws, on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of any Environmental Claim or any Hazardous Materials Activity
relating to or arising from, directly or indirectly, any past or present
activity, operation, land ownership, or practice of the Company or any of its
Restricted Subsidiaries.

         "Indenture" means the Base Indenture, as supplemented by this
Supplemental Indenture, governing the Notes, in each case, as amended,
supplemented or otherwise modified from time to time in accordance with its
respective terms.

         "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

         "Initial Notes" means the first $750.0 million aggregate principal
amount of Notes issued under this Supplemental Indenture on the Issue Date.

          "Intercreditor Confirmation" means the agreement of any holder of
Parity Secured Debt or other Parity Secured Obligations to the provisions
described in the Order of Application and definition of the term "Equally and
Ratably," as set forth in any Secured Debt Document for the benefit of, and
enforceable as a third party beneficiary by, each present and future holder of
Parity Secured Obligations and each present and future Secured Debt
Representative.

         "Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) by Moody's or BBB- (or the equivalent) by S&P.

         "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or similar obligations), advances or capital
contributions (excluding payroll, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. "Investment"
shall exclude extensions of trade credit by the Company and its Restricted
Subsidiaries in the ordinary course of business and Permitted PEDFA Bond
Indebtedness. If the Company or any Subsidiary of the Company

                                       17

<PAGE>

sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the Fair Market Value of the Company's Investments in such
Subsidiary that were not sold or disposed of. The acquisition by the Company or
any Subsidiary of the Company of a Person that holds an Investment in a third
Person will be deemed to be an Investment by the Company or such Subsidiary in
such third Person in an amount equal to the Fair Market Value of the Investments
held by the acquired Person in such third Person. Except as otherwise provided
in this Supplemental Indenture, the amount of an Investment shall be its Fair
Market Value at the time the Investment is made and without giving effect to
subsequent changes in value.

         "Issue Date" means December 22, 2004.

          "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement and any lease
that constitutes a security interest.

         "Miscellaneous Orion Subsidiaries" means, collectively, Beaver River,
LLC, Eddystone Power, LLC, Free State Electric, LLC, Grane Creek, LLC, Liberty
Member, LLC, Liberty MidAtlantic, LLC, MidAtlantic Liberty, LLC, Midwest Ash
Disposal, Inc., OPD Group, Inc., OPOS MidAtlantic, Inc., Orion Power Atlantic,
Inc., Orion Power Atlantic LLC, Orion Power Atlantic, Ltd., Orion Power
Development Company, Inc., Orion Power Marketing and Supply, Inc., Orion Power
Operating Services, Inc., Orion Power Operating Services Astoria, Inc. and Orion
Power Operating Services Midwest, Inc.

         "Moody's" means Moody's Investors Service, Inc.

         "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

                  (1) any gain (or loss), together with any related provision
         for taxes on such gain (or loss), realized in connection with:

                           (a) any Asset Sale;

                           (b) the disposition of any securities by such Person
         or any of its Restricted Subsidiaries or the extinguishment of any
         Indebtedness of such Person or any of its Restricted Subsidiaries; and

                  (2) any extraordinary gain (or loss), together with any
         related provision for taxes on such extraordinary gain (or loss).

         "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
amounts reserved for adjustment in respect of the sale price of such asset or
assets established in accordance with GAAP.

                                       18

<PAGE>

         "Non-Recourse" means, with respect to any specified Person and the
Indebtedness of such Person:

                  (1) neither the Company nor any of its Restricted Subsidiaries
         (A) provides credit support of any kind (including any undertaking,
         agreement or instrument that would constitute Indebtedness) for the
         Indebtedness of such Person other than a pledge of the Equity Interests
         of such Person, (B) is directly or indirectly liable as a guarantor or
         otherwise of the Indebtedness of such Person, or (C) constitutes the
         lender with respect to the Indebtedness of such Person; and

                  (2) in the case of an Unrestricted Subsidiary, no default on
         the Indebtedness of such Person (including any rights that the holders
         of the Indebtedness may have to take enforcement action against an
         Unrestricted Subsidiary) would permit upon notice, lapse of time or
         both any holder of Indebtedness of the Company or any of its Restricted
         Subsidiaries to declare a default on such Indebtedness of the Company
         or any of its Restricted Subsidiaries or cause the payment of such
         Indebtedness of the Company or any of its Restricted Subsidiaries to be
         accelerated or payable prior to its stated maturity.

          "Note Documents" means the Notes and the Indenture, the Existing Notes
and the related Existing Indentures, the Note Guarantees, each Intercreditor
Confirmation and the Security Documents.

          "Note Guarantee" means the Guarantee by each Guarantor of the
Company's payment Obligations under the Indenture and on the Notes, executed
pursuant to the provisions of this Supplemental Indenture.

         "Note Obligations" means:

                  (1) Notes issued on the Issue Date and the Existing Notes; or

                  (2) Notes issued by the Company after the Issue Date under
         this Supplemental Indenture that constitute Sharing Eligible Debt and
         all related exchange notes,

together with the Note Guarantees and all other Obligations (including all
Obligations owing to the Trustee) of any Obligor under the Note Documents.

         "Notes" has the meaning assigned to it in the preamble to this
Supplemental Indenture. The Initial Notes and the Additional Notes shall be
treated as a single class for all purposes under this Supplemental Indenture.
Unless the context otherwise requires, all references to the Notes shall include
the Initial Notes and any Additional Notes.

         "Notice of Actionable Default" means a written notice given to the
Collateral Trustee by the Required Secured Debtholders or any Secured Debt
Representative, stating that an Actionable Default has occurred and is
continuing.

         "Obligations" means any principal, interest, premium, fees,
indemnifications, reimbursements, expenses, damages and other liabilities
payable under the documentation governing any Indebtedness.

         "Obligor" means the Company, the Guarantors and each other Subsidiary
of the Company that has granted the Collateral Trustee a Lien upon any property
as security for any Note Obligation.

         "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any

                                       19

<PAGE>

Assistant Treasurer, the Controller, the Secretary, Assistant Secretary, or any
Vice-President of such Person.

          "Order of Application" has the meaning assigned to it in the
Collateral Trust Agreement.

          "Parity Secured Debt" means:

                  (1) the Notes issued on the Issue Date;

                  (2) the Existing Notes;

                  (3) Credit Agreement Debt outstanding or committed on the
         Issue Date; and

                  (4) Sharing Eligible Debt (including the Seward Guarantees)
         that is designated by the Company, in an Officer's Certificate
         delivered to the Collateral Trustee on or before the date of incurrence
         of such Indebtedness, as entitled to share Equally and Ratably in the
         benefits and proceeds of all Liens held by the Collateral Trustee in
         Shared Collateral.

         "Parity Secured Obligations" means, collectively, the Note Obligations,
the Credit Agreement Obligations and all Obligations in respect of each other
Series of Secured Debt.

         "Participant" means, with respect to the Depositary, a Person who has
an account with the Depositary.

         "PEDFA" means Pennsylvania Economic Development Financing Authority and
its successors.

         "Permitted Business" means the business of providing services and
products in the energy market and any businesses incidental or reasonably
related thereto.

         "Permitted ERCOT Assets" means (1) electric generating assets together
with assets related thereto (including any assets related to the operation and
fuel supply of such electric generating assets) which assets support REI's
and/or its Restricted Subsidiaries' retail business in the State of Texas and
(2) all (but not less than all) of the Capital Stock of any Person that owns
solely Permitted ERCOT Assets (whether directly or through one or more wholly
owned Subsidiaries) described in clause (1) above.

         "Permitted Investments" means:

                  (1) any Investment in the Company or in a Restricted
         Subsidiary of the Company;

                  (2) any Investment in Cash Equivalents and, in the case of the
         Excluded Subsidiaries only, cash equivalents or other liquid
         investments permitted under any Credit Facility to which it is a party;

                  (3) any Investment by the Company or any Restricted Subsidiary
         of the Company in a Person, if as a result of such Investment:

                           (a) such Person becomes a Restricted Subsidiary of
         the Company; or

                           (b) such Person is merged, consolidated or
         amalgamated with or into, or transfers or conveys substantially all of
         its assets to, or is liquidated into, the Company or a Restricted
         Subsidiary of the Company;

                                       20

<PAGE>

                  (4) [Reserved];

                  (5) any Investment made as a result of the receipt of non-cash
         consideration from an Asset Sale that was made pursuant to and in
         compliance with the provisions of Section 4.10 hereof;

                  (6) any acquisition of assets or Capital Stock solely in
         exchange for the issuance of Equity Interests (other than Disqualified
         Stock) of the Company;

                  (7) any Investments received in compromise or resolution of
         (A) Obligations of trade creditors or customers that were incurred in
         the ordinary course of business of the Company or any of its Restricted
         Subsidiaries, including pursuant to any plan of reorganization or
         similar arrangement upon the bankruptcy or insolvency of any trade
         creditor or customer; or (B) litigation, arbitration or other disputes
         with Persons who are not Affiliates;

                  (8) Investments represented by Hedging Obligations;

                  (9) loans or advances to employees made in the ordinary course
         of business up to an aggregate principal amount not to exceed $10.0
         million at any one time;

                  (10) any Investment acquired by the Company or any of its
         Restricted Subsidiaries on account of any claim against, or interest
         in, any other Person (A) acquired in good faith in connection with or
         as a result of a bankruptcy, workout, reorganization or
         recapitalization of such other Person or (B) as a result of a bona fide
         foreclosure by the Company or any of its Restricted Subsidiaries with
         respect to any claim against any other Person;

                  (11) repurchases of the Notes or pari passu Indebtedness;

                  (12) any Investment by the Company or a Restricted Subsidiary
         of the Company in a Securitization Entity or any Investment by a
         Securitization Entity in any other Person in connection with a
         Qualified Securitization Transaction;

                  (13) payment of consolidated taxes pursuant to the Tax Sharing
         Agreement, dated as of October 1, 2002, among the Company and its
         Subsidiaries named therein, as amended, supplemented or modified from
         time to time and any other tax allocation agreements among the Company
         and its Subsidiaries;

                  (14) receivables owing to the Company or a Restricted
         Subsidiary, if created or acquired in the ordinary course of business
         and payable or dischargeable in accordance with customary trade terms;
         provided, however, that such trade terms may include such concessionary
         trade terms as the Company or such Restricted Subsidiary deems
         reasonable under the circumstances; and

                  (15) other Investments in any Person having an aggregate Fair
         Market Value (measured on the date each such Investment was made and
         without giving effect to subsequent changes in value), when taken
         together with all other Investments made pursuant to this clause (15)
         that are at the time outstanding not to exceed $125.0 million.

         "Permitted Liens" means:

                                       21

<PAGE>

                  (1) Liens held by the Collateral Trustee Equally and Ratably
         securing all Indebtedness that is Parity Secured Debt and Equally and
         Ratably securing all other Parity Secured Obligations;

                  (2) Permitted Separate Liens;

                  (3) [Reserved];

                  (4) [Reserved];

                  (5) Liens on assets of REMA and its Subsidiaries securing
         Indebtedness of REMA and its Subsidiaries permitted to be incurred
         pursuant to clause (5) of the definition of Permitted Debt, including
         cash collateral for letters of credit issued thereunder and Liens
         encumbering assets of REMA and/or any of its Subsidiaries securing
         obligations under, or in connection with, or which constitute,
         Qualifying Credit Support (as defined in the participation agreements
         to which REMA is a party);

                  (6) Liens on assets of the Seward Subsidiary securing
         Permitted PEDFA Bond Indebtedness incurred by the Seward Subsidiary and
         that is Non-Recourse to the Company and all of its other Restricted
         Subsidiaries (other than an unsecured Guarantee, if any, provided by
         the Company);

                  (7) [Reserved];

                  (8) [Reserved];

                  (9) Liens on assets of a Restricted Subsidiary in existence on
         the date on which such Person becomes a Restricted Subsidiary; provided
         that on the date on which such Person becomes a Restricted Subsidiary,
         after giving effect to the incurrence of such Liens, the Consolidated
         Senior Leverage Ratio would not exceed 3.0 to 1.0;

                  (10) Liens securing Indebtedness (including Capital Lease
         Obligations) permitted to be incurred pursuant to clause (11) of the
         definition of Permitted Debt, covering only the assets acquired with or
         financed by such Indebtedness;

                  (11) Liens securing obligations under sale leaseback
         transactions permitted by the provisions of Section 4.16 hereof;

                  (12) Liens in favor of the Company or the Guarantors;

                  (13) Liens for taxes, assessments or governmental charges or
         claims that are not yet delinquent or that are being contested in good
         faith by appropriate proceedings promptly instituted and diligently
         concluded; provided that any reserve or other appropriate provision as
         is required in conformity with GAAP has been made therefor;

                  (14) Liens imposed by law, such as carriers', warehousemen's,
         landlord's and mechanics' Liens, in each case, incurred in the ordinary
         course of business;

                  (15) survey exceptions, encumbrances, easements or
         reservations, including those for licenses, rights-of-way, sewers,
         electric lines, telegraph and telephone lines, other utilities, mineral
         reservations and rights and leases, zoning restrictions and other
         restrictions as to the use

                                       22

<PAGE>

         of real property or other exceptions to title that were not incurred in
         connection with Indebtedness and that (A) exist on the Issue Date and
         are recorded on such date, (B) are permitted under the terms of the
         Security Documents or (C) do not in the aggregate materially adversely
         affect the value of said properties or materially impair their use in
         the operation of the business of such Person;

                  (16) Liens to secure any Permitted Refinancing Indebtedness
         permitted to be incurred under this Supplemental Indenture if such
         Permitted Refinancing Indebtedness is incurred by the same obligor on
         the Indebtedness being extended, refinanced, renewed, replaced,
         defeased or refunded (except as provided in clause (4) of the
         definition of Permitted Refinancing Indebtedness); provided, however,
         that:

                           (a) the new Lien shall be limited to all or part of
                  the same categories of property and assets that secured or,
                  under the written agreements pursuant to which the original
                  Lien arose, could secure the original Lien (plus improvements
                  and accessions to, such property or proceeds or distributions
                  thereof), except, if Permitted PEDFA Bond Indebtedness is
                  Sharing Eligible Debt, it may be secured by Liens held by the
                  Collateral Trustee on the Shared Collateral; and

                           (b) the Indebtedness secured by the new Lien is not
                  increased to any amount greater than the sum of (i) the
                  outstanding principal amount or, if greater, committed amount
                  of the Permitted Refinancing Indebtedness and (ii) an amount
                  necessary to pay any fees and expenses, including premiums,
                  related to such refinancings, refunding, extension, renewal or
                  replacement and (iii) any protective advances with respect to
                  the property and assets that secure such Permitted Refinancing
                  Indebtedness;

                  (17) Liens on assets transferred to a Securitization Entity or
         on assets of a Securitization Entity, in either case incurred in
         connection with a Qualified Securitization Transaction;

                  (18) financing statements (including precautionary statements)
         filed in connection with a Capital Lease Obligation or an operating
         lease, in each case, not prohibited hereunder; provided that no such
         financing statement extends to, covers or refers to as collateral, any
         property or assets of the Company or a Restricted Subsidiary, other
         than the property or assets which are subject to such Capital Lease
         Obligation or such operating lease;

                  (19) Liens arising out of or in connection with any judgment
         that does not constitute an Event of Default or in connection with any
         litigation or other legal proceeding as to which an appeal to contest
         or review is timely commenced in good faith by appropriate proceedings
         and as to which adequate reserves have been established in accordance
         with GAAP; provided that any right to levy, seizure, attachment,
         sequestration, foreclosure or garnishment of any property and assets of
         the Company or a Restricted Subsidiary thereof arising out of or in
         connection with any such Lien has been and continues to be enjoined or
         effectively stayed;

                  (20) inchoate statutory Liens arising under ERISA;

                  (21) Liens (A) on cash and short-term investments (i)
         deposited by the Company or any of its Subsidiaries in margin accounts
         with or on behalf of futures contract brokers or paid over to other
         counterparties or (ii) pledged or deposited as collateral to a contract
         counterparty or issuer of surety bonds by the Company or any of its
         Subsidiaries, in the case of clause (i) or (ii), to secure obligations
         with respect to (a) contracts for commercial and trading activities in
         the ordinary course of business and contracts (including without
         limitation, physical delivery, option

                                       23

<PAGE>

         (whether cash or financial), exchange, swap and futures contracts) for
         the purchase, transmission, distribution, sale, lease or hedge of any
         energy-related commodity or service or (b) interest rate, commodity
         price, or currency rate management contracts or derivatives and (B)
         encumbering assets other than accounts or receivables arising out of
         contracts or agreements relating to the generation, distribution or
         transmission of energy; provided that all such agreements or contracts
         are entered into in the ordinary course of business;

                  (22) Liens arising by virtue of any statutory or common law
         provision relating to banker's liens, rights of set off or similar
         rights, contractual rights of setoff or netting arrangements entered
         into in the ordinary course of business and similar rights with respect
         to deposit accounts, commodity accounts and/or securities accounts;

                  (23) Liens arising under Section 9.343 of the Texas Uniform
         Commercial Code or similar statutes of states other than Texas;

                  (24) Liens created under the Security Agreement dated as of
         March 28, 2003 among Reliant Energy Retail Services, LLC ("RERS"),
         StarEn Power, LLC ("StarEn") and Reliant Energy Solutions, LLC
         ("Solutions"), as debtors, and Texas Genco, L.P. as secured party
         securing up to $250.0 million of obligations owing to Texas Genco, L.P.
         under the Master Power Purchase and Sale Agreement dated as of October
         1, 2002 between Texas Genco, L.P and Solutions, as the same may be
         amended, amended and restated, supplemented or otherwise modified,
         renewed or replaced from time to time, and the related Guaranty dated
         as of October 1, 2002 by Reliant Energy Retail Holdings, LLC, RERS,
         StarEn and Solutions in favor of Texas Genco, L.P., as the same may be
         amended, amended and restated, supplemented or otherwise modified,
         renewed or replaced from time to time, provided that such Liens are
         subject always to the terms of the Texas Genco Intercreditor Agreement,
         as such agreement may be amended, amended and restated, supplemented or
         otherwise modified, renewed or replaced from time to time;

                  (25) pledges and deposits to secure the payment of worker's
         compensation, unemployment insurance, social security benefits or
         obligations under similar laws, or to secure the payment or performance
         of statutory or public obligations (including environmental, municipal
         and public utility commission obligations and requirements),
         reimbursement or indemnity obligations arising out of surety,
         performance, or other similar bonds, and other obligations of a like
         nature, in each case incurred in the ordinary course of business;

                  (26) [Reserved];

                  (27) Liens granted by a Person in favor of a commercial
         trading counterparty pursuant to a netting agreement, which Liens
         encumber rights under agreements that are subject to such netting
         agreement and which Liens secure such Person's obligations to such
         counterparty under such netting agreement; provided, that any such
         agreements and netting agreements are entered into in the ordinary
         course of business; and provided, further, that the Liens are incurred
         in the ordinary course of business and when granted, do not secure
         obligations which are past due;

                  (28) Liens on proceeds from the issuance of Seward Tax-Exempt
         Bonds or Permitted PEDFA Bond Indebtedness and Liens on Indebtedness of
         the Company held by a Seward Subsidiary securing the Seward Tax-Exempt
         Bonds or Permitted PEDFA Bond Indebtedness;

                  (29) Liens on assets of the Excluded Subsidiaries existing on
         the Issue Date;

                                       24

<PAGE>

                  (30) Liens on assets of REMA and its Subsidiaries created in
         connection with the sale-leaseback of REMA's interests in the Keystone,
         Conemaugh and Shawville generating facilities consummated in August
         2000;

                  (31) Liens on certain of Reliant Energy Choctaw County, LLC's
         switchyard equipment at the Choctaw Facility granted to Entergy in
         connection with an Operating and Maintenance Agreement;

                  (32) Liens created in connection with the indemnity and
         contribution obligations in favor of underwriters or note purchasers in
         connection with the Seward Tax-Exempt Bonds;

                  (33) Liens on assets of Reliant Energy Solutions, LLC created
         in connection with Delivery Order No. DABT39-97-C-4046 dated September
         1997 and issued by the Directorate of Contracting, Contract Support
         Division, Ft. Sill, Oklahoma; and

                  (34) Liens incurred in the ordinary course of business of the
         Company or any Restricted Subsidiary of the Company securing
         obligations that do not exceed $25.0 million in the aggregate at any
         one time outstanding.

         "Permitted PEDFA Bond Indebtedness" means Indebtedness incurred by the
Company and/or the Seward Subsidiary and/or guaranteed by the Company and/or the
Guarantors in tax-exempt industrial development bond financings that are not
supported by letters of credit outstanding under the Credit Agreement, the
proceeds of which are used:

                  (1) to build the Seward Facility;

                  (2) to reimburse the Company, its Restricted Subsidiaries or
         the Seward Subsidiary for amounts advanced or incurred, or for
         Indebtedness incurred to fund such construction costs, prior to the
         date of incurrence of such Indebtedness; or

                  (3) to refund or defease the Seward Tax-Exempt Bonds or
         refinance Indebtedness evidenced by or in support of the Seward
         Tax-Exempt Bonds.

         "Permitted Prior Liens" means (1) Liens described in clauses (9), (10),
(11), (13), (14), (15), (18), (21), (22), (23,) (24), (25), (27), (31), (32) and
(33) of the definition of "Permitted Liens," (2) Liens refinancing or replacing
any of the Liens contemplated in clause (1) of this definition and (3) Liens
that arise by operation of law and are not voluntarily granted, to the extent
entitled by law to priority over the security interests created by the Security
Documents.

         "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

                  (1) the principal amount (or accreted value, if applicable) of
         such Permitted Refinancing Indebtedness does not exceed the principal
         amount (or accreted value, if applicable) of the Indebtedness extended,
         refinanced, renewed, replaced, defeased or refunded (plus all accrued
         interest on the Indebtedness and the amount of all expenses, costs and
         fees and premiums incurred in connection therewith);

                                       25

<PAGE>

                  (2) except for Permitted PEDFA Bond Indebtedness, such
         Permitted Refinancing Indebtedness has a final maturity date later than
         the final maturity date of, and has a Weighted Average Life to Maturity
         equal to or greater than the Weighted Average Life to Maturity of, the
         Indebtedness being extended, refinanced, renewed, replaced, defeased or
         refunded;

                  (3) if the Indebtedness being extended, refinanced, renewed,
         replaced, defeased or refunded is subordinated in right of payment to
         the Notes, such Permitted Refinancing Indebtedness is subordinated in
         right of payment to, the Notes on terms at least as favorable to the
         Holders of Notes as those contained in the documentation governing the
         Indebtedness being extended, refinanced, renewed, replaced, defeased or
         refunded, as reasonably determined by the Company or such Restricted
         Subsidiary;

                  (4) such Indebtedness is incurred either by the Company or by
         the Restricted Subsidiary who is the obligor on the Indebtedness being
         extended, refinanced, renewed, replaced, defeased or refunded, except
         that Permitted PEDFA Bond Indebtedness may be (A) incurred by the
         Company and/or guaranteed by the Company if the assets of the Seward
         Subsidiary (other than Investments in the Company pledged to secure
         such Permitted PEDFA Bond Indebtedness and proceeds from the issuance
         of Permitted PEDFA Bond Indebtedness that secures Permitted PEDFA Bond
         Indebtedness) remain free of all Liens securing Indebtedness, except
         Liens held by the Collateral Trustee as security for Secured
         Obligations or (B) guaranteed by the Company on an unsecured basis if
         such Indebtedness is otherwise Non-Recourse to the Company and its
         other Restricted Subsidiaries (other than the Seward Subsidiary ) and
         is secured solely by Liens on the assets of the Seward Subsidiary
         and/or the Equity Interests of the Seward Subsidiary ; provided,
         further, that in the case of Indebtedness of an Excluded Orion Power
         Subsidiary that is being refinanced, replaced or refunded, such
         Indebtedness may be incurred at another Excluded Orion Power Subsidiary
         or at Orion Power Holdings, Inc; and

                  (5) if incurred by the Company, such Indebtedness may be
         guaranteed by the Guarantors.

          "Permitted Separate Liens" means Liens that are granted or maintained
by the Company and the Restricted Subsidiaries upon Excluded Property as
security for Obligations under Credit Facilities; provided that Permitted
Separate Liens on Excluded Securities are limited as follows:

                  (1) Liens that are attached to any Excluded Securities on the
         Issue Date and were granted by the Security Documents to secure
         Indebtedness outstanding or committed under the Credit Agreement on the
         Issue Date and Obligations in respect thereof may be maintained and, at
         the option of the Company, may also secure Obligations under other
         Credit Facilities constituting Parity Secured Debt;

                  (2) Liens attaching to other Excluded Securities issued by a
         Restricted Subsidiary that is a Guarantor may be granted and maintained
         to secure only Credit Agreement Obligations and, at the option of the
         Company, Obligations under other Credit Facilities constituting Parity
         Secured Debt; and

                  (3) Liens attaching to Excluded Securities issued by an
         Unrestricted Subsidiary may be granted and maintained to secure any
         Indebtedness of such Unrestricted Subsidiary.

         "Purchase Money Note" means a promissory note of a Securitization
Entity evidencing amounts owed to the Company or any Restricted Subsidiary of
the Company in connection with a Qualified Securitization Transaction to a
Securitization Entity, which note shall be repaid from cash available to the

                                       26

<PAGE>

Securitization Entity other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest and
principal and amounts paid in connection with the purchase of newly generated
receivables or newly acquired equipment.

         "Qualified Securitization Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to:

                  (1) a Securitization Entity (in the case of a transfer by the
         Company or any of its Restricted Subsidiaries); and

                  (2) any other Person (in the case of a transfer by a
         Securitization Entity), or may grant a security interest in any
         accounts receivable or equipment (whether now existing or arising or
         acquired in the future) of the Company or any of its Restricted
         Subsidiaries, and any assets related thereto, including, without
         limitation, all collateral securing such accounts receivable and
         equipment, all contracts and contract rights and all guarantees or
         other obligations in respect of such accounts receivable and equipment,
         proceeds of such accounts receivable and equipment and other assets
         (including contract rights) which are customarily transferred or in
         respect of which security interests are customarily granted in
         connection with asset securitization transactions involving accounts
         receivable and equipment.

         "REMA" means Reliant Energy Mid-Atlantic Power Holdings, LLC.

         "REMA Lease" means, collectively, the obligations of REMA as facility
lessee under the Facility Lease Agreements, each dated as of August 24, 2000 and
each between REMA and, respectively, Conemaugh Lessor Genco, LLC, Keystone
Lessor Genco, LLC, and Shawville Lessor Genco, LLC, and under the related
participation agreements and other documents executed in connection therewith,
in each case, as amended through the Issue Date.

         "Required Lenders" means, at any time in respect of any action or
matter, (1) the number or percentage of holders of Credit Agreement Obligations
whose consent is required under the Credit Agreement to take such action or bind
the holders of Credit Agreement Obligations to such matter or (2) the Credit
Agreement Agent acting upon authorization under the Credit Agreement or under
the authorization or consent of the number or percentage of holders referred to
in clause (1).

         "Required Secured Debtholders" means, at any time, the holders of a
majority in aggregate outstanding principal amount of all Secured Debt then
outstanding and unfunded letters of credit or credit commitments which, if
funded, would constitute outstanding Secured Debt, voting together as a single
class. For this purpose only, Secured Debt registered in the name of, or
beneficially owned by, the Company or any of its Subsidiaries shall be deemed
not to be outstanding.

          "Restricted Investment" means an Investment other than a Permitted
Investment.

         "Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.

         "S&P" means Standard & Poor's Ratings Group.

         "Secured Debt" means the Parity Secured Debt.

                                       27

<PAGE>

         "Secured Debt Documents" means, collectively, the Credit Agreement
Documents, the Note Documents and the indenture, agreement and other documents
governing each other Series of Secured Debt and all agreements binding on any
Obligor related thereto.

         "Secured Debt Representative" means:

                  (1) in the case of the Notes, the Trustee;

                  (2) in the case of the Existing Notes, the applicable trustee;

                  (3) in the case of Credit Agreement Debt, the Credit Agreement
         Agent;

                  (4) in the case of any other Series of Secured Debt, the
         trustee, agent or representative of the holders of such Series of
         Secured Debt who maintains, or on whose behalf is maintained, the
         transfer register for or who acts as administrative agent for such
         Series of Secured Debt and is appointed as Secured Debt Representative
         (for purposes related to the administration of the Security Documents)
         pursuant to the indenture or agreement governing such Series of Secured
         Debt; or

                  (5) in the case of the Seward Guarantees, the trustees under
         the indentures governing the Seward Notes.

         "Secured Obligations" means the Parity Secured Obligations.

          "Securitization Entity" means RE Retail Receivables, LLC, and any
Person in which the Company or any Restricted Subsidiary of the Company makes an
Investment and to which the Company or any Restricted Subsidiary of the Company
transfers accounts receivable or equipment (and related assets, including
contract rights) which engages in no activities other than in connection with
the financing, sale, or purchase of accounts receivable or equipment or related
assets (including contract rights) and which is designated by the Board of
Directors of the Company (as provided below) as a Securitization Entity:

                  (1) no portion of the Indebtedness or any other Obligations
         (contingent or otherwise) of which:

                           (a) is guaranteed by the Company or any Restricted
                  Subsidiary of the Company (excluding guarantees of Obligations
                  (other than the principal of, and interest on, Indebtedness))
                  pursuant to Standard Securitization Undertakings;

                           (b) is recourse to or obligates the Company or any
                  Restricted Subsidiary of the Company in any way other than
                  pursuant to Standard Securitization Undertakings; or

                           (c) subjects any property or asset of the Company or
                  any Restricted Subsidiary of the Company, directly or
                  indirectly, contingently or otherwise, to the satisfaction
                  thereof, other than pursuant to Standard Securitization
                  Undertakings;

                  (2) with which neither the Company nor any Restricted
         Subsidiary of the Company has any material contract, agreement,
         arrangement or understanding (except in connection with a Purchase
         Money Note or Qualified Securitization Transaction) other than on terms
         no less favorable to the Company or such Restricted Subsidiary than
         those that might be obtained at the time from Persons that are not
         Affiliates of the Company, as determined by the Company, other

                                       28

<PAGE>

         than amounts payable in the ordinary course of business in connection
         with servicing receivables and other assets of such entity; and

                  (3) to which neither the Company nor any Restricted Subsidiary
         of the Company has any obligation to maintain or preserve such entity's
         financial condition or cause such entity to achieve certain levels of
         operating results.

         Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution of the Company giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
foregoing conditions.

         "Security Documents" means the Collateral Trust Agreement, and all
security agreements, pledge agreements, control agreements, collateral
assignments, mortgages, deed of trust or other grants or transfers for security
or agreements related thereto executed and delivered by the Company or any
Guarantor creating (or purporting to create) a Lien upon Collateral in favor of
the Collateral Trustee to secure Secured Obligations, in each case, as amended,
modified, renewed, restated or replaced, in whole or in part, from time to time.

         "Separate Cash Deposits" means cash collateral deposits required by the
Credit Agreement to secure letter of credit exposure after default or to provide
for mandatory prepayments after outstanding loans are repaid.

         "Separate Collateral" means Capital Stock of Subsidiaries and
intercompany notes that satisfy the requirements of the defined term "Excluded
Securities."

         "Series of Secured Debt" means, severally, the Notes, the Existing 2010
Notes, the Existing 2013 Notes, the Seward Guarantees, the Credit Agreement Debt
and each other issue or series of Parity Secured Debt.

         "Seward Facility" means the 520 MW coal facility and related assets
owned by the Seward Subsidiary, or its successors, and located, or to be
located, in New Florence, Indiana County, Pennsylvania.

         "Seward Guarantees" means, collectively, the Seward Note Parent
Guarantees and the Seward Note Subsidiary Guarantees.

         "Seward Note Parent Guarantees" means the guarantee of the Seward Notes
by the Company.

         "Seward Note Subsidiary Guarantees" means the guarantee of the Seward
Note Parent Guarantees by the Guarantors.

         "Seward Notes" means up to $500.0 million in aggregate principal amount
of Permitted PEDFA Bond Indebtedness resulting from (1) the conversion to
long-term interest rate mode and reoffering on December 22, 2004 of up to $400.0
million in aggregate principal amount of Seward Tax-Exempt Bonds or (2) the
issuance on December 22, 2004 of $100.0 million in aggregate principal amount of
Seward Series 2004A Bonds.

         "Seward Series 2004A Bonds" means the Pennsylvania Economic Development
Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC
Project), Series 2004A.

                                       29

<PAGE>

         "Seward Subsidiary" means Reliant Energy Seward, LLC, a Delaware
limited liability company.

         "Seward Tax-Exempt Bonds" means (1) the Pennsylvania Economic
Development Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy
Seward, LLC Project), Series 2001A, in the original aggregate principal amount
of $150,000,000, (2) the Pennsylvania Economic Development Financing Authority
Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC Project), Series
2002A, in the original aggregate principal amount of $75,000,000, (3) the
Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue
Bonds (Reliant Energy Seward, LLC Project), Series 2002B, in the original
aggregate principal amount of $75,000,000, (4) the Pennsylvania Economic
Development Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy
Seward, LLC Project), Series 2003A, in the original aggregate principal amount
of $100,000,000 and (5) any bonds issued by PEDFA on or after the Issue Date as
permitted under the Credit Agreement as in effect on the Issue Date and
supported by letters of credit outstanding under the Credit Agreement.

         "Sharing Eligible Debt" means:

                  (1) Indebtedness incurred pursuant to clause (1) of the
         definition of Permitted Debt;

                  (2) Indebtedness incurred under clause (21) of the definition
         of Permitted Debt;

                  (3) the Existing Notes and the Notes issued on the Issue Date;

                  (4) Permitted Refinancing Indebtedness incurred by the Company
         or, if it constitutes Permitted PEDFA Bond Indebtedness, Indebtedness
         incurred by the Company and/or the Seward Subsidiary and/or guaranteed
         by the Company and/or the Guarantors, the net proceeds of which are
         used to refinance, extend, renew, replace, defease or refund
         Indebtedness evidenced by or in support of the Seward Tax-Exempt Bonds;
         provided, that, in the case of Permitted PEDFA Bond Indebtedness, the
         assets of the Seward Subsidiary (other than Investments in the Company
         pledged to secure such Permitted PEDFA Bond Indebtedness and proceeds
         from the issuance of Permitted PEDFA Bond Indebtedness that secures
         Permitted PEDFA Bond Indebtedness) shall remain free of all Liens
         securing Indebtedness, except Permitted Prior Liens and Liens held by
         the Collateral Trustee as security for the Parity Secured Debt;

                  (5) [Reserved];

                  (6) [Reserved];

                  (7) Permitted Refinancing Indebtedness, the net proceeds of
         which are used to refinance Parity Secured Debt; and

                  (8) any other Indebtedness incurred by the Company if (A) when
         it was incurred, the incurrence of such Indebtedness by the Company was
         permitted by this Supplemental Indenture and (B) on the day such
         Indebtedness was incurred, after giving effect to such incurrence and
         the application of the proceeds from, and the creation of Liens to
         secure, such Indebtedness, the Consolidated Senior Leverage Ratio was
         not greater than 3.0 to 1.0;

         provided that each category of Indebtedness described above:

                  (1) must be guaranteed by any of the Restricted Subsidiaries
         that, on the date of incurrence of such Indebtedness, is obligated as a
         Guarantor under a Note Guarantee of the Notes;

                                       30

<PAGE>

                  (2) must not be subordinated in right of payment or in respect
         of the application of the proceeds of the Collateral Trustee's Liens on
         the Collateral to any other Indebtedness of the Company or any
         Guarantor (whether or not such other Indebtedness is part of the same
         series of Indebtedness), except in accordance with the Order of
         Application; and

                  (3) is governed by an indenture or agreement that appoints a
         Secured Debt Representative and includes an Intercreditor Confirmation.

          "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation was in effect on
July 1, 2003; provided that clause (3) of such definition will be disregarded.

          "Specified Junior Securities" means subordinated debt securities
issued by the Company that:

                  (1) are subordinated in right of payment in full to the Notes;

                  (2) have a final maturity date occurring at least 91 days
         after the final maturity date of the Notes and have a Weighted Average
         Life to Maturity at least 91 days longer than the Weighted Average Life
         to Maturity of the Notes;

                  (3) are not guaranteed by any Subsidiary of the Company except
         for any guarantee by a Guarantor that is contractually subordinated in
         right of payment to the prior payment in full in cash to the Note
         Guarantees of the Notes; and

                  (4) are not convertible into any other securities except
         Equity Interests of the Company (other than Disqualified Stock).

          "Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company, which are substantially similar to those in existence
on the Issue Date or are otherwise reasonably customary in an accounts
receivable or equipment securitization transaction, in each case, as determined
by the Company.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the Issue Date, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

          "Supplemental Indenture" means this First Supplemental Indenture,
dated as of the Issue Date, by and among the Company, the Guarantors and the
Trustee, governing the Notes, as amended, supplemented or otherwise modified
from time to time in accordance with the Base Indenture and the terms hereof.

          "Texas Genco" means Texas Genco Holdings, Inc., a Texas corporation
and a 100% owner of Texas Genco, LP, a Texas limited partnership.

         "Texas Genco Intercreditor Agreement" means the Intercreditor Agreement
dated as of July 1, 2003 among Texas Genco, L.P., Bank of America, N.A. and the
Collateral Trustee.

         "Unrestricted Subsidiary" means (i) RE Retail Receivables, LLC, but
only to the extent that it continues to be a Securitization Entity, and (ii) any
Subsidiary of the Company or any successor to any of

                                       31

<PAGE>

them that is designated by the Board of Directors of the Company as an
Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent
that such Subsidiary:

                  (1) has no Indebtedness other than Indebtedness that is
         Non-Recourse to the Company and its Restricted Subsidiaries;

                  (2) is not party to any agreement, contract, arrangement or
         understanding with the Company or any Restricted Subsidiary of the
         Company unless the terms of any such agreement, contract, arrangement
         or understanding are no less favorable to the Company or such
         Restricted Subsidiary than those that might be obtained at the time
         from Persons who are not Affiliates of the Company; and

                  (3) is a Person with respect to which neither the Company nor
         any of its Restricted Subsidiaries has any direct or indirect
         obligation (A) to subscribe for additional Equity Interests or (B) to
         maintain or preserve such Person's financial condition or to cause such
         Person to achieve any specified levels of operating results.

         Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officer's Certificate certifying that such designation complied with the
preceding conditions and was permitted by the provisions of Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Supplemental Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under the provisions of Section 4.09
hereof, the Company shall be in default of such Section. The Board of Directors
of the Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (1) such Indebtedness is permitted to be incurred
under the provisions of Section 4.09 hereof, calculated on a pro forma basis as
if such designation had occurred at the beginning of the four-quarter reference
period; and (2) no Default or Event of Default would be in existence following
such designation.

         "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

                  (1) the sum of the products obtained by multiplying (A) the
         amount of each then remaining installment, sinking fund, serial
         maturity or other required payments of principal, including payment at
         final maturity, in respect of the Indebtedness, by (B) the number of
         years (calculated to the nearest one-twelfth) that will elapse between
         such date and the making of such payment; by

                  (2) the then outstanding principal amount of such
         Indebtedness.

Section 1.02 Other Definitions.

                                       32

<PAGE>

<TABLE>
<CAPTION>
                                                                                        Defined in
Term                                                                                      Section
----                                                                                      -------
<S>                                                                                     <C>
"Affiliate Transaction".............................................................       4.11
"Asset Sale Offer"..................................................................       4.10
"Change of Control Offer"...........................................................       4.15
"Change of Control Payment".........................................................       4.15
"Change of Control Payment Date"....................................................       4.15
"Covenant Defeasance"...............................................................       8.03
"Event of Default"..................................................................       6.01
"Excess Proceeds"...................................................................       4.10
"incur".............................................................................       4.09
"Indemnitee"........................................................................      10.07
"Legal Defeasance"..................................................................       8.02
"Offer Amount"......................................................................       3.09
"Offer Period"......................................................................       3.09
"Permitted Debt"....................................................................       4.09
"Purchase Date".....................................................................       3.09
"Restricted Payments"...............................................................       4.07
"Shared Collateral".................................................................      10.02
"Termination Date"..................................................................       4.23
</TABLE>

Section 1.03. Incorporation by Reference of Trust Indenture Act.

         Whenever this Supplemental Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this
Supplemental Indenture.

         The following TIA terms used in this Supplemental Indenture have the
following meanings:

         "indenture securities" means the Notes;

         "indenture security Holder" means a Holder of a Note;

         "indenture trustee" or "institutional trustee" means the Trustee; and

         "obligor" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.

         All other terms used in this Supplemental Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA have the meanings so assigned to them. All other capitalized terms
used herein and not otherwise defined shall have the meanings provided in the
Base Indenture.

Section 1.04 Rules of Construction.

         Unless the context otherwise requires:

                  (1) a term has the meaning assigned to it;

                  (2) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                  (3) "or" is not exclusive;

                                       33

<PAGE>

                  (4) words in the singular include the plural, and in the
         plural include the singular;

                  (5) "will" shall be interpreted to express a command;

                  (6) provisions apply to successive events and transactions;

                  (7) references to sections of or rules under the Securities
         Act will be deemed to include substitute, replacement of successor
         sections or rules adopted by the SEC from time to time; and

                  (8) references to sections of the Indenture refer to sections
         of this Supplemental Indenture.

Section 1.05 Relationship with Base Indenture.

         The terms and provisions contained in the Base Indenture shall
constitute, and are hereby expressly made, a part of this Supplemental Indenture
and the Company, the Guarantors and the Trustee, by their execution and delivery
of this Supplemental Indenture, expressly agree to such terms and provisions and
to be bound thereby. However, to the extent any provision of the Base Indenture
conflicts with the express provisions of this Supplemental Indenture, the
provisions of this Supplemental Indenture shall govern and be controlling.

         The Trustee accepts the amendment of the Base Indenture effected by
this Supplemental Indenture and agrees to execute the trust created by the Base
Indenture as hereby amended, but only upon the terms and conditions set forth in
the Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee in the performance of the trust
created by the Base Indenture, and without limiting the generality of the
foregoing, the Trustee shall not be responsible in any manner whatsoever for or
with respect to any of the recitals or statements contained herein, all of which
recitals or statements are made solely by the Company and the Guarantors, or for
or with respect to (1) the validity or sufficiency of this Supplemental
Indenture or any of the terms or provisions hereof, (2) the proper authorization
hereof by the Company and the Guarantors, (3) the due execution hereof by the
Company and the Guarantors or (4) the consequences (direct or indirect and
whether deliberate or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.

                                   ARTICLE 2.
                                    THE NOTES

Section 2.01 Form and Dating.

         (a) General. The Notes shall be issued in registered global form
without interest coupons. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. The Company shall furnish any such notations, legends or endorsements
to the Trustee in writing. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $2,000 and integral
multiples of $1,000 in excess of $2,000.

         The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of the Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Supplemental
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of the Base Indenture, the provisions of the Note shall govern and be
controlling and to the extent any provision of

                                       34

<PAGE>

the Note conflicts with the express provisions of this Supplemental Indenture,
the provisions of this Supplemental Indenture shall govern and be controlling.

         (b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend
thereon). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon). Each
Global Note shall represent such of the outstanding Notes as will be specified
therein and each shall provide that it represents the aggregate principal amount
of outstanding Notes from time to time as reflected in the records of the
Trustee and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. The Trustee's records shall be noted to
reflect the amount of any increase or decrease in the aggregate principal amount
of outstanding Notes represented thereby, in accordance with instructions given
by the Holder thereof as required by Section 2.06 hereof.

Section 2.02 Execution and Authentication.

         One Officer must sign the Notes for the Company by manual or facsimile
signature.

         If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note will nevertheless be valid.

         A Note will not be valid until authenticated by the manual signature of
the Trustee. The signature will be conclusive evidence that the Note has been
authenticated under this Supplemental Indenture.

         The Trustee shall, upon receipt of a Company Order, authenticate Notes
for original issue under this Supplemental Indenture, including any Additional
Notes issued pursuant to Section 2.13 hereof. The aggregate principal amount of
Notes outstanding at any time may not exceed the aggregate principal amount of
Notes authorized for issuance by the Company pursuant to one or more Company
Orders, except as provided in Section 306 of the Base Indenture.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Supplemental Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders, the
Company or an Affiliate of the Company.

Section 2.03 Reserved.

Section 2.04 Reserved.

Section 2.05 Holder Lists.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Securities Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders and the Company shall otherwise comply with TIA Section 312(a).

Section 2.06 Transfer and Exchange.

                                       35

<PAGE>

         (a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes shall be exchanged
by the Company for Definitive Notes if:

                  (1) the Company delivers to the Trustee notice from the
         Depositary that it is unwilling or unable to continue to act as
         Depositary or that it is no longer a clearing agency registered under
         the Exchange Act and, in either case, a successor Depositary is not
         appointed by the Company within 120 days after the date of such notice
         from the Depositary;

                  (2) the Company in its sole discretion determines that the
         Global Notes (in whole but not in part) should be exchanged for
         Definitive Notes and delivers a written notice to such effect to the
         Trustee; or

                  (3) there has occurred and is continuing a Default or Event of
         Default with respect to the Notes.

         Upon the occurrence of any of the preceding events in (1), (2) or (3)
above, Definitive Notes shall be issued in such names and in any approved
denominations as the Depositary shall instruct the Trustee. Global Notes also
may be exchanged or replaced, in whole or in part, as provided in Sections 304
and 306 of the Base Indenture. Every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 hereof or Section 304 or 306 of the Base Indenture, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) and (d) hereof.

         (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Supplemental Indenture and the Applicable Procedures. Transfers of beneficial
interests in the Global Notes also will require compliance with either
subparagraph (1) or (2) below, as applicable, as well as one or more of the
other following subparagraphs, as applicable:

                  (1) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Global Note may be transferred to Persons
         who take delivery thereof in the form of a beneficial interest in a
         Global Note. No written orders or instructions shall be required to be
         delivered to the Securities Registrar to effect the transfers described
         in this Section 2.06(b)(1).

                  (2) All Other Transfers and Exchanges of Beneficial Interests
         in Global Notes. In connection with all transfers and exchanges of
         beneficial interests that are not subject to Section 2.06(b)(1) above,
         the transferor of such beneficial interest must deliver to the
         Securities Registrar both:

                           (A) a written order from a Participant or an Indirect
                  Participant given to the Depositary in accordance with the
                  Applicable Procedures directing the Depositary to credit or
                  cause to be credited a beneficial interest in another Global
                  Note in an amount equal to the beneficial interest to be
                  transferred or exchanged; and

                           (B) instructions given in accordance with the
                  Applicable Procedures containing information regarding the
                  Participant account to be credited with such increase.

                                       36

<PAGE>

                  Upon satisfaction of all of the requirements for transfer or
         exchange of beneficial interests in Global Notes contained in this
         Supplemental Indenture and the Notes or otherwise applicable under the
         Securities Act, the Trustee shall adjust the principal amount of the
         relevant Global Note(s) pursuant to Section 2.06(g) hereof.

         (c) Transfer or Exchange of Beneficial Interests in Global Notes for
Definitive Notes.

                  (1) If any holder of a beneficial interest in a Global Note
         proposes to exchange such beneficial interest for a Definitive Note or
         to transfer such beneficial interest to a Person who takes delivery
         thereof in the form of a Definitive Note, then, upon satisfaction of
         the conditions set forth in Section 2.06(b)(2) hereof, the Trustee
         shall cause the aggregate principal amount of the applicable Global
         Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and
         the Company shall execute and the Trustee shall authenticate and
         deliver to the Person designated in the instructions a Definitive Note
         in the appropriate principal amount. Any Definitive Note issued in
         exchange for a beneficial interest pursuant to this Section 2.06(c)(1)
         shall be registered in such name or names and in such authorized
         denomination or denominations as the holder of such beneficial interest
         requests through instructions to the Securities Registrar from or
         through the Depositary and the Participant or Indirect Participant. The
         Trustee shall deliver such Definitive Notes to the Persons in whose
         names such Notes are so registered.

         (d) Transfer and Exchange of Definitive Notes for Beneficial Interests
in Global Notes.

                  A Holder of a Definitive Note may exchange such Note for a
         beneficial interest in a Global Note or transfer such Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the Trustee shall cancel the applicable
         Definitive Note and increase or cause to be increased the aggregate
         principal amount of one of the Global Notes.

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to the previous paragraph at a
         time when a Global Note has not yet been issued, the Company shall
         issue and, upon receipt of an Authentication Order in accordance with
         Section 2.02 hereof, the Trustee shall authenticate one or more Global
         Notes in an aggregate principal amount equal to the principal amount of
         Definitive Notes so transferred.

                  A Holder of Definitive Notes may transfer such Notes to a
         Person who takes delivery thereof in the form of a Definitive Note.

         (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Securities Registrar shall register
the transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder must present or surrender to the
Securities Registrar the Definitive Notes duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Securities Registrar
duly executed by such Holder or by its attorney, duly authorized in writing. In
addition, the requesting Holder must provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).

         (f) Legends. A legend in substantially the following form will appear
on the face of all Global Notes issued under this Supplemental Indenture unless
specifically stated otherwise in the applicable provisions of this Supplemental
Indenture.

                                       37

<PAGE>

 "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE SUPPLEMENTAL
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.06 OF THE SUPPLEMENTAL INDENTURE, (2) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE SUPPLEMENTAL INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO
THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 3.09 OF THE BASE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF RELIANT ENERGY, INC.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

         (g) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 309 of the Base
Indenture. At any time prior to such cancellation, if any beneficial interest in
a Global Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
will be reduced accordingly and a notation will be made on the records
maintained by the Trustee or by the Depositary at the direction of the Trustee
to reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note will be
increased accordingly and a notation will be made on the records maintained by
the Trustee or by the Depositary at the direction of the Trustee to reflect such
increase.

         (h) General Provisions Relating to Transfers and Exchanges.

                  (1) To permit registrations of transfers and exchanges, the
         Company shall execute and the Trustee shall authenticate Global Notes
         and Definitive Notes upon receipt of an Authentication Order in
         accordance with Section 2.02 or at the Securities Registrar's request.

                  (2) No service charge shall be made to a Holder of a Global
         Note or to a Holder of a Definitive Note for any registration of
         transfer or exchange, but the Company may require payment of a sum
         sufficient to cover any transfer tax or similar governmental charge
         payable in

                                       38

<PAGE>

         connection therewith (other than any such transfer taxes or similar
         governmental charge payable upon exchange or transfer pursuant to
         Sections 3.06, 3.09, 4.10, 4.15 and 9.05 hereof and Section 304 of the
         Base Indenture).

                  (3) The Securities Registrar shall not be required to register
         the transfer of or exchange any Note selected for redemption in whole
         or in part, except the unredeemed portion of any Note being redeemed in
         part.

                  (4) All Global Notes and Definitive Notes issued upon any
         registration of transfer or exchange of Global Notes or Definitive
         Notes shall be the valid obligations of the Company, evidencing the
         same debt, and entitled to the same benefits under this Supplemental
         Indenture, as the Global Notes or Definitive Notes surrendered upon
         such registration of transfer or exchange.

                  (5) The Company shall not be required:

                           (A) to issue, to register the transfer of or to
                  exchange any Notes during a period beginning at the opening of
                  business 15 days before the day of any selection of Notes for
                  redemption under Section 3.02 hereof and ending at the close
                  of business on the day of selection;

                           (B) to register the transfer of or to exchange any
                  Note selected for redemption in whole or in part, except the
                  unredeemed portion of any Note being redeemed in part; or

                           (C) to register the transfer of or to exchange a Note
                  between a record date and the next succeeding interest payment
                  date.

                  (6) Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of and interest on such Notes and for all other purposes, and
         none of the Trustee, any Agent or the Company shall be affected by
         notice to the contrary.

                  (7) The Trustee shall authenticate Global Notes and Definitive
         Notes in accordance with the provisions of Section 2.02 hereof.

                  (8) All certifications, certificates and Opinions of Counsel
         required to be submitted to the Securities Registrar pursuant to this
         Section 2.06 to effect a registration of transfer or exchange may be
         submitted by facsimile.

Section 2.07 Reserved.

Section 2.08 Reserved.

Section 2.09 Reserved.

Section 2.10 Reserved.

Section 2.11 Reserved.

Section 2.12 Reserved.

                                       39

<PAGE>

Section 2.13 Issuance of Additional Notes.

         The Company shall be entitled, upon delivery of an Officer's
Certificate, Opinion of Counsel and Company Order, subject to its compliance
with Sections 4.09 and 4.12 hereof, to issue Additional Notes under this
Supplemental Indenture which shall have identical terms as the Initial Notes
issued on the Issue Date, other than with respect to the date of issuance and
issue price. The Initial Notes issued on the Issue Date and any Additional Notes
issued shall be treated as a single class for all purposes under this
Supplemental Indenture.

         With respect to any Additional Notes, the Company shall set forth in a
resolution of its Board of Directors and an Officer's Certificate, a copy of
each which shall be delivered to the Trustee, the following information:

                  (a) the aggregate principal amount of such Additional Notes to
         be authenticated and delivered pursuant to this Supplemental Indenture;
         and

                  (b) the issue price, the issue date and the CUSIP number of
         such Additional Notes.

Section 2.14 Designated Senior Debt.

         For purposes of the Existing Convertible Notes Indenture, Notes issued
under this Supplemental Indenture will be deemed to be "Designated Senior Debt,"
as such term is defined in the Existing Convertible Notes Indenture.

Section 2.15 Reserved.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

         If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at
least 30 days (45 days in the case of a partial redemption) but not more than 60
days before a redemption date, an Officer's Certificate setting forth:

                  (1) the clause of this Supplemental Indenture pursuant to
         which the redemption shall occur;

                  (2) the redemption date;

                  (3) the principal amount of Notes to be redeemed; and

                  (4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

         If less than all of the Notes are to be redeemed at any time, the
Trustee shall select Notes for redemption or purchase on a pro rata basis among
all outstanding Notes or, if the Notes are listed on any national securities
exchange, in compliance with the requirements of the principal national
securities exchange on which the Notes are listed.

                                       40

<PAGE>

         In the event of partial redemption by lot, the particular Notes to be
redeemed or purchased shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption by the Trustee from
the outstanding Notes not previously called for redemption.

         The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $2,000 or whole multiples of $1,000 in
excess of $2,000; except that if all of the Notes of a Holder are to be
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Supplemental Indenture that apply to Notes called
for redemption also apply to portions of Notes called for redemption.

Section 3.03 Notice of Redemption.

         At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the
Notes or a satisfaction and discharge of this Supplemental Indenture pursuant to
Article 8 or 13 of this Supplemental Indenture.

         The notice will identify the Notes to be redeemed and will state:

                  (1) the redemption date;

                  (2) the redemption price;

                  (3) if any Note is being redeemed in part, the portion of the
         principal amount of such Note to be redeemed and that, after the
         redemption date upon surrender of such Note, a new Note or Notes in
         principal amount equal to the unredeemed portion will be issued upon
         cancellation of the original Note;

                  (4) the name and address of the Paying Agent;

                  (5) that Notes called for redemption must be surrendered to
         the Paying Agent to collect the redemption price;

                  (6) that, unless the Company defaults in making such
         redemption payment, interest on Notes called for redemption ceases to
         accrue on and after the redemption date;

                  (7) the paragraph of the Notes and/or Section of this
         Supplemental Indenture pursuant to which the Notes called for
         redemption are being redeemed; and

                  (8) that no representation is made as to the correctness or
         accuracy of the CUSIP number, if any, listed in such notice or printed
         on the Notes.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company has delivered to the Trustee, at least 45 days prior to the redemption
date, an Officer's Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.

Section 3.04 Effect of Notice of Redemption.

                                       41

<PAGE>

         Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.

Section 3.05 Deposit of Redemption or Purchase Price.

         One Business Day prior to the redemption or Purchase Date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption or purchase price of, accrued interest, and premium, if any, on
all Notes to be redeemed or purchased on that date. Promptly after the Company's
written request, the Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption or purchase price of,
accrued interest, and premium, if any, on, all Notes to be redeemed or
purchased.

         If the Company complies with the provisions of the preceding paragraph,
on and after the redemption or Purchase Date, interest will cease to accrue on
the Notes or the portions of Notes called for redemption or purchase. If a Note
is redeemed or purchased on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is
not so paid upon surrender for redemption or purchase because of the failure of
the Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption or purchase date until such principal
is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

         Upon surrender of a Note that is redeemed or purchased in part, the
Company shall issue and, upon receipt of an Company Order, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed or unpurchased portion of the Note
surrendered.

Section 3.07 Optional Redemption.

         (a) At any time prior to December 15, 2007, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Notes
issued under this Supplemental Indenture at a redemption price of 106.750% of
the principal amount, plus accrued and unpaid interest to the redemption date,
with the net cash proceeds of one or more Equity Offerings of the Company;
provided that:

                  (1) at least 65% of the aggregate principal amount of Notes
         issued under this Supplemental Indenture remains outstanding
         immediately after the occurrence of such redemption (excluding Notes
         held by the Company and its Subsidiaries); and

                  (2) the redemption occurs within 75 days of the date of the
         closing of such Equity Offering.

         (b) Except pursuant to the preceding paragraph, the Notes are not
redeemable at the Company's option prior to December 15, 2009.

                                       42

<PAGE>

         (c) On or after December 15, 2009, the Company may redeem all or a part
of the Notes upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest on the Notes redeemed, to the applicable
redemption date, if redeemed during the twelve-month period beginning on
December 15 of the years indicated below, subject to the rights of Holders on
the relevant record date to receive interest on the relevant interest payment
date:

<TABLE>
<CAPTION>
Year                                                                                  Percentage
----                                                                                  ----------
<S>                                                                                   <C>
2009.............................................................................       103.375%
2010.............................................................................       102.250%
2011.............................................................................       101.125%
2012 and thereafter..............................................................       100.000%
</TABLE>

         (d) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

         The Company is not required to make mandatory redemption or sinking
fund payments with respect to the Notes.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

         In the event that, pursuant to Section 4.10 hereof, the Company is
required to commence an Asset Sale Offer, it shall follow the procedures
specified below.

         The Asset Sale Offer shall be made to all Holders of Notes and all
holders of other Parity Secured Debt (other than Credit Agreement Debt)
containing provisions similar to those set forth in this Supplemental Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets. The Asset Sale Offer shall remain open for a period of at least 20
Business Days following its commencement and not more than 30 Business Days,
except to the extent that a longer period is required by applicable law (the
"Offer Period"). No later than three Business Days after the termination of the
Offer Period (the "Purchase Date"), the Company shall apply a portion of the
Excess Proceeds as calculated pursuant to the second sentence of Section 4.10(d)
hereof (the "Offer Amount") to the purchase of Notes and such other Parity
Secured Debt (on a pro rata basis, if applicable) or, if less than the Offer
Amount has been tendered, all Notes and other Indebtedness tendered in response
to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the
same manner as interest payments are made.

         If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.

         Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders. The notice
will contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the
terms of the Asset Sale Offer, will state:

                  (1) that the Asset Sale Offer is being made pursuant to this
         Section 3.09 and Section 4.10 hereof and the length of time the Asset
         Sale Offer will remain open;

                                       43

<PAGE>

                  (2) the Offer Amount, the purchase price and the Purchase
         Date;

                  (3) that any Note not tendered or accepted for payment will
         continue to accrue interest;

                  (4) that, unless the Company defaults in making such payment,
         any Note accepted for payment pursuant to the Asset Sale Offer shall
         cease to accrue interest after the Purchase Date;

                  (5) that Holders electing to have a Note purchased pursuant to
         an Asset Sale Offer may elect to have Notes purchased in denominations
         of $2,000, or integral multiples of $1,000 in excess of $2,000;

                  (6) that Holders electing to have a Note purchased pursuant to
         any Asset Sale Offer shall be required to surrender the Note, with the
         form entitled "Option of Holder to Elect Purchase" on the reverse of
         the Note completed, or transfer by book-entry transfer, to the Company,
         a Depositary, if appointed by the Company, or a Paying Agent at the
         address specified in the notice at least three days before the Purchase
         Date;

                  (7) that Holders shall be entitled to withdraw their election
         if the Company, the Depositary or the Paying Agent, as the case may be,
         receives, not later than the expiration of the Offer Period, a
         telegram, telex, facsimile transmission or letter setting forth the
         name of the Holder, the principal amount of the Note the Holder
         delivered for purchase and a statement that such Holder is withdrawing
         his election to have such Note purchased;

                  (8) that, if the aggregate principal amount of Notes and other
         Parity Secured Debt surrendered in connection with the Asset Sale Offer
         exceeds the Offer Amount, the Company shall select the Notes and other
         Parity Secured Debt to be purchased on a pro rata basis based on the
         principal amount of Notes and such other Parity Secured Debt
         surrendered (with such adjustments as may be deemed appropriate by the
         Company so that only Notes in denominations of $2,000, or integral
         multiples of $1,000 in excess of $2,000, will be purchased); and

                  (9) that Holders whose Notes were purchased only in part will
         be issued new Notes equal in principal amount to the unpurchased
         portion of the Notes surrendered (or transferred by book-entry
         transfer).

         On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officer's Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on or as soon as
practicable after the Purchase Date.

         Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                       44

<PAGE>

                                   ARTICLE 4.
                                    COVENANTS

Section 4.01 Payment of Notes.

         The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest will be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due.

         The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.

Section 4.02 Maintenance of Office or Agency.

         The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Securities Registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and the Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
fails to maintain any such required office or agency or fails to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.

         The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission will in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.

         The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 1002 of
the Base Indenture.

Section 4.03 Reports.

         (a) Whether or not required by the SEC's rules and regulations, so long
as any Notes are outstanding, the Company shall furnish to Holders, within the
time periods specified in the SEC's rules and regulations:

                  (1) all quarterly and annual reports that would be required to
         be filed with the SEC on Forms 10-Q and 10-K if the Company were
         required to file such reports; and

                  (2) all current reports that would be required to be filed
         with the SEC on Form 8-K if the Company were required to file such
         reports.

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<PAGE>

         All such reports shall be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.
Each annual report on Form 10-K will include a report on the Company's
consolidated financial statements by the Company's certified independent
accountants. In addition, the Company shall file a copy of each of the reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods specified in the rules and regulations applicable to
such reports (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
reasonable request.

         If, at any time, the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company shall
nevertheless continue filing the reports specified in clauses (1) and (2) of
this Section 4.03(a) with the SEC within the time periods specified above unless
the SEC will not accept such a filing. The Company agrees that it shall not take
any action for the purpose of causing the SEC not to accept any such filings.
If, notwithstanding the foregoing, the SEC will not accept the Company's filings
for any reason, the Company shall post the reports referred to in the preceding
paragraph on its website within the time periods that would apply if the Company
were required to file those reports with the SEC. The Company shall at all times
comply with TIA Section 314(a).

         (b) In addition, the Company and the Guarantors agree that, for so long
as any Notes remain outstanding, at any time they are not required to file the
reports required by the preceding paragraphs with the Commission, they shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.

Section 4.04 Compliance Certificate.

         (a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officer's Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under the Indenture and the Security Documents, and further stating,
as to each such Officer signing such certificate, that to the best of his or her
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in the Indenture and the Security Documents and is not in
default in the performance or observance of any of the terms, provisions and
conditions of the Indenture or the Security Documents (or, if a Default or Event
of Default has occurred, describing all such Defaults or Events of Default of
which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto. The
Company's fiscal year ends December 31st.

         (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof in so far as such provisions
relate to financial and accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

                                       46

<PAGE>

         (c) So long as any of the Notes are outstanding, the Company shall
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officer's Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

Section 4.05 Taxes.

         The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders.

Section 4.06 Stay, Extension and Usury Laws.

         The Company and each of the Guarantors covenants (to the extent that it
may lawfully do so) that they shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of the Indenture; and the
Company and each of the Guarantors (to the extent that they may lawfully do so)
hereby expressly waive all benefit or advantage of any such law, and covenant
that they shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.

Section 4.07 Restricted Payments.

         (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:

                  (1) declare or pay any dividend or make any other payment or
         distribution on account of the Company's or any of its Restricted
         Subsidiaries' Equity Interests (including, without limitation, any
         payment in connection with any merger or consolidation involving the
         Company or any of its Restricted Subsidiaries) or to the direct or
         indirect holders of the Company's or any of its Restricted
         Subsidiaries' Equity Interests in their capacity as such (other than
         dividends or distributions payable in Equity Interests (other than
         Disqualified Stock) of the Company or to the Company or a Restricted
         Subsidiary of the Company);

                  (2) purchase, redeem or otherwise acquire or retire for value
         (including, without limitation, in connection with any merger or
         consolidation involving the Company) any Equity Interests of the
         Company;

                  (3) make any payment on or with respect to, or purchase,
         redeem, defease or otherwise acquire or retire for value any
         Indebtedness of the Company or of any Guarantor that is contractually
         subordinated to the Notes or any Note Guarantee (excluding any
         intercompany Indebtedness, intercompany receivables or intercompany
         advances between or among any of the Company and any of its Restricted
         Subsidiaries and Permitted PEDFA Bond Indebtedness), except a payment
         of interest or principal at the Stated Maturity thereof; or

                  (4) make any Restricted Investment (all such payments and
         other actions set forth in these clauses (1) through (4) above being
         collectively referred to as "Restricted Payments"),

                  unless, at the time of and after giving effect to such
         Restricted Payment:

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<PAGE>

                  (1) no Default or Event of Default has occurred and is
         continuing or would occur as a consequence of such Restricted Payment;
         and

                  (2) the Company would, at the time of such Restricted Payment
         and after giving pro forma effect thereto as if such Restricted Payment
         had been made at the beginning of the applicable four-quarter period,
         have been permitted to incur at least $1.00 of additional Indebtedness
         pursuant to the Fixed Charge Coverage Ratio test set forth in Section
         4.09(a) hereof; and

                  (3) such Restricted Payment, together with the aggregate
         amount of all other Restricted Payments made by the Company and its
         Restricted Subsidiaries after July 1, 2003 (excluding Restricted
         Payments permitted by clauses (2) through (12) of paragraph (b) below),
         is less than the sum, without duplication, of:

                           (A) 50% of the Consolidated Net Income of the Company
                  for the period (taken as one accounting period) from the
                  beginning of the first full fiscal quarter since July 1, 2003
                  to the end of the Company's most recently ended fiscal quarter
                  for which internal financial statements are available at the
                  time of such Restricted Payment (or, if such Consolidated Net
                  Income for such period is a deficit, less 100% of such
                  deficit), plus

                           (B) 100% of the aggregate net cash proceeds received
                  by the Company since July 1, 2003 as a contribution to its
                  common equity capital or surplus or from the issue or sale of
                  Equity Interests of the Company (other than Disqualified
                  Stock) or from the issue or sale of convertible or
                  exchangeable Disqualified Stock or convertible or exchangeable
                  debt securities of the Company that have been converted into
                  or exchanged for such Equity Interests (other than Equity
                  Interests (or Disqualified Stock or debt securities) sold to a
                  Subsidiary of the Company), plus

                           (C) to the extent that any Restricted Investment that
                  was made after July 1, 2003 is sold for cash or otherwise
                  liquidated or repaid for cash, the lesser of (i) the cash
                  return with respect to such Restricted Investment (less the
                  cost of disposition, if any) and (ii) the initial amount of
                  such Restricted Investment, plus

                           (D) 50% of any cash received by the Company or a
                  Restricted Subsidiary of the Company after July 1, 2003 from
                  an Unrestricted Subsidiary of the Company, to the extent that
                  such cash was not otherwise included in Consolidated Net
                  Income of the Company for such period and did not result in an
                  increase in the amount available for future Permitted
                  Investments, plus

                           (E) to the extent that any Unrestricted Subsidiary of
                  the Company is redesignated as a Restricted Subsidiary after
                  July 1, 2003, the Fair Market Value of the Company's
                  Investment in such Subsidiary as of the date of such
                  redesignation.

         (b) The provisions of Section 4.07(a) hereof shall not prohibit:

                  (1) the payment of any dividend within 60 days after the date
         of declaration of the dividend, if at the date of declaration the
         dividend payment would have complied with the provisions of this
         Supplemental Indenture;

                  (2) so long as no Default has occurred and is continuing or
         would be caused thereby, the making of any Restricted Payment in
         exchange for, or out of the net cash proceeds of, the

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<PAGE>

         substantially concurrent sale (other than to a Restricted Subsidiary of
         the Company) of, Equity Interests of the Company (other than
         Disqualified Stock) or of the substantially concurrent contribution of
         common equity capital or surplus to the Company, provided that the
         amount of any such net cash proceeds that are utilized for any such
         redemption, repurchase, retirement, defeasance or other acquisition
         shall be excluded from clause (3)(B) of Section 4.07(a) hereof;

                  (3) the defeasance, redemption, repurchase or other
         acquisition of Indebtedness of the Company or any Guarantor that is
         subordinated to the Notes or to any Note Guarantee with the net cash
         proceeds from a substantially concurrent incurrence of Permitted
         Refinancing Indebtedness;

                  (4) the payment of any dividend (or, in the case of any
         partnership or limited liability company, any similar distribution) by
         a Restricted Subsidiary of the Company to the holders of its Equity
         Interests on a pro rata basis;

                  (5) so long as no Default has occurred and is continuing or
         would be caused thereby, (A) the repurchase, redemption or other
         acquisition or retirement for value of any Equity Interests of the
         Company or any Restricted Subsidiary of the Company in connection with
         any management equity subscription agreement, stock option agreement,
         shareholders' agreement, severance agreement, employee benefit plan or
         agreement or similar agreement or (B) the repurchase for value of any
         Equity Interests of the Company in the open market to satisfy stock
         options issued by the Company that are outstanding; provided that the
         aggregate price paid for all such repurchased, redeemed, acquired or
         retired Equity Interests after the Issue Date may not exceed $25.0
         million in any calendar year (or the pro rata portion thereof for the
         calendar year 2004);

                  (6) the repurchase of Equity Interests deemed to occur upon
         the exercise of stock options to the extent such Equity Interests
         represent a portion of the exercise price of those stock options;

                  (7) the purchase by the Company of fractional shares upon
         conversion of any securities of the Company into Equity Interests of
         the Company;

                  (8) the declaration and payment of dividends (A) to holders of
         any class or series of Disqualified Stock of the Company or any
         Restricted Subsidiary of the Company issued on or after the Issue Date
         in accordance with the Fixed Charge Coverage test set forth in Section
         4.09(a) hereof;

                  (9) upon the occurrence of a Change of Control and after the
         completion of the offer to repurchase the Notes pursuant to the
         provisions of Section 4.15 hereof (including the purchase of all Notes
         tendered), any purchase, defeasance, retirement, redemption or other
         acquisition of Capital Stock or Indebtedness that is contractually
         subordinated to the Notes or any Note Guarantee required under the
         terms of such Capital Stock or Indebtedness as a result of such Change
         of Control;

                  (10) the transactions with any Person (including any Affiliate
         of the Company) set forth in clauses (1) and (4) of Section 4.11(b)
         hereof and the funding of any obligations in connection therewith;

                                       49

<PAGE>

                  (11) the issuance of Equity Interests of the Company (other
         than Disqualified Stock) for other Equity Interests of the Company in
         connection with any rights offering and payments for the redemption of
         fractional shares in connection with any rights offering; and

                  (12) so long as no Default has occurred and is continuing or
         would be caused thereby, additional Restricted Payments in an aggregate
         amount not to exceed $100.0 million since July 1, 2003.

         The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

         For purposes of determining compliance with this Section 4.07, in the
event that a Restricted Payment meets the criteria of more than one of the types
of Restricted Payments described in the above clauses, the Company, in its sole
discretion, may order and classify, and from time to time may reorder and
reclassify, such Restricted Payment if it would have been permitted at the time
such Restricted Payment was made and at the time of any such reclassification.

Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.

         (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

                  (1) pay dividends or make any other distributions on its
         Capital Stock to the Company or any of its Restricted Subsidiaries, or
         with respect to any other interest or participation in, or measured by,
         its profits, or pay any indebtedness owed to the Company or any of its
         Restricted Subsidiaries;

                  (2) make loans or advances to the Company or any of its
         Restricted Subsidiaries; or

                  (3) transfer any of its properties or assets to the Company or
         any of its Restricted Subsidiaries.

         (b) The restrictions in Section 4.08(a) hereof shall not apply to
encumbrances or restrictions existing under or by reason of:

                  (1) agreements as in effect on the Issue Date and any
         amendments, modifications, restatements, renewals, increases,
         supplements, refundings, replacements or refinancings of those
         agreements, provided that such amendments, modifications, restatements,
         renewals, increases, supplements, refundings, replacement or
         refinancings are not materially more restrictive, taken as a whole,
         with respect to such dividend and other payment restrictions than those
         contained in those agreements on the Issue Date as reasonably
         determined by the Company or such Restricted Subsidiary;

                  (2) this Supplemental Indenture, the Notes, the Note
         Guarantees and the Seward Guarantees;

                  (3) applicable law, rule, regulation or order;

                  (4) [Reserved];

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<PAGE>

                  (5) Indebtedness incurred by REMA pursuant to clause (4) of
         Section 4.09(b) hereof;

                  (6) Indebtedness incurred by the Seward Subsidiary consisting
         of Permitted PEDFA Bond Indebtedness or Indebtedness evidenced by or in
         support of the Seward Tax-Exempt Bonds pursuant to clause (5) of
         Section 4.09(b) hereof;

                  (7) [Reserved];

                  (8) [Reserved];

                  (9) customary non-assignment provisions in contracts,
         agreements, leases, permits and licenses entered into or issued in the
         ordinary course of business;

                  (10) purchase money obligations for property acquired in the
         ordinary course of business and Capital Lease Obligations that impose
         restrictions on the property purchased or leased of the nature
         described in clause (3) of Section 4.08(a) hereof;

                  (11) any agreement for the sale or other disposition of a
         Restricted Subsidiary that restricts distributions by that Restricted
         Subsidiary pending the sale or other disposition;

                  (12) Permitted Refinancing Indebtedness; provided that the
         restrictions contained in the agreements governing such Permitted
         Refinancing Indebtedness are not materially more restrictive, taken as
         a whole, than those contained in the agreements governing the
         Indebtedness being refinanced, as reasonably determined by the Company
         or such Restricted Subsidiary;

                  (13) Permitted Liens that limit the right of the debtor to
         dispose of the assets subject to such Liens;

                  (14) provisions limiting or prohibiting the disposition or
         distribution of assets or property in joint venture agreements, asset
         sale agreements, sale-leaseback agreements, stock sale agreements and
         other similar agreements entered into (i) in the ordinary course of
         business or (ii) with the approval of the Company's or the Restricted
         Subsidiary's Board of Directors or chief financial officer, which
         limitation or prohibition is applicable only to the assets that are the
         subject of such agreements;

                  (15) restrictions on cash or other deposits or net worth
         imposed by customers under contracts entered into in the ordinary
         course of business;

                  (16) any Purchase Money Note or other Indebtedness or any
         contractual requirements of a Securitization Entity in connection with
         a Qualified Securitization Transaction; provided that such restrictions
         apply only to such Securitization Entity;

                  (17) restrictions or conditions contained in any trading,
         netting, operating, construction, service, supply, purchase, sale or
         similar agreement to which the Company or any Restricted Subsidiary of
         the Company is a party entered into in the ordinary course of business;
         provided that such agreement prohibits the encumbrance of solely the
         property or assets of the Company or such Restricted Subsidiary that
         are the subject of such agreement, the payment rights arising
         thereunder and/or the proceeds thereof and not to any other asset or
         property of the Company or such Restricted Subsidiary or the assets or
         property of any other Restricted Subsidiary;

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<PAGE>

                  (18) Indebtedness of a Restricted Subsidiary of the Company
         existing at the time it became a Restricted Subsidiary if such
         restriction was not created in connection with or in anticipation of
         the transaction or series of transactions pursuant to which such
         Restricted Subsidiary became a Restricted Subsidiary or was acquired by
         the Company; and

                  (19) with respect to clause (3) of Section 4.08(a) hereof
         only, restrictions encumbering property at the time such property was
         acquired by the Company or any of its Restricted Subsidiaries, so long
         as such restrictions relate solely to the property so acquired and were
         not created in connection with or in anticipation of such acquisition.

Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.

         (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur
Indebtedness (including Acquired Debt) or issue preferred stock, if the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.0 to
1, determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock or preferred stock had been issued, as the case may be, at
the beginning of such four-quarter period.

         (b) The provisions of Section 4.09(a) will not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):

                  (1) the incurrence (A) by the Company and the guarantee by the
         Guarantors of additional Indebtedness and letters of credit under
         Credit Facilities and (B) by Securitization Entities of Indebtedness in
         Qualified Securitization Transactions in an aggregate principal amount
         at any one time outstanding under this clause (1) (with letters of
         credit being deemed to have a principal amount equal to the maximum
         potential liability of the Company and its Restricted Subsidiaries
         thereunder), including all Permitted Refinancing Indebtedness incurred
         to refund, refinance or replace any Indebtedness incurred pursuant to
         this clause (1), not to exceed the greater of:

                           (a) $3.0 billion; or

                           (b) $3.73 billion less the sum, without duplication,
                  of:

                                    (i) the aggregate amount of all repayments,
                           optional or mandatory, of the principal of any term
                           Indebtedness under a Credit Facility (other than
                           repayments under Credit Facilities of Excluded
                           Subsidiaries, REMA and its Subsidiaries or the Seward
                           Subsidiary ) that have been made by the Company or
                           any of its Restricted Subsidiaries since the Issue
                           Date;

                                    (ii) the aggregate amount, without
                           duplication, of all commitment reductions with
                           respect to any revolving credit borrowings under a
                           Credit Facility that have been made by the Company or
                           any of its Restricted Subsidiaries (other

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<PAGE>

                           than Credit Facilities of Excluded Subsidiaries, REMA
                           and its Subsidiaries or the Seward Subsidiary) since
                           the Issue Date; and

                                    (iii) the aggregate principal amount of
                           Indebtedness incurred pursuant to clause (5) of this
                           Section 4.09(b) (including all Permitted Refinancing
                           Indebtedness incurred to refund, refinance or replace
                           any Indebtedness incurred pursuant to such clause
                           (5)) that is at the time outstanding;

                  (2) [Reserved];

                  (3) [Reserved];

                  (4) the incurrence by REMA and its Subsidiaries of additional
         Indebtedness and letters of credit under Credit Facilities of REMA or
         any of its Subsidiaries in an aggregate principal amount at any one
         time outstanding under this clause (4) (with letters of credit being
         deemed to have a principal amount equal to the maximum potential
         liability of REMA and its Subsidiaries thereunder), including all
         Permitted Refinancing Indebtedness incurred to refund, refinance or
         replace any Indebtedness incurred pursuant to this clause (4), not to
         exceed $60.0 million;

                  (5) the incurrence by the Company and/or the Seward Subsidiary
         of (A) Permitted PEDFA Bond Indebtedness (including the Seward Notes)
         and/or the guarantee thereof by the Company and/or the Guarantors
         (including the Seward Guarantees) or (B) Indebtedness evidenced by or
         in support of the Seward Tax-Exempt Bonds, in an aggregate principal
         amount at any one time outstanding under this clause (5), including all
         Permitted Refinancing Indebtedness incurred to refund, refinance or
         replace any Indebtedness incurred pursuant to this clause (5), without
         duplication, not to exceed $600.0 million less the aggregate amount of
         all repayments, optional or mandatory, of the principal of any
         Indebtedness incurred pursuant to this clause (5) that have been made
         by the Company and/or the Guarantors and/or the Seward Subsidiary since
         the Issue Date;

                  (6) [Reserved];

                  (7) [Reserved];

                  (8) the issuance of Specified Junior Securities by the
         Company, including all Permitted Refinancing Indebtedness incurred to
         refund, refinance or replace any Indebtedness incurred pursuant to this
         clause (8); provided that at least 50% of the net proceeds of such
         issuance (other than proceeds that are used by the Company or any
         Guarantor to acquire Permitted ERCOT Assets) are applied to the
         repayment of term Indebtedness under the Company's Credit Facilities;
         provided, further, that if there is any change in the terms of such
         Specified Junior Securities that results in such securities no longer
         meeting all of the requirements of the definition of "Specified Junior
         Securities," then such change will be deemed to constitute an
         incurrence of Indebtedness by the Company that was not permitted by
         this clause (8);

                  (9) the incurrence by the Company and its Restricted
         Subsidiaries of the Existing Indebtedness, including the Existing
         Convertible Notes, the Existing Notes, Reliant Energy Channelview's
         Indebtedness, Orion Power Holdings, Inc.'s Senior Notes due 2010 and
         Indebtedness under the REMA Lease, and including all Permitted
         Refinancing Indebtedness incurred to refund, refinance or replace any
         Indebtedness incurred pursuant to this clause (9);

                                       53

<PAGE>

                  (10) the incurrence by the Company and the Guarantors of
         Indebtedness represented by the Notes and the related Note Guarantees
         issued on the Issue Date and the incurrence by any Restricted
         Subsidiary of the Company of any other Note Guarantee of the Notes,
         including all Permitted Refinancing Indebtedness incurred to refund,
         refinance or replace any Indebtedness incurred pursuant to this clause
         (10);

                  (11) the incurrence by the Company or any of its Restricted
         Subsidiaries of Indebtedness represented by Capital Lease Obligations,
         mortgage financings or purchase money obligations, in each case,
         incurred for the purpose of financing all or any part of the purchase
         price or cost of design, construction, installation or improvement of
         property, plant or equipment used in the business of the Company or any
         of its Restricted Subsidiaries, in an aggregate principal amount,
         including all Permitted Refinancing Indebtedness incurred to refund,
         refinance or replace any Indebtedness incurred pursuant to this clause
         (11), not to exceed $100.0 million at any one time outstanding;

                  (12) the incurrence by the Company or any of its Restricted
         Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
         the net proceeds of which are used to refund, refinance or replace
         Indebtedness (other than intercompany Indebtedness) that was permitted
         to be incurred under Section 4.09(a) hereof or clauses (1), (4), (5),
         (8), (9), (10), (11), (12) or (21) of this Section 4.09(b);

                  (13) the incurrence by the Company or any of its Restricted
         Subsidiaries of intercompany Indebtedness between or among the Company
         and any of its Restricted Subsidiaries; provided, however, that:

                           (a) if the Company or any Guarantor is the obligor on
         such Indebtedness and (i) the payee is not the Company or a Guarantor
         or (ii) such Indebtedness constitutes Excluded Securities, such
         Indebtedness (except Permitted PEDFA Bond Indebtedness) must be
         expressly subordinated to the prior payment in full in cash of all
         Obligations then due with respect to the Notes, in the case of the
         Company, or the Note Guarantee, in the case of a Guarantor; and

                           (b) (i) any subsequent issuance or transfer of Equity
         Interests that results in any such Indebtedness being held by a Person
         other than the Company or a Restricted Subsidiary of the Company and
         (ii) any sale or other transfer of any such Indebtedness to a Person
         that is not either the Company or a Restricted Subsidiary of the
         Company (except transfers to the Collateral Trustee to secure Secured
         Obligations) shall be deemed, in each case, to constitute an incurrence
         of such Indebtedness by the Company or such Restricted Subsidiary, as
         the case may be, that was not permitted by this clause (13);

                  (14) the incurrence by any Guarantor of any Guarantee of
         Parity Secured Debt or any other Obligation that guarantees, secures or
         supports, Equally and Ratably, all of the Parity Secured Debt and
         Parity Secured Obligations;

                  (15) the issuance by any of the Company's Restricted
         Subsidiaries to the Company or to any of its Restricted Subsidiaries of
         shares of preferred stock; provided, however, that:

                           (a) any subsequent issuance or transfer of Equity
         Interests that results in any such preferred stock being held by a
         Person other than the Company or a Restricted Subsidiary of the
         Company; and

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                           (b) any sale or other transfer of any such preferred
         stock to a Person that is not either the Company or a Restricted
         Subsidiary of the Company,

shall be deemed, in each case, to constitute an issuance of such preferred stock
by the Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (15);

                  (16) the incurrence by the Company or any of its Restricted
         Subsidiaries of Hedging Obligations in the ordinary course of business
         and not for speculative purposes;

                  (17) the incurrence by the Company or any of its Restricted
         Subsidiaries of Indebtedness in respect of workers' compensation
         claims, self-insurance obligations, bankers' acceptances, performance
         and surety bonds provided by the Company or a Restricted Subsidiary in
         the ordinary course of business;

                  (18) the incurrence by the Company or any of its Restricted
         Subsidiaries of Indebtedness arising from the honoring by a bank or
         other financial institution of a check, draft or similar instrument
         inadvertently drawn against insufficient funds, so long as such
         Indebtedness is covered within five business days;

                  (19) the incurrence of Indebtedness arising from agreements of
         the Company or a Restricted Subsidiary providing for indemnification,
         adjustment of purchase price or similar obligations, in each case,
         incurred or assumed in connection with the disposition of any business,
         assets or Equity Interests of a Subsidiary; provided that the maximum
         aggregate liability in respect of all such Indebtedness shall at no
         time exceed the gross proceeds (including non-cash proceeds) actually
         received by the Company and/or such Restricted Subsidiary in connection
         with such disposition;

                  (20) the Guarantee by the Company or any Guarantor of
         Indebtedness that was permitted to be incurred by Section 4.09(a)
         hereof or clauses (8), (11) or (21) of this Section 4.09(b); and

                  (21) the incurrence by the Company or any of its Restricted
         Subsidiaries of additional Indebtedness in an aggregate principal
         amount (or accreted value, as applicable) at any time outstanding
         pursuant to this clause (21), including all Permitted Refinancing
         Indebtedness incurred to refund, refinance or replace any Indebtedness
         incurred pursuant to this clause (21), not to exceed $500.0 million
         (which may, but need not, be incurred under a Credit Facility).

         The Company shall not, and shall not permit any Guarantor to, incur any
Indebtedness (including Permitted Debt) that is contractually subordinated in
right of payment to any other Indebtedness of the Company or that Guarantor
(except Permitted PEDFA Bond Indebtedness) unless such Indebtedness is also
contractually subordinated in right of payment to the Notes or the applicable
Note Guarantee on substantially identical terms; provided, however, that no
Indebtedness of the Company shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Company solely by virtue of
being unsecured or by virtue of being secured on a junior basis.

         For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (21) of
Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section
4.09(a) hereof, the Company shall be permitted to classify such item of
Indebtedness on the date of its incurrence, or later reclassify from time to
time all or a portion of such item of Indebtedness, in any manner that complies
with this Section 4.09. Indebtedness under Credit Facilities outstanding on the
Issue Date shall initially be deemed to have been incurred on such date in
reliance on the exception

                                       55

<PAGE>

provided by clauses (1), (4) and (9) of Section 4.09(b) hereof, as applicable,
and all Permitted PEDFA Bond Indebtedness and other Indebtedness evidenced by or
in support of the Seward Tax-Exempt Bonds outstanding on the Issue Date shall
initially be deemed to have been incurred on such date in reliance on the
exception provided by clause (5) of Section 4.09(b) hereof. The accrual of
interest, the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Stock in the form of
additional shares of the same class of Disqualified Stock shall not be deemed to
be an incurrence of Indebtedness or an issuance of Disqualified Stock for
purposes of this Section 4.09; provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued. Notwithstanding
any other provision of this Section 4.09, the maximum amount of Indebtedness
that the Company or any Restricted Subsidiary may incur pursuant to this Section
4.09 shall not be deemed to be exceeded solely as a result of fluctuations in
exchange rates or currency values.

Section 4.10 Asset Sales.

         (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

                  (1) the Company (or the Restricted Subsidiary, as the case may
         be) receives consideration at the time of such Asset Sale at least
         equal to the Fair Market Value of the assets or Equity Interests issued
         or sold or otherwise disposed of (as reasonably determined by the
         Company or such Restricted Subsidiary); and

                  (2) at least 75% of the consideration therefor received in the
         Asset Sale by the Company or such Restricted Subsidiary is in the form
         of cash or Cash Equivalents. For purposes of this provision, each of
         the following shall be deemed to be cash:

                           (a) any liabilities, as shown on the Company's most
         recent consolidated balance sheet, of the Company or any Restricted
         Subsidiary (other than contingent liabilities and liabilities that are
         by their terms subordinated to the Notes or any Note Guarantee) that
         are assumed by the transferee of any such assets pursuant to a
         customary novation agreement that releases the Company or such
         Restricted Subsidiary from further liability;

                           (b) any securities, notes or other obligations
         received by the Company or any such Restricted Subsidiary from such
         transferee that are converted (by sale or other disposition) by the
         Company or such Restricted Subsidiary into cash, to the extent of the
         cash received in that conversion within 60 days; and

                           (c) reasonable reserves for indemnity obligations and
         purchase price adjustments funded in cash or held back by the
         purchaser.

         (b) Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, other than Excluded Proceeds, the Company (or the applicable Restricted
Subsidiary, as the case may be) may apply such Net Proceeds:

                  (1) in the case of a sale of assets of a Restricted Subsidiary
         of a Company that is not a Guarantor, to repay Indebtedness of that
         Restricted Subsidiary, or, in the case of a sale of assets of an
         Excluded Orion Power Subsidiary, to repay Indebtedness of Orion Power
         Holdings, Inc. and, in each case, correspondingly reduce commitments
         with respect thereto;

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<PAGE>

                  (2) in the case of a sale of assets pledged to secure
         Indebtedness (including Capital Lease Obligations), other than Secured
         Debt, to repay the Indebtedness secured by those assets; or

                  (3) in the case of any Asset Sale:

                           (A) to acquire all or substantially all of the assets
                  of, or all or a majority of the Voting Stock of, a Person
                  engaged in a Permitted Business provided that such Person
                  becomes a Guarantor;

                           (B) to make a capital expenditure; or

                           (C) to acquire other assets that are not classified
                  as current assets under GAAP and that are used or useful in a
                  Permitted Business.

         (c) If any Net Proceeds from any sale of Shared Collateral or Excluded
Securities or from any issuance of Equity Securities that constitute an Asset
Sale are required pursuant to the terms of any of the Secured Debt Documents to
be deposited into a cash collateral or similar account, then such Net Proceeds
shall be deposited into a Cash Collateral Account as part of the Shared
Collateral. As to any other Net Proceeds, pending final application of such Net
Proceeds in accordance with this Section 4.10, the Company may temporarily
reduce revolving credit borrowings or otherwise invest the Net Proceeds in any
manner that is not prohibited by this Supplemental Indenture.

         (d) Any Net Proceeds from Asset Sales (other than Excluded Proceeds)
that are not applied or invested as provided in Section 4.10(b) hereof shall
constitute "Excess Proceeds," except that if any portion of any Net Proceeds
from an Asset Sale (other than Excluded Proceeds) is required at any time
pursuant to any Secured Debt Document to be applied to the mandatory prepayment,
redemption, repurchase or purchase of Parity Secured Debt or to provide cash
collateral for letters of credit issued under Parity Secured Debt, then all of
the Net Proceeds from that Asset Sale (other than Excluded Proceeds) will be
deemed to be "Excess Proceeds" at that time. When the aggregate amount of Excess
Proceeds exceeds $25.0 million, within five days thereof, the Company shall make
an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness (including the Existing 2010 Notes and the Existing 2013 Notes)
that is pari passu with the Notes (other than Credit Agreement Debt and the
Seward Guarantees)(and so long as the Notes are secured, Equally and Ratably
secured with the Notes) containing provisions similar to those set forth in this
Supplemental Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets, to purchase (or repay, prepay or redeem, as
applicable) an aggregate principal amount of Notes and such other pari passu
Indebtedness that may be purchased (or repaid, prepaid or redeemed) equal to the
aggregate Excess Proceeds multiplied by a fraction, the numerator of which
consists of (A) the aggregate principal amount then outstanding on the Notes and
all such other pari passu Indebtedness containing such provisions (not including
Credit Agreement Debt) and the denominator of which is (B) the sum of (i) such
aggregate amount in the preceding clause (A) and (ii) the Credit Agreement Debt
then outstanding (an "Asset Sale Offer"). The offer price in any Asset Sale
Offer will be equal to 100% of principal amount plus accrued and unpaid interest
to the date of purchase, and shall be payable in cash. If any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Supplemental
Indenture. If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Company shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

         (e) [Reserved].

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         (f) The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
Sections 3.09 or 4.10 of this Supplemental Indenture, the Company shall comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under those provisions of this Supplemental
Indenture by virtue of such conflict.

Section 4.11 Transactions with Affiliates.

         (a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each, an "Affiliate Transaction"), unless:

                  (1) such Affiliate Transaction is on terms that are no less
         favorable (as reasonably determined by the Company) to the Company or
         the relevant Restricted Subsidiary than those that would have been
         obtained in a comparable transaction by the Company or such Restricted
         Subsidiary with an unrelated Person; and

                  (2) the Company delivers to the Trustee:

                           (A) with respect to any Affiliate Transaction or
                  series of related Affiliate Transactions involving aggregate
                  consideration in excess of $25.0 million, a resolution of the
                  Board of Directors set forth in an Officer's Certificate
                  certifying that such Affiliate Transaction complies with this
                  Section 4.11(a) and that such Affiliate Transaction has been
                  approved by a majority of the disinterested members of the
                  Board of Directors; and

                           (B) with respect to any Affiliate Transaction or
                  series of related Affiliate Transactions involving aggregate
                  consideration in excess of $35.0 million, an opinion as to the
                  fairness to the Company or such Restricted Subsidiary of such
                  Affiliate Transaction from a financial point of view issued by
                  an accounting, appraisal or investment banking firm of
                  national standing.

         (b) The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of Section
4.11(a) hereof:

                  (1) any employment agreement or director's engagement
         agreement, employee benefit plan, officer and director indemnification
         agreement or any similar arrangement entered into by the Company or any
         of its Restricted Subsidiaries in the ordinary course of business or
         approved by the relevant Board of Directors;

                  (2) transactions between or among the Company and/or its
         Restricted Subsidiaries;

                  (3) transactions with a Person that is an Affiliate of the
         Company solely because the Company owns, directly or through a
         Restricted Subsidiary, an Equity Interest in, or controls, such Person;

                  (4) payment of reasonable directors' fees to Persons who are
         not otherwise Affiliates of the Company;

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<PAGE>

                  (5) any issuance of Equity Interests (other than Disqualified
         Stock) of the Company to Affiliates of the Company;

                  (6) Restricted Payments that do not violate the provisions of
         Section 4.07 hereof;

                  (7) transactions effected as part of a Qualified
         Securitization Transaction;

                  (8) loans or advances to employees in the ordinary course of
         business not to exceed $10.0 million in the aggregate outstanding at
         any one time;

                  (9) any agreement, instrument or arrangement as in effect as
         of the Issue Date or any amendment thereto or any transaction
         contemplated thereby (including pursuant to any amendment thereto) in
         any replacement agreement thereto so long as any such amendment or
         replacement agreement is not more disadvantageous to the Holders in any
         material respect than the original agreement as in effect on the Issue
         Date as determined by the Company;

                  (10) any pro rata distribution (including a rights offering)
         to all holders of a class of Equity Interests or Indebtedness of the
         Company or any of its Restricted Subsidiaries, including Persons who
         are Affiliates of the Company or any of its Restricted Subsidiaries;
         and

                  (11) any transaction involving sales of electric capacity,
         energy, ancillary services, transmission services and products, steam,
         emissions credits, fuel, fuel transportation and fuel storage in the
         ordinary course of business on terms that are no less favorable (as
         reasonably determined by the Company) to the Company or the relevant
         Restricted Subsidiary of the Company than those that would have been
         obtained in a comparable transaction by the Company or such Restricted
         Subsidiary with an unrelated Person.

Section 4.12 Liens.

         The Company shall not and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind on any asset
now owned or hereafter acquired, except Permitted Liens.

Section 4.13 Line of Business.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any business other than Permitted Businesses, except
to such extent as would not be material to the Company and its Subsidiaries
taken as a whole.

Section 4.14 Corporate Existence.

         Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect:

                  (1) its corporate existence, and the corporate, partnership or
         other existence of each of its Subsidiaries, in accordance with the
         respective organizational documents (as the same may be amended from
         time to time) of the Company or any such Subsidiary; and

                  (2) the rights (charter and statutory), licenses and
         franchises of the Company and its Subsidiaries; provided, however, that
         the Company shall not be required to preserve any such right, license
         or franchise, or the corporate, partnership or other existence of any
         of its

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<PAGE>

         Subsidiaries, if (a) the Company shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of the
         Company and its Subsidiaries, taken as a whole, and that the loss
         thereof is not adverse in any material respect to the Holders of the
         Notes and (b) if a Subsidiary is to be dissolved, such Subsidiary has
         no assets.

Section 4.15 Offer to Repurchase Upon Change of Control.

         (a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of
each Holder's Notes at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest on the Notes repurchased, if
any, to the date of purchase (the "Change of Control Payment"). Within thirty
days following any Change of Control, the Company shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and stating:

                  (1) that the Change of Control Offer is being made pursuant to
         this Section 4.15 and that all Notes tendered will be accepted for
         payment;

                  (2) the purchase price and the purchase date, which date will
         be no earlier than 30 days and no later than 60 days from the date such
         notice is mailed (the "Change of Control Payment Date");

                  (3) that any Note not tendered will continue to accrue
         interest;

                  (4) that, unless the Company defaults in the payment of the
         Change of Control Payment, all Notes accepted for payment pursuant to
         the Change of Control Offer will cease to accrue interest after the
         Change of Control Payment Date;

                  (5) that Holders electing to have any Notes purchased pursuant
         to a Change of Control Offer shall be required to surrender the Notes,
         with the form entitled "Option of Holder to Elect Purchase" on the
         reverse of the Notes completed, to the Paying Agent at the address
         specified in the notice prior to the close of business on the third
         Business Day preceding the Change of Control Payment Date;

                  (6) that Holders will be entitled to withdraw their election
         if the Paying Agent receives, not later than the close of business on
         the second Business Day preceding the Change of Control Payment Date, a
         telegram, telex, facsimile transmission or letter setting forth the
         name of the Holder, the principal amount of Notes delivered for
         purchase, and a statement that such Holder is withdrawing his election
         to have the Notes purchased; and

                  (7) that Holders whose Notes are being purchased only in part
         will be issued new Notes equal in principal amount to the unpurchased
         portion of the Notes surrendered, which unpurchased portion must be
         equal to $2,000 in principal amount or an integral multiple of $1,000
         in excess of $2,000.

         The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change in Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of Section 4.15 of this Supplemental Indenture, the Company shall
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 4.15 by virtue of
such conflict.

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<PAGE>

         (b) On the Change of Control Payment Date, the Company shall, to the
extent lawful:

                  (1) accept for payment all Notes or portions of Notes properly
         tendered pursuant to the Change of Control Offer;

                  (2) deposit with the Paying Agent an amount equal to the
         Change of Control Payment in respect of all Notes or portions of Notes
         properly tendered; and

                  (3) deliver or cause to be delivered to the Trustee the Notes
         properly accepted together with an Officer's Certificate stating the
         aggregate principal amount of Notes or portions of Notes being
         purchased by the Company.

         No Notes of $2,000 or less can be repurchased in part. The Paying Agent
shall promptly mail to each Holder of Notes properly tendered the Change of
Control Payment for such Notes, and the Trustee upon receipt of an Company Order
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

         (c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if (1) a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 hereof and purchases all Notes properly tendered and not withdrawn
under the Change of Control Offer or (2) notice of redemption has been given
pursuant to Section 3.07 hereof unless and until there is a default in payment
of the applicable redemption price.

Section 4.16 Limitation on Sale and Leaseback Transactions.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if:

                  (1) the Company or that Restricted Subsidiary, as applicable,
         could have incurred Indebtedness in an amount equal to the Attributable
         Debt relating to such sale and leaseback transaction under the
         provisions of Section 4.09 hereof;

                  (2) the gross cash proceeds of that sale and leaseback
         transaction are at least equal to the Fair Market Value of the property
         that is the subject of that sale and leaseback transaction; and

                  (3) if such sale and leaseback transaction constitutes an
         Asset Sale, the transfer of assets in that sale and leaseback
         transaction is permitted by, and the Company applies the proceeds of
         such transaction in compliance with, the provisions of Section 4.10
         hereof.

         The preceding restrictions shall not apply to a sale and leaseback
transaction entered into between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries of the Company.

Section 4.17 Payments for Consent.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any monetary
consideration to or for the benefit of any Holder for or as an inducement to any
consent under or waiver or amendment of any of the terms or provisions of the

                                       61
<PAGE>

Indenture, the Notes or the Note Guarantees unless such consideration is offered
to be paid and is paid to all Holders that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.

Section 4.18 Additional Note Guarantees.

         If after the Issue Date the Company or any of its Restricted
Subsidiaries acquires or creates another Domestic Subsidiary that is required to
become a guarantor of any borrowings under the Credit Agreement or any other
Indebtedness of the Company, or any Excluded Subsidiary ceases to be an Excluded
Subsidiary, then that Domestic Subsidiary or former Excluded Subsidiary shall
become a Guarantor and (A) execute a Note Guarantee substantially in the form as
Exhibit B hereto, a supplemental indenture substantially in the form as Exhibit
C hereto and a joinder agreement to the Security Documents in form and substance
reasonably satisfactory to the Trustee providing that such Subsidiary shall
become a Guarantor under this Supplemental Indenture and a party as grantor to
the Security Documents and (B) deliver an Opinion of Counsel satisfactory to the
Trustee, in each case, within 30 Business Days of the date on which it was
required to become a guarantor of any borrowings under the Credit Agreement or
any other Indebtedness of the Company, or any Excluded Subsidiary ceases to be
an Excluded Subsidiary.

Section 4.19 Changes in Covenants When Notes Rated Investment Grade.

         If on any date following the Issue Date:

         (a) the rating assigned to the Notes by either S&P or Moody's is an
Investment Grade Rating, and

         (b) no Default or Event of Default shall have occurred and be
continuing,

         then, beginning on that day and subject to the provisions of the
following paragraph, the provisions of Sections 4.07, 4.08, 4.09, 4.10, 4.11,
4.20 and clause (4) of Section 5.01 hereof shall be suspended.

         Notwithstanding the foregoing, if the ratings assigned by both such
rating agencies with respect to the Notes should subsequently decline to below
an Investment Grade Rating, the provisions of Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.20 and clause (4) of Section 5.01 hereof shall be reinstituted as of and
from the date of such rating decline. The provisions of Section 4.07 hereof
shall be interpreted as if they had been in effect since July 1, 2003 except
that no default will be deemed to have occurred solely by reason of a Restricted
Payment made or declared (and later made) in accordance with the provisions of
Section 4.07(b)(1) while the provisions of such Section were suspended.

Section 4.20 Designation of Restricted and Unrestricted Subsidiaries.

         The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
Fair Market Value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to
be an Investment made as of the time of the designation and shall reduce the
amount available for Restricted Payments under Section 4.07(a) hereof or under
the definition of Permitted Investments, as determined by the Company. That
designation shall only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary.

                                       62
<PAGE>

Section 4.21 Reserved.

Section 4.22 Insurance.

         The Company and the Guarantors shall maintain with financially sound
and reputable insurance companies, insurance on their property and assets
(including the Shared Collateral) in at least such amounts, with such
deductibles and against at least such risks as is customary for companies of the
same or similar size engaged in the same or similar businesses as those of the
Company and the Guarantors and furnish to the Collateral Trustee, upon written
request, full information as to its property and liability insurance carriers.
Holders of Note Obligations, as a class, will be named as an additional insured
on all liability insurance policies of the Company and its Restricted
Subsidiaries and the Collateral Trustee will be named as loss payee on all
property and casualty insurance policies of each such person.

Section 4.23 Subordination of Intercompany Indebtedness.

         (a) Each of the Company and the Guarantors hereby agrees that any
intercompany Indebtedness or other intercompany receivables, intercompany
payables or intercompany advances directly or indirectly made by or owed to the
Company or such Guarantor by any Guarantor or the Company, as applicable, of
whatever nature at any time outstanding shall be subordinate and subject in
right of payment to the prior indefeasible payment in full in cash of the Note
Obligations. Each of the Company and the Guarantors hereby agrees that it shall
not become obligated or otherwise liable for any intercompany Indebtedness, or
other intercompany receivable, intercompany payable or intercompany advance that
is owed to any Person other than the Company or any Guarantor, unless such
Person agrees that such Indebtedness, receivable, payable or advance (as
applicable) is completely subordinated to the Note Obligations and subject in
right of payment to the prior indefeasible payment in full in cash of the Note
Obligations, and that no payment on any such Indebtedness, receivable, payable
or advance shall be made by the Company or any Guarantor until the earliest to
occur of: (i) satisfaction and discharge of this Supplemental Indenture pursuant
to Article 13 hereof, (ii) Legal Defeasance or Covenant Defeasance or (iii)
payment in full in cash of the Notes and all other Note Obligations that are
outstanding, due and payable at the time the Notes are paid in full in cash (for
purposes of this Section 4.23, only, collectively the "Termination Date");
except: intercompany receivables, intercompany payables, intercompany advances
and intercompany Indebtedness made to, or on behalf of, any Person, other than
the Company or any Guarantor, permitted pursuant to the terms hereof may be paid
or repaid, in each case so long as no Event of Default shall have occurred and
be continuing; provided, however, that the foregoing shall not apply to any
intercompany Indebtedness or other intercompany receivable, intercompany payable
or intercompany advance with a Person, other than the Company or any Guarantor,
where such Person is expressly prohibited from agreeing to the foregoing
subordination pursuant to the terms and provisions of the definitive credit
documentation with respect to Indebtedness of such Person for borrowed money
listed on Schedule 7.3(k) to the Credit Agreement.

         (b) In the event that any payment on any such intercompany
Indebtedness, receivable, payable or advance shall be received by the Company or
any Guarantor other than as permitted by Section 4.23(a) before the Termination
Date, the Company or such Guarantor, as applicable, shall receive such payments
and hold the same in trust for, segregate the same from its own assets and shall
immediately pay over to, the Collateral Trustee for the benefit of the holders
of Parity Secured Debt all such sums to the extent necessary so that the holders
of Parity Secured Debt shall have been indefeasibly paid in full, in cash, all
Note Obligations owed or which may become owing.

                                   ARTICLE 5.
                                   SUCCESSORS

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Section 5.01 Merger, Consolidation, or Sale of Assets.

         The Company shall not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:

                  (1) either:

                           (A) the Company is the surviving corporation; or

                           (B) the Person formed by or surviving any such
                  consolidation or merger (if other than the Company) or to
                  which such sale, assignment, transfer, conveyance or other
                  disposition has been made is either (i) a corporation
                  organized or existing under the laws of the United States, any
                  state of the United States or the District of Columbia or (ii)
                  is a partnership or limited liability company organized or
                  existing under the laws of the United States, any state
                  thereof or the District of Columbia that has at least one
                  Restricted Subsidiary that is a corporation organized or
                  existing under the laws of the United States, any state
                  thereof or the District of Columbia which corporation becomes
                  a co-issuer of the Notes pursuant to a supplemental indenture
                  duly and validly executed by the Trustee;

                  (2) the Person formed by or surviving any such consolidation
         or merger (if other than the Company) or the Person to which such sale,
         assignment, transfer, conveyance or other disposition has been made
         assumes all the obligations of the Company under the Notes, the
         Indenture and the Security Documents pursuant to a supplemental
         indenture reasonably satisfactory to the Trustee;

                  (3) immediately after such transaction, no Default or Event of
         Default exists; and

                  (4) the Company or the Person formed by or surviving any such
         consolidation or merger (if other than the Company), or to which such
         sale, assignment, transfer, conveyance or other disposition has been
         made:

                           (A) would have Consolidated Net Worth immediately
                  after the transaction equal to or greater than the
                  Consolidated Net Worth of the Company immediately preceding
                  the transaction; and

                           (B) would, on the date of such transaction after
                  giving pro forma effect thereto and to any related financing
                  transactions as if the same had occurred at the beginning of
                  the applicable four-quarter period, either (i) have a pro
                  forma Fixed Charge Coverage Ratio that is at least equal to
                  the actual Fixed Charge Coverage Ratio of the Company as of
                  such date or (ii) be permitted to incur at least $1.00 of
                  additional Indebtedness pursuant to the Fixed Charge Coverage
                  Ratio test set forth in Section 4.09(a).

         In addition, the Company shall not, directly or indirectly, lease all
or substantially all of its properties or assets, in one or more related
transactions, to any other Person.

         Notwithstanding the foregoing:

                  (1) any Restricted Subsidiary of the Company may consolidate
         with, merge into or transfer all or part of its properties and assets
         to the Company or any other Restricted Subsidiary of the Company; and

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                  (2) the Company may merge with an Affiliate solely for the
         purpose of reincorporating the Company or re-forming in another
         jurisdiction.

Section 5.02 Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole in a transaction
that is subject to, and that complies with the provisions of, Section 5.01
hereof, the successor corporation formed by such consolidation or into or with
which the Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted for
(so that from and after the date of such consolidation, merger, sale, lease,
conveyance or other disposition, the provisions of the Indenture referring to
the "Company" shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company under the
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay the principal of, interest, premium on the
Notes except in the case of a sale of all of the Company's assets in a
transaction that is subject to, and that complies with the provisions of,
Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

         Each of the following is an "Event of Default":

                  (1) the Company defaults for 30 days in the payment when due
         of interest on the Notes;

                  (2) the Company defaults in the payment when due (at maturity,
         upon redemption or otherwise) of the principal of, or premium, if any,
         on the Notes;

                  (3) the Company or any of its Restricted Subsidiaries fails to
         comply with the provisions of Sections 4.10, 4.15 or 5.01 hereof for 30
         days after notice to the Company from the Trustee or the Holders of at
         least 25% in the aggregate principal amount of Notes then outstanding;

                  (4) the Company or any of its Restricted Subsidiaries fails to
         observe or perform any other covenant, representation, warranty or
         other agreement in the Indenture, the Notes or the Security Documents
         for 60 days after notice to the Company from the Trustee or the Holders
         of at least 25% in aggregate principal amount of Notes then
         outstanding;

                  (5) default under any mortgage, indenture or instrument under
         which there may be issued or by which there may be secured or evidenced
         any Indebtedness for money borrowed by the Company or any of its
         Restricted Subsidiaries other than (A) Reliant Energy Channelview, L.P.
         and its Subsidiaries so long as, taken together, they would not
         constitute a Significant Subsidiary and (B) Reliant Energy Retail
         Holdings, LLC or its successor or any Subsidiary thereof in connection
         with a Qualified Securitization Transaction (or the payment of which is
         guaranteed by the Company or any of its Restricted Subsidiaries)
         whether such Indebtedness or guarantee now exists, or is created after
         the Issue Date, if that default:

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<PAGE>

                           (a) is caused by a failure to pay principal of, or
         interest or premium, if any, on such Indebtedness after the expiration
         of the grace period provided in such Indebtedness on the date of such
         default (a "Payment Default"); or

                           (b) results in the acceleration of such Indebtedness
         prior to its express maturity,

         and, in each case, the principal amount of any such Indebtedness,
         together with the principal amount of any other such Indebtedness under
         which there has been a Payment Default or the maturity of which has
         been so accelerated, aggregates $50.0 million or more;

                  (6) failure by the Company or any of its Restricted
         Subsidiaries to pay final and non-appealable judgments aggregating in
         excess of $50.0 million, which are not covered by indemnities or
         third-party insurance, which judgments are not paid, discharged,
         vacated or stayed for a period of 60 days;

                  (7) the repudiation by the Company or any of its Restricted
         Subsidiaries of any of its obligations under any of the Security
         Documents or the unenforceability of any of the Security Documents
         against the Company or any of its Restricted Subsidiaries for any
         reason if such unenforceability is applicable to Collateral having an
         aggregate Fair Market Value of $50.0 million or more;

                  (8) any Security Document or any Lien purported to be granted
         thereby on assets having a Fair Market Value in excess of $50.0 million
         is held in any judicial proceeding to be unenforceable or invalid, in
         whole or in part, or ceases for any reason within the control of the
         Company or any of its Restricted Subsidiaries (other than pursuant to a
         release that is delivered or becomes effective as set forth in this
         Supplemental Indenture) to be fully enforceable and perfected;

                  (9) except as permitted by this Supplemental Indenture, any
         Note Guarantee of a Significant Subsidiary is held in any judicial
         proceeding to be unenforceable or invalid or ceases for any reason to
         be in full force and effect or any Guarantor that is a Significant
         Subsidiary, or any Person acting on behalf of any Guarantor that is a
         Significant Subsidiary, denies or disaffirms its obligations under its
         Note Guarantee;

                  (10) the Company or any of its Restricted Subsidiaries that is
         a Significant Subsidiary or any group of Restricted Subsidiaries that,
         taken as a whole, would constitute a Significant Subsidiary pursuant to
         or within the meaning of Bankruptcy Law:

                           (a) commences a voluntary case,

                           (b) consents to the entry of an order for relief
         against it in an involuntary case,

                           (c) consents to the appointment of a custodian of it
         or for all or substantially all of its property,

                           (d) makes a general assignment for the benefit of its
         creditors, or

                           (e) generally is not paying its debts as they become
         due; or

                  (11) a court of competent jurisdiction enters an order or
         decree under any Bankruptcy Law that:

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<PAGE>

                           (a) is for relief against the Company or any of its
         Restricted Subsidiaries that is a Significant Subsidiary any group of
         Restricted Subsidiaries that, taken as a whole, would constitute a
         Significant Subsidiary in an involuntary case;

                           (b) appoints a custodian of the Company or any of its
         Restricted Subsidiaries that is a Significant Subsidiary or any group
         of Restricted Subsidiaries that, taken as a whole, would constitute a
         Significant Subsidiary or for all or substantially all of the property
         of the Company or any of its Significant Subsidiaries or any group of
         Restricted Subsidiaries that, taken as a whole, would constitute a
         Significant Subsidiary; or

                           (c) orders the liquidation of the Company or any of
         its Restricted Subsidiaries that is a Significant Subsidiary or any
         group of Restricted Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary;

                  and the order or decree remains unstayed and in effect for 60
                  consecutive days;

Section 6.02 Acceleration.

         In the case of an Event of Default specified in clause (10) or (11) of
Section 6.01 hereof, with respect to the Company, any Restricted Subsidiary that
is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable immediately. The Holders of a majority in
aggregate principal amount of the then outstanding Notes by written notice to
the Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.

Section 6.03 Reserved.

Section 6.04 Waiver of Past Defaults.

         Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of the Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

Section 6.05 Reserved.

Section 6.06 Reserved.

Section 6.07 Reserved.

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Section 6.08 Collection Suit by Trustee.

         If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

Section 6.09 Reserved.

Section 6.10 Priorities.

         If the Trustee collects any money pursuant to this Article 6 or
receives any money pursuant to the Collateral Trust Agreement, it shall pay out
the money in the following order:

                  First: to the Trustee, its agents and attorneys for amounts
         due under Section 7.01 hereof and Section 607 of the Base Indenture,
         including payment of all compensation, expense and liabilities
         incurred, and all advances made, by the Trustee and the costs and
         expenses of collection;

                  Second: to Holders of Notes for amounts due and unpaid on the
         Notes for principal, premium, if any, and interest, ratably, without
         preference or priority of any kind, according to the amounts due and
         payable on the Notes for principal, premium, if any, and interest,
         respectively; and

                  Third: to the Company or to such party as a court of competent
         jurisdiction shall direct.

         The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

Section 6.11 Reserved.

                                   ARTICLE 7.
                      TRUSTEE'S COMPENSATION AND INDEMNITY

Section 7.01 Compensation and Indemnity.

         (a) The Company and Guarantors, jointly and severally, shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Supplemental Indenture and services hereunder. The Trustee's compensation will
not be limited by any law on compensation of a trustee of an express trust. The
Company and Guarantors, jointly and severally, shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such
expenses will include the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.

         (b) The Company and the Guarantors, jointly and severally, shall
indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Supplemental Indenture, the Note
Documents or the Collateral Trust Agreement including the costs and expenses of
enforcing this Supplemental Indenture, the Note

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<PAGE>

Documents or the Collateral Trust Agreement against the Company and the
Guarantors (including this Section 7.01) and defending itself against any claim
(whether asserted by the Company, the Guarantors or any Holder or any other
Person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith or willful
misconduct. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company or any of the Guarantors of their obligations hereunder. The
Company or such Guarantor shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel and the Company and / or
Guarantors shall pay the reasonable fees and expenses of such counsel. Neither
the Company nor any Guarantor need pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.

         (c) The obligations of the Company and the Guarantors under this
Section 7.01 will survive the satisfaction and discharge of this Supplemental
Indenture.

         (d) To secure the Company's and Guarantors' payment obligations in this
Section 7.01, the Trustee will have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Supplemental Indenture.

         (e) When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(10) or (11) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

         (f) The Trustee shall comply with the provisions of TIAss.313(b)(2) to
the extent applicable.

         (g) The Company's and Guarantors' obligations under this Section 7.01
shall survive the resignation or removal of the Trustee, any termination of this
Supplemental Indenture, including any termination or rejection of this
Supplemental Indenture in any insolvency or similar proceeding and the repayment
of all the Notes.

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

         The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officer's Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each of the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their obligations with respect to all
outstanding Notes (including the Note Guarantees) on the date the conditions set
forth in Section 8.04 hereof are satisfied (hereinafter, "Legal Defeasance").
For this purpose, Legal Defeasance means that the

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Company and the Guarantors shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes (including the Note
Guarantees), which will thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of the Indenture referred
to in clauses (1) and (2) below, and to have satisfied all their other
obligations under such Notes, the Note Guarantees and this Supplemental
Indenture and, to the extent applicable, the Base Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which will survive
until otherwise terminated or discharged hereunder:

                  (1) the rights of Holders of outstanding Notes to receive
         payments in respect of the principal of, or interest or premium, if
         any, and on such Notes when such payments are due from the trust
         referred to in Section 8.04 hereof;

                  (2) the Company's obligations with respect to such Notes under
         Article 2 and Section 4.02 hereof;

                  (3) the rights, powers, trusts, duties and immunities of the
         Trustee hereunder and under the Base Indenture, and the Company's and
         the Guarantors' obligations in connection therewith; and

                  (4) this Article 8.

         Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from each of their obligations under the covenants contained in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.20, 4.22, 4.23 hereof and clause (4) of Section 5.01 hereof with respect to
the outstanding Notes on and after the date the conditions set forth in Section
8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
will thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but will continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes will not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the outstanding Notes and Note
Guarantees, the Company and the Guarantors may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply will not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of the
Indenture and such Notes and Note Guarantees shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(9)
hereof shall not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

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         (a) In order to exercise either Legal Defeasance or Covenant Defeasance
under either Section 8.02 or 8.03 hereof:

                  (1) the Company must irrevocably deposit with the Trustee, in
         trust, for the benefit of the Holders, cash in U.S. dollars,
         non-callable Government Securities, or a combination of cash in U.S.
         dollars and non-callable Government Securities, in amounts as will be
         sufficient, in the opinion of a nationally recognized investment bank,
         appraisal firm or firm of independent public accountants to pay the
         principal of, or interest and premium, if any, on the outstanding Notes
         on the Stated Maturity or on the applicable redemption date, as the
         case may be, and the Company must specify whether the Notes are being
         defeased to maturity or to a particular redemption date;

                  (2) in the case of an election under Section 8.02 hereof, the
         Company has delivered to the Trustee an Opinion of Counsel reasonably
         acceptable to the Trustee confirming that (A) the Company has received
         from, or there has been published by, the Internal Revenue Service a
         ruling or (B) since the Issue Date, there has been a change in the
         applicable federal income tax law, in either case to the effect that,
         and based thereon such Opinion of Counsel shall confirm that, the
         Holders shall not recognize income, gain or loss for federal income tax
         purposes as a result of such Legal Defeasance and shall be subject to
         federal income tax on the same amounts, in the same manner and at the
         same times as would have been the case if such Legal Defeasance had not
         occurred;

                  (3) in the case of an election under Section 8.03 hereof, the
         Company has delivered to the Trustee an Opinion of Counsel reasonably
         acceptable to the Trustee confirming that the Holders of the
         outstanding Notes will not recognize income, gain or loss for federal
         income tax purposes as a result of such Covenant Defeasance and will be
         subject to federal income tax on the same amounts, in the same manner
         and at the same times as would have been the case if such Covenant
         Defeasance had not occurred;

                  (4) no Default or Event of Default has occurred and is
         continuing on the date of such deposit (other than a Default or Event
         of Default resulting from or cured by the borrowing of funds to be
         applied to such deposit);

                  (5) such Legal Defeasance or Covenant Defeasance shall not
         result in a breach or violation of, or constitute a default under any
         material agreement or instrument (other than the Indenture) to which
         the Company or any of its Subsidiaries is a party or by which the
         Company or any of its Subsidiaries is bound;

                  (6) the Company must deliver to the Trustee an Officer's
         Certificate stating that the deposit was not made by the Company with
         the intent of preferring the Holders over the other creditors of the
         Company with the intent of defeating, hindering, delaying or defrauding
         creditors of the Company; and

                  (7) the Company must deliver to the Trustee an Officer's
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent relating to the Legal Defeasance or the Covenant Defeasance
         have been complied with.

         (b) Upon the occurrence of a Legal Defeasance or a Covenant Defeasance,
the Trustee shall send written notice of such Legal Defeasance or Covenant
Defeasance to both the Collateral Trustee and the Company.

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Section 8.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.

         Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and the Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.

         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders.

         Notwithstanding anything in this Article 8 to the contrary, the Trustee
shall deliver or pay to the Company from time to time upon the written request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(1) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 8.06 Repayment to Company.

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its written request or (if then held by the Company) will be
discharged from such trust; and the Holder of such Note will thereafter be
permitted to look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, will thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which will not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining shall be
repaid to the Company.

Section 8.07 Reinstatement.

         If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under the
Indenture and the Notes and the Note Guarantees will be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any

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Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

         Notwithstanding Article Nine of the Base Indenture and Section 9.02 of
this Supplemental Indenture, the Company, the Guarantors and the Trustee may
amend or supplement this Supplemental Indenture, the Note Guarantees or the
Notes without the consent of any Holder:

                  (1) to cure any ambiguity, defect or inconsistency;

                  (2) to provide for uncertificated Notes in addition to or in
         place of certificated Notes or to alter the provisions of Article 2
         hereof (including the related definitions) in a manner that does not
         materially adversely affect any Holder;

                  (3) to provide for the assumption of the Company's or a
         Guarantor's obligations to the Holders of the Notes by a successor to
         the Company or such Guarantor pursuant to Article 5 or Article 12
         hereof;

                  (4) to make any change that would provide any additional
         rights or benefits to the Holders, including the addition of
         guarantees, or that does not adversely affect the legal rights under
         this Supplemental Indenture of any such Holder;

                  (5) to comply with requirements of the SEC in order to effect
         or maintain the qualification of this Supplemental Indenture under the
         TIA;

                  (6) to make, complete or confirm any grant of Collateral
         permitted or required by the Security Documents, the Collateral Trust
         Agreement or this Supplemental Indenture or, with the consent of the
         Credit Agreement Agent, any release of Collateral that becomes
         effective as set forth in the Security Documents, the Collateral Trust
         Agreement or this Supplemental Indenture;

                  (7) to conform the text of this Supplemental Indenture, the
         Notes or the Note Guarantees to any provision of the Description of
         Notes to the extent that such provision in the Description of Notes was
         intended to be a verbatim recitation of a provision of this
         Supplemental Indenture, the Notes or the Note Guarantees;

                  (8) to reflect any waiver or termination of any right arising
         under the provisions of Section 11.01 hereof that otherwise would be
         enforceable by any holder of any Series of Secured Debt other than the
         Notes at any time issued under this Supplemental Indenture, if such
         waiver or termination is set forth or provided in the indenture or
         agreement governing or giving rise to such Series of Secured Debt, but
         no waiver or amendment pursuant to this clause (8) shall adversely
         affect the rights of any Holder;

                  (9) to provide for the issuance of Additional Notes in
         accordance with the limitations set forth in this Supplemental
         Indenture as of the Issue Date; or

                  (10) to allow any Person to execute a supplemental indenture
         and/or a Note Guarantee with respect to the Notes to become a
         Guarantor.

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         Upon the request of the Company authorizing the execution of any such
amended or supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 903 of the Base Indenture and Section 9.06
hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Supplemental Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental indenture that
affects its own rights, duties or immunities under the Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

         (a) Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Supplemental Indenture (including, without
limitation, Section 3.09, 4.10 and 4.15 hereof), the Note Guarantees and the
Notes with the consent of the Holders of at least a majority in principal
aggregate amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Supplemental Indenture, the Note
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal aggregate amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes).

         Section 101 of the Base Indenture shall determine which Notes are
considered to be "outstanding" for purposes of this Section 9.02.

         Upon the written request of the Company and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 603 of the Base Indenture and Section 9.06 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture directly affects the Trustee's own
rights, duties or immunities under the Indenture or otherwise, in which case the
Trustee may in its discretion, but will not be obligated to, enter into such
amended or supplemental indenture.

         It is not necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment or waiver, but it
is sufficient if such consent approves the substance thereof.

         After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, will not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver.

         Subject to Section 6.04 hereof and Section 508 of the Base Indenture,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Supplemental Indenture or the Notes. However, without the
consent of each Holder affected, an amendment or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):

                  (1) reduce the principal amount of Notes whose Holders must
         consent to an amendment, supplement or waiver hereunder or under the
         Base Indenture as to the Notes;

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                  (2) reduce the principal of or change the fixed maturity of
         any Note or alter any of the provisions with respect to the redemption
         of the Notes (except as provided above with respect to Sections 3.09,
         4.10 and 4.15 hereof);

                  (3) reduce the rate of or change the time for payment of
         interest, including default interest, on any Note;

                  (4) waive a Default or Event of Default in the payment of
         principal of, or interest or premium on the Notes (except a rescission
         of acceleration of the Notes by the Holders of at least a majority in
         aggregate principal amount of the Notes and a waiver of the payment
         default that resulted from such acceleration);

                  (5) make any Note payable in money other than that stated in
         the Notes;

                  (6) make any change in the provisions of this Supplemental
         Indenture relating to waivers of past Defaults or the rights of Holders
         of Notes to receive payments of principal of, or interest or premium on
         the Notes;

                  (7) waive a redemption payment with respect to any Note (other
         than a payment required by the provisions of Sections 3.09, 4.10 and
         4.15 hereof); or

                  (8) make any change in Section 6.04 hereof, Section 508 of the
         Base Indenture, as to the Notes, or in the foregoing amendment and
         waiver provisions.

         (b) Notwithstanding any other provision of the Indenture, no amendment
or supplement to the provisions of Article XI hereof may be made in a manner
which conflicts with the provisions of Section 11.04 hereof.

         (c) Other than as expressly provided in this Section 9.02(a)(8) above,
the Base Indenture may only be amended, supplemented or otherwise modified as
and to the extent provided in the Base Indenture.

Section 9.03 Compliance with Trust Indenture Act.

         Every amendment or supplement to this Supplemental Indenture or the
Notes will be set forth in a amended or supplemental Indenture that complies
with the TIA as then in effect.

Section 9.04 Revocation and Effect of Consents.

         Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05 Notation on or Exchange of Notes.

         The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee

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shall, upon receipt of an Company Order, authenticate new Notes that reflect the
amendment, supplement or waiver.

         Failure to make the appropriate notation or issue a new Note will not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

         The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. In
executing any amended or supplemental indenture, the Trustee will be entitled to
receive and (subject to Section 602 of the Base Indenture) will be fully
protected in relying upon an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental Indenture is
authorized or permitted by the Indenture.

                                  ARTICLE 10.
                             COLLATERAL AND SECURITY

Section 10.01 Security.

         The punctual payment of (i) the principal of, premium, if any, and
interest on the Notes and all other Parity Secured Obligations, when due,
whether on an interest payment date, at maturity, by acceleration, repurchase,
redemption or otherwise, (ii) interest on overdue principal of, premium, if any,
and interest on, the Notes and all other Parity Secured Obligations, (iii) the
performance of all other obligations of the Company to the Holders or the
Trustee under the Indenture and the Notes, according to the terms hereunder or
thereunder, and (iv) the performance of all other obligations of the Company
under the Secured Debt Documents are secured Equally and Ratably by liens upon
the Company's rights in the Shared Collateral. The payment of the Note
Guarantees of each Guarantor and all other Obligations of such Guarantor, when
due, and the performance of all other Obligations of such Guarantor under the
Secured Debt Documents are secured Equally and Ratably by Liens upon such
Guarantor's rights in the Shared Collateral.

Section 10.02 Collateral.

         (a) The Notes are secured, together with the Credit Agreement Debt, all
other Parity Secured Debt of the Company and all other Parity Secured
Obligations of the Company, Equally and Ratably by security interests granted to
the Collateral Trustee in all of the assets of the Company that secure Credit
Agreement Obligations, except Excluded Property. Each Note Guarantee is secured,
together with each Guarantor's guarantee of the Credit Agreement Debt, all other
guarantees of Parity Secured Debt of each Guarantor and all other Parity Secured
Obligations of each Guarantor, Equally and Ratably by security interests granted
to the Collateral Trustee in all assets of each Guarantor that secure its
guarantee of the Credit Agreement Obligations except Excluded Property. As
provided in and limited by the Security Documents, such security interests are
junior in priority to Permitted Prior Liens.

         (b) The assets securing Credit Agreement Obligations and guarantees of
Credit Agreement Obligations, excluding Excluded Property, consist of
substantially all of the operating assets of the Company and the Guarantors
owned as of the Issue Date or at any time thereafter acquired, subject to
Permitted Liens ("Shared Collateral"), including, without limitation, as of the
Issue Date:

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                  (1) mortgages on 13 electric generating plants with a net
         generating capacity of approximately 8,455 megawatts and related rights
         of way;

                  (2) the outstanding Capital Stock of Reliant Energy Retail
         Holdings, LLC, which through its Subsidiaries is engaged in the retail
         energy business;

                  (3) the outstanding Capital Stock of Orion Power Holdings,
         Inc., which through its Subsidiaries owns and operates 10 electric
         generating plants with a net generating capacity of approximately 5,400
         megawatts located in New York, Pennsylvania, Ohio and West Virginia;

                  (4) the outstanding Capital Stock of REMA, which owns or
         leases, together with its subsidiaries, 19 electric generating plants
         with a net generating capacity of approximately 3,732 megawatts located
         in Pennsylvania, New Jersey and Maryland; and

                  (5) substantially all of the inventory, equipment, accounts,
         general intangibles and other personal property of the Guarantors,
         except Excluded Securities.

         The Shared Collateral does not include any of the assets of the
Excluded Subsidiaries and does not include the Orion Intercompany Notes.

         The Shared Collateral also does not include certain assets that are
subject to various contractual or legal restrictions on liens or were otherwise
permitted by the holders of the Credit Agreement Obligations to be excluded from
the Liens securing the Credit Agreement Obligations, including (1) certain
receivables and related accounts of certain Guarantors that are in the retail
energy business, which are subject to a receivables securitization program and
are owned by a Securitization Entity, and (2) proceeds from the issuance of
Seward Tax-Exempt Bonds or Permitted PEDFA Bond Indebtedness (including the
Seward Notes) that secure the Seward Tax-Exempt Bonds or Permitted PEDFA Bond
Indebtedness.

Section 10.03 Further Assurances.

         (a) The Company and each Guarantor shall do or cause to be done all
acts and things which may be required, or which the Collateral Trustee from time
to time may reasonably request, to assure and confirm that the Collateral
Trustee holds Equally and Ratably, for the benefit of the Trustee and the
Holders of the Notes and holders of the other Parity Secured Debt duly created,
enforceable and perfected Liens (subject to Permitted Prior Liens) upon all
property, whether real, personal (including after-acquired personal property) or
mixed, of the Company and the Guarantors that is subject to any Lien securing
any other Series of Secured Debt, except Permitted Separate Liens upon Excluded
Property.

         (b) If the Company or any of the Guarantors at any time owns or
acquires any property that is subject to a Lien securing any Parity Secured Debt
(except Permitted Separate Liens upon Excluded Property), but is not subject to
a valid, enforceable perfected Lien (subject to Permitted Prior Liens) in favor
of the Collateral Trustee as security Equally and Ratably for all of the Parity
Secured Obligations, then the Company shall, or shall cause such Guarantor if
and to the extent required under the Credit Agreement or any other Credit
Facility of the Company to, concurrently:

                  (1) execute and deliver to the Collateral Trustee a security
         document upon substantially the same terms as the Security Documents
         delivered in connection with the issuance of the Notes or other terms
         reasonably satisfactory to the Company or such Guarantor and the
         Collateral Trustee acting at the direction of the Credit Agreement
         Agent, granting a Lien upon such property

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<PAGE>

         to the Collateral Trustee for the benefit of the holders of Parity
         Secured Obligations, Equally and Ratably;

                  (2) cause the Lien granted in such security document to be
         duly perfected in any manner permitted by law and cause each other Lien
         that secures Indebtedness upon such property to be (A) released, unless
         it is a Permitted Lien, or (B) subordinated to the Collateral Trustee's
         Liens if it is not a Permitted Prior Lien; and

                  (3) deliver to the Trustee and the Collateral Trustee any
         opinion of counsel delivered to or for the benefit of any Series of
         Secured Debt relating to such Security Document or the Lien granted
         therein.

         (c) Upon the written request of the Collateral Trustee at any time and
from time to time, the Company and each Guarantor shall promptly execute,
acknowledge and deliver such Security Documents, instruments, certificates,
notices and other documents and take such other actions as shall be required or
which the Collateral Trustee may reasonably request to grant, perfect or
maintain the priority of (subject to Permitted Prior Liens) the Liens and
benefits intended to be conferred as contemplated by the Secured Debt Documents
and the Security Documents for the benefit of the holders of the Parity Secured
Obligations.

Section 10.04 Collateral Trustee.

         (a) The Company has appointed Wachovia Bank, National Association or
one of its affiliates to serve as the Collateral Trustee for the benefit of the
holders of:

                  (1) the Notes;

                  (2) the Existing Notes;

                  (3)  the Credit Agreement Debt;

                  (4) the Seward Guarantees;

                  (5) any and all future Parity Secured Debt; and

                  (6) all other Secured Obligations outstanding from time to
         time.

         (b) The Collateral Trustee (directly or through co-trustees, agents or
sub-agents) holds, and is entitled to enforce, all Liens on the Collateral.

         (c) Except as provided in the Collateral Trust Agreement or the
Security Documents or as directed by an Act of Secured Debtholders, the
Collateral Trustee is not obligated:

                  (1) to act upon directions purported to be delivered to it by
         any other Person;

                  (2) to foreclose upon or otherwise enforce any Lien; or

                  (3) to take any other action whatsoever with regard to any or
         all of the Security Documents, the Liens created thereby or the
         Collateral.

Section 10.05 Security Documents and Guarantee.

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         (a) Each Holder of the Notes, by acceptance of the Notes, hereby
authorizes the Trustee and the Collateral Trustee, as applicable, on behalf of
and for the benefit of the Holders, to be the agent for and representative of
the Holders with respect to the Note Guarantees, the Shared Collateral and the
Security Documents.

         (b) Anything contained in any of the Note Documents to the contrary
notwithstanding, each Holder hereby agrees that no Holder or the Trustee shall
have any right individually to realize upon any of the Shared Collateral, it
being understood and agreed that all powers, rights and remedies of the Trustee
hereunder may be exercised solely by the Trustee in accordance with the terms
hereof and all powers, rights and remedies in respect of the Shared Collateral
under the Security Documents may be exercised solely by the Collateral Trustee.

Section 10.06 Release of Security Interests.

         (a) The Shared Collateral will be released from the Collateral
Trustee's Liens:

                  (1) in whole, at any time when no Actionable Default Period is
         continuing, if neither the Company nor any Guarantor has any
         Indebtedness secured by Liens, except for the Liens described in
         clauses (10), (11), (17) and (28) of the definition of "Permitted
         Liens;"

                  (2) as to any or all Shared Collateral at any time when no
         Actionable Default Period is continuing, if (A) consent to the release
         of Shared Collateral has been given by an Act of Secured Debtholders
         and (B) such release has become effective in accordance with the terms
         of the consent;

                  (3) as to any or all Shared Collateral at any time when an
         Actionable Default Period is continuing, if (A) consent to the release
         of such Shared Collateral has been given by an Act of Secured
         Debtholders and by the Required Lenders and (B) such release has become
         effective in accordance with the terms of the consent;

                  (4) as to (A) deposits in any Cash Collateral Account that are
         to be applied to fund any mandatory prepayment or purchase offer
         (including an Asset Sale Offer) that becomes required as to any Secured
         Debt as a result of a sale of assets, concurrently with such
         application, so long as effective provision is made for apportionment
         of such funding to all holders of Secured Debt entitled to participate
         in such mandatory prepayment or purchase offer in accordance with their
         respective entitlements under the Secured Debt Documents; and (B)
         deposits in any Cash Collateral Account that constitute proceeds from
         an asset sale that are permitted under the Secured Debt Documents to be
         reinvested or otherwise are not required under the Secured Debt
         Documents to be reinvested or otherwise are not required to be applied
         to a mandatory prepayment or purchase offer in respect of any Secured
         Debt, concurrently with such reinvestment in assets constituting
         Collateral or other permitted use under the Secured Debt Documents;

                  (5) as to assets of the Seward Subsidiary, concurrently with
         the incurrence by the Seward Subsidiary of Permitted PEDFA Bond
         Indebtedness that (A) is Non-Recourse to the Company and all of its
         other Restricted Subsidiaries (other than an unsecured Guarantee, if
         any provided by the Company); and (B) is secured solely by Liens on
         such assets; or

                  (6) in accordance with the provisions of the Security
         Documents as in effect from time to time.

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<PAGE>

         (b) The Collateral Trustee's Liens upon Shared Collateral will no
longer secure the Note Obligations and the right of the holders of Note
Obligations to the benefits and proceeds of the Collateral Trustee's Liens on
Shared Collateral will terminate and be discharged at the Company's written
request:

                  (1) upon satisfaction and discharge of this Supplemental
         Indenture pursuant to Article 13 hereof;

                  (2) upon Legal Defeasance or Covenant Defeasance; or

                  (3) upon payment in full in cash of the Notes and all other
         Note Obligations that are outstanding, due and payable at the time the
         Notes are paid in full in cash.

         (c) Any release of all or substantially all Shared Collateral owned by
any Guarantor will become effective only if all Liens on Excluded Securities
issued by such Guarantor have previously been or are concurrently released.

         (d) The Company shall otherwise comply with the provisions of TIA
Section 314(b).

         (e) To the extent applicable, the Company shall cause TIA Section
313(b), relating to reports, and TIA Section 314(d), relating to the release of
property or securities or relating to the substitution therefor of any property
or securities to be subjected to the Lien of the Security Documents, to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company except in cases where TIA Section 314(d)
requires that such certificate or opinion be made by an independent Person,
which Person will be an independent engineer, appraiser or other expert selected
by the Company and reasonably satisfactory to the Trustee. Notwithstanding
anything to the contrary in this paragraph, the Company shall not be required to
comply with all or any portion of TIA Section 314(d) (1) with respect to
releases of Collateral pursuant to Section 10.06(g) and (2) if it determines, in
good faith based on advice of counsel, that under the terms of Section 314(d)
and/or any interpretation or guidance as to the meaning thereof of the
Commission and its staff, including "no action" letters or exemptive orders, all
or any portion of TIA Section 314(d) is inapplicable to one or a series of
released Collateral.

         (f) To the extent applicable, the Company shall furnish to the Trustee,
prior to each proposed release of Collateral pursuant to the Security Documents:

                  (1) all documents required by TIAss.314(d); and

                  (2) an Opinion of Counsel to the effect that such accompanying
         documents constitute all documents required by TIA Section 314(d).

         If any Collateral is released in accordance with the Indenture or any
Security Document and if the Company has delivered the certificates and
documents required by the Security Documents and this Section 10.06, the
Trustee, upon receipt of such certificates and Opinion of Counsel, shall notify
the Collateral Trustee of the receipt of such documents.

         (g) Notwithstanding anything herein to the contrary, so long as no
Event of Default shall have occurred and be continuing:

                  (1) the Company may, without any prior release or consent by
         the Trustee, conduct the following ordinary course activities in
         respect of the Collateral subject to the lien of the Security Documents
         which do not individually or in the aggregate adversely affect the
         value of such Collateral:

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                           (a)      cash payments (including for the scheduled
                                    repayment of Indebtedness) in the ordinary
                                    course of business;

                           (b)      sales or other dispositions of inventory in
                                    the ordinary course of business;

                           (c)      collections, sales or other dispositions of
                                    accounts receivable in the ordinary course
                                    of business; and

                           (d)      sales or other dispositions in the ordinary
                                    course of business of any property the use
                                    of which is no longer necessary or desirable
                                    in the proper conduct of the business of the
                                    Company and its Subsidiaries and is not
                                    material to the conduct of the business of
                                    the Company and its Subsidiaries; and

                  (2) the fair value of any Collateral released in accordance
         with clause (1) of this Section 10.06(g) need not be considered in
         determining whether the aggregate fair value of Collateral released in
         any calendar year meets or exceeds the 10% threshold specified in TIA
         Section 314(d);

provided, however, that the Company's right to rely on this Section 10.06(g)
will be conditioned upon the Company's delivering to the Trustee, within 30
calendar days following the end of each six-month period beginning on January 1
and July 1 of any year, an Officer's Certificate to the effect that all releases
during such six-month period in respect of which the Company did not comply with
TIA Section 314(d) in reliance on this Section 10.06(g) were made in the
ordinary course of business.

Section 10.07 Environmental Indemnity.

         (a) Each of the Company and the Guarantors jointly and severally agrees
to defend (subject to Indemnitees' selection of counsel), indemnify, pay and
hold harmless the Trustee and each Holder and each of their respective
Affiliates and each and all of the directors, officers, partners, trustees,
employees, attorneys and agents, and (in each case) their respective heirs,
representatives, successors and assigns (each of the foregoing, an "Indemnitee")
from and against any and all Indemnified Liabilities; provided, no Indemnitee
shall be entitled to indemnification hereunder with respect to any Indemnified
Liability to the extent such Indemnified Liability is found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
directly and primarily from the gross negligence or willful misconduct of such
Indemnitee.

         (b) All amounts due under Section 10.07(a) hereof shall be payable not
later than 10 days after written demand therefor.

         (c) To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in Section 10.07(a) hereof may be unenforceable in whole
or in part because they are violative of any law or public policy, each of the
Company and Guarantors shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Indemnitees or any of them.

         (d) Neither the Company nor any Guarantor shall ever assert any claim
against any Indemnitee, on any theory of liability, for any lost profits or
special, indirect or consequential damages or (to the fullest extent lawful) any
punitive damages arising out of, in connection with, or as a result of, the
Indenture or any other Note Document or any agreement or instrument or
transaction contemplated hereby or relating in any respect to any Indemnified
Liability, and each of the Company and Guarantors hereby forever waives,
releases and agrees not to sue upon any claim for any such lost profits or
special,

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<PAGE>

indirect, consequential or (to the fullest extent lawful) punitive damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.

         (e) The agreements in this Section 10.07 shall survive repayment of the
Notes and all other amounts payable hereunder and the resignation and removal of
the Trustee or collateral agent.

                                  ARTICLE 11.
                               COLLATERAL SHARING

Section 11.01 Equal and Ratable Lien Sharing by Holders of Notes and holders of
other Parity Secured Debt.

         (a) Notwithstanding (1) anything to the contrary contained in the
Secured Debt Documents, (2) the time of incurrence of any Series of Secured
Debt, (3) the order or method of attachment or perfection of any Liens securing
any Series of Secured Debt, (4) the time or order of filing or recording of
financing statements, mortgages or other documents filed or recorded to perfect
any Lien upon any Shared Collateral, (5) the time of taking possession or
control over any Shared Collateral or (6) the rules for determining priority
under any law governing relative priorities of Liens:

                  (1) all Liens at any time granted by the Company or any of its
         Subsidiaries in the Shared Collateral to secure any of the Parity
         Secured Debt shall secure, Equally and Ratably, all liabilities of the
         Company or such Subsidiary under or in respect of the Parity Secured
         Debt and other Parity Secured Obligations; and

                  (2) all proceeds of all Liens at any time granted by the
         Company or any its Subsidiaries in the Shared Collateral to secure any
         of the Parity Secured Debt shall be allocated and distributed Equally
         and Ratably on account of all liabilities of the Company or such
         Subsidiary under or in respect of the Parity Secured Debt and other
         Parity Secured Obligations.

         Each Holder of the Notes, by acceptance of the Notes, agrees to the
provisions described in the Order of Application and the definition of the term
"Equally and Ratably."

         (b) The provisions of Section 11.01(a) hereof are intended for the
benefit of, and will be enforceable as a third party beneficiary by, each
present and future holder of Secured Obligations and each present and future
Secured Debt Representative.

         (c) It is understood that Shared Collateral may be released pursuant to
the provisions of Section 10.06 hereof.

Section 11.02 Reserved.

Section 11.03 Enforcement of Security Interests.

         The enforcement of the Collateral Trustee's Liens in the Shared
Collateral shall be governed by the Collateral Trust Agreement.

Section 11.04 Amendment and Supplement.

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         (a) No amendment or supplement to the provisions of Section 11.01
hereof that adversely affects the right of any Holder of Notes to share in the
Shared Collateral Equally and Ratably will:

                  (1) be effective unless set forth in a writing signed by the
         Trustee with the consent of the Holders of at least a majority in
         principal amount of the Notes then outstanding (including, without
         limitation, consents obtained in connection with a purchase of, or
         tender offer or exchange offer for, any Notes); or

                  (2) be effective without the written consent of the Company.

         No waiver of the provisions of this Article 11.01 will in any event be
effective unless set forth in a writing signed and consented to, as required for
an amendment under this Section 11.04, by the party to be bound thereby.

         (b) Any amendment or supplement to the provisions of the Security
Documents will be effective only in accordance with the provisions of Section
9.01 of the Collateral Trust Agreement.

                                  ARTICLE 12.
                                 NOTE GUARANTEES

Section 12.01 Guarantee.

         (a) Subject to this Article 12, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that:

                  (1) the principal of, premium, if any, and interest on the
         Notes shall be promptly paid in full when due, whether at maturity, by
         acceleration, redemption or otherwise, and interest on the overdue
         principal of and interest on the Notes, if any, if lawful, and all
         other obligations of the Company to the Holders or the Trustee
         hereunder or thereunder shall be promptly paid in full or performed,
         all in accordance with the terms hereof and thereof; and

                  (2) in case of any extension of time of payment or renewal of
         any Notes or any of such other obligations, that same shall be promptly
         paid in full when due or performed in accordance with the terms of the
         extension or renewal, whether at stated maturity, by acceleration or
         otherwise.

         Failing payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

         (b) The Guarantors hereby agree that their obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note

                                       83
<PAGE>

Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes and the Indenture.

         (c) If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors or any custodian, trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

         (d) Each Guarantor agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (2) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) will forthwith become due and payable by the Guarantors for
the purpose of this Note Guarantee. The Guarantors will have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Note Guarantee.

Section 12.02 Limitation on Guarantor Liability.

         Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will be limited to the maximum amount that will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 12, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.

Section 12.03 Execution and Delivery of Note Guarantee.

         To evidence its Note Guarantee set forth in Section 12.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form attached as Exhibit B hereto shall be endorsed by an Officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Supplemental Indenture shall be executed on behalf of such Guarantor by one of
its Officers.

         Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 12.01 will remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.

         If an Officer whose signature is on this Supplemental Indenture or on
the Note Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee
will be valid nevertheless.

         The delivery of any Note by the Trustee, after the authentication
thereof hereunder, will constitute due delivery of the Note Guarantee set forth
in this Supplemental Indenture on behalf of the Guarantors.

                                       84
<PAGE>

         In the event that the Company creates or acquires any Domestic
Subsidiary after the Issue Date, if required by Section 4.18 hereof, the Company
shall cause such Domestic Subsidiary to comply with the provisions of Section
4.18 hereof and this Article 12, to the extent applicable.

Section 12.04 Guarantors May Consolidate, etc., on Certain Terms.

         Except as otherwise provided in Section 12.05, no Guarantor may sell or
otherwise dispose of all or substantially all of its assets to, or consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person) another Person, other than the Company or another Guarantor, unless:

                  (1) immediately after giving effect to that transaction, no
         Default or Event of Default exists; and

                  (2) either:

                           (a) subject to Section 12.05 hereof, the Person
         acquiring the property in any such sale or disposition or the Person
         formed by or surviving any such consolidation or merger assumes all the
         obligations of that Guarantor under this Supplemental Indenture, its
         Note Guarantee and all Security Documents delivered by that Guarantor
         pursuant to a supplemental indenture; or

                           (b) the Net Proceeds of such sale or other
         disposition are applied in accordance with the applicable provisions of
         this Supplemental Indenture, including without limitation, Section 4.10
         hereof, and the Collateral Trust Agreement.

         In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Supplemental Indenture to be performed by
the Guarantor, such successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor Person thereupon may cause to be signed any or all of the Note
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Note Guarantees so issued will in all respects have the same
legal rank and benefit under this Supplemental Indenture as the Note Guarantees
theretofore and thereafter issued in accordance with the terms of this
Supplemental Indenture as though all of such Note Guarantees had been issued on
the Issue Date.

         Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Supplemental Indenture or
in any of the Notes will prevent any consolidation or merger of a Guarantor with
or into the Company or another Guarantor, or will prevent any sale or conveyance
of the property of a Guarantor as an entirety or substantially as an entirety to
the Company or another Guarantor.

Section 12.05 Releases.

         (a) The Note Guarantee of a Guarantor shall be released automatically
and all security interests granted by that Guarantor or granted in such
Guarantor's Capital Stock to the Collateral Trustee shall be released with
respect to the Note Obligations:

                  (1) in connection with any sale or other disposition of all of
         the assets or Capital Stock of that Guarantor (including by way of
         merger or consolidation) to a Person that is not (either before

                                       85
<PAGE>

         or after giving effect to such transaction) the Company or a Restricted
         Subsidiary of the Company, if the Net Proceeds of the sale or
         disposition are applied in accordance with the applicable provisions of
         this Supplemental Indenture, including without limitation, Section 4.10
         hereof, and the Collateral Trust Agreement without limiting any other
         rights of the Company hereunder;

                  (2) if the Company designates any Restricted Subsidiary that
         is a Guarantor to be an Unrestricted Subsidiary in accordance with the
         applicable provisions of this Supplemental Indenture;

                  (3) upon a dissolution of that Guarantor that is permitted
         under Section 4.14 hereof; or

                  (4) upon written request of the Company, if that Guarantor has
         been or will be concurrently released from its guarantee of all other
         Indebtedness of the Company; provided that all Liens on the Excluded
         Securities issued by such Guarantor securing any such Indebtedness have
         been or are concurrently released.

         (b) The Note Guarantee of a Guarantor shall be released with respect to
the Notes automatically upon Legal Defeasance, Covenant Defeasance or
satisfaction and discharge of this Supplemental Indenture pursuant to Article 13
hereof.

         (c) Upon delivery by the Company to the Trustee of an Officer's
Certificate and an Opinion of Counsel to the effect that the action or event
giving rise to the applicable release has occurred or was made by the Company in
accordance with the provisions of this Supplemental Indenture and the Collateral
Trust Agreement, as applicable, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.

         (d) Any Guarantor not released from its obligations under its Note
Guarantee will remain liable for the full amount of principal of and interest on
the Notes and for the other obligations of any Guarantor under the Indenture as
provided in this Article 12.

                                  ARTICLE 13.
                           SATISFACTION AND DISCHARGE

Section 13.01 Satisfaction and Discharge.

         This Supplemental Indenture will be discharged and will cease to be of
further effect as to all Notes issued hereunder, when:

                  (1) either:

                           (a) all Notes that have been authenticated, except
         lost, stolen or destroyed Notes that have been replaced or paid and
         Notes for whose payment money has been deposited in trust and
         thereafter repaid to the Company, have been delivered to the Trustee
         for cancellation; or

                           (b) all Notes that have not been delivered to the
         Trustee for cancellation have become due and payable by reason of the
         mailing of a notice of redemption or otherwise or will become due and
         payable within one year and the Company or any Guarantor has
         irrevocably deposited or caused to be deposited with the Trustee as
         trust funds in trust solely for the benefit of the Holders, cash in
         U.S. dollars, non-callable Government Securities, or a combination
         thereof, in such amounts as will be sufficient without consideration of
         any reinvestment of interest, to pay

                                       86
<PAGE>

         and discharge the entire indebtedness on the Notes not delivered to the
         Trustee for cancellation for principal, premium, if any, and accrued
         interest to the date of maturity or redemption;

                  (2) no Default or Event of Default has occurred and is
         continuing on the date of the deposit or will occur as a result of the
         deposit and the deposit will not result in a breach or violation of, or
         constitute a default under, any other instrument to which the Company
         or any Guarantor is a party or by which the Company or any Guarantor is
         bound;

                  (3) the Company or any Guarantor has paid or caused to be paid
         all sums payable by it under this Supplemental Indenture; and

                  (4) the Company has delivered irrevocable instructions to the
         Trustee under this Supplemental Indenture to apply the deposited money
         toward the payment of the Notes at maturity or the redemption date, as
         the case may be.

In addition, the Company must deliver an Officer's Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

         Notwithstanding the satisfaction and discharge of this Supplemental
Indenture, if money has been deposited with the Trustee pursuant to subclause
(b) of clause (1) of this Section, the provisions of Section 13.02 and Section
8.06 will survive. In addition, nothing in this Section 13.01 will be deemed to
discharge those provisions of Section 7.01 hereof and Section 607 of the Base
Indenture, that, by their terms, survive the satisfaction and discharge of this
Supplemental Indenture. Further, the Shared Collateral will be released with
respect to the Note Obligations with respect to the Notes only, pursuant to the
provisions of Section 10.06, upon a discharge of this Supplemental Indenture in
accordance with the provisions described in that Section.

Section 13.02 Application of Trust Money.

         Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 13.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and the Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal, premium, if any, and interest for whose payment such money has
been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

         If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 13.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and any Guarantor's obligations under this Supplemental Indenture and
the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 13.01; provided that if the Company has made any payment of
principal of, premium, if any, or interest on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.

                                  ARTICLE 14.
                                  MISCELLANEOUS

Section 14.01 Trust Indenture Act Controls.

                                       87
<PAGE>

         If any provision of this Supplemental Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties will
control.

Section 14.02 Notices.

         Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:

         If to the Company and/or any Guarantor:

         Reliant Energy, Inc.
         1000 Main Street
         Houston, Texas 77002
         Telecopier No.: (713) 497-3000
         Attention: General Counsel

         With a copy to:
         Skadden, Arps, Slate, Meagher & Flom LLP
         Four Times Square
         New York, NY 10036
         Telecopier No.: (212) 735-2000
         Attention: Richard B. Aftanas

         If to the Trustee:
         Wilmington Trust Company
         Rodney Square North
         1100 North Market Street
         Wilmington, Delaware 19890
         Telecopier No.: (302) 636-4143
         Attention: Corporate Trust Administration

         The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

         All notices and communications (other than those sent to Holders) will
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

         Any notice or communication to a Holder will be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Securities Registrar. Any notice or communication will also be so mailed
to any Person described in TIA Section 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a Holder or any defect in it
will not affect its sufficiency with respect to other Holders.

         If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

                                       88
<PAGE>

         If the Company mails a notice or communication to Holders, it will mail
a copy to the Trustee and each Agent at the same time.

Section 14.03 Communication by Holders of Notes with Other Holders of Notes.

         Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under the Indenture or the Notes. The
Company, the Trustee, the Securities Registrar and anyone else shall have the
protection of TIA Section 312(c).

Section 14.04 Reserved.

Section 14.05 Reserved.

Section 14.06 Reserved.

Section 14.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.

         No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, will have any liability for any obligations
of the Company or the Guarantors under the Notes, this Supplemental Indenture,
the Note Guarantees, the Security Documents or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. The waiver may
not be effective to waive liabilities under the federal securities laws.

Section 14.08 Governing Law.

         THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 14.09 No Adverse Interpretation of Other Agreements.

         This Supplemental Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Supplemental Indenture.

Section 14.10 Successors.

         All agreements of the Company in the Indenture and the Notes will bind
its successors. All agreements of the Trustee in the Indenture will bind its
successors. All agreements of each Guarantor in this Supplemental Indenture will
bind its successors, except as otherwise provided in Section 12.05.

Section 14.11 Severability.

         In case any provision in the Indenture or in the Notes is invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

Section 14.12 Counterpart Originals.

                                       89
<PAGE>

         The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy will be an original, but all of them together
represent the same agreement.

Section 14.13 Table of Contents, Headings, etc.

         The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Supplemental Indenture have been inserted for
convenience of reference only, are not to be considered a part of this
Supplemental Indenture and will in no way modify or restrict any of the terms or
provisions hereof.

                         [Signatures on following pages]

                                       90
<PAGE>

                                   SIGNATURES

Dated as of December 22, 2004

                                RELIANT ENERGY, INC.,
                                as Issuer

                                By: ________________________________
                                    Name:
                                    Title:

                                GUARANTORS:

                                RELIANT ENERGY ASSET MANAGEMENT, LLC
                                RELIANT ENERGY AURORA DEVELOPMENT, LLC
                                RELIANT ENERGY AURORA HOLDING, LLC
                                RELIANT ENERGY AURORA I, LP
                                RELIANT ENERGY AURORA II, LP
                                RELIANT ENERGY AURORA, LP
                                RELIANT ENERGY BROADBAND, INC.
                                RELIANT ENERGY CALIFORNIA HOLDINGS, LLC
                                RELIANT ENERGY CAPITAL (EUROPE), INC.
                                RELIANT ENERGY COMMUNICATIONS, INC.
                                RELIANT ENERGY COOLWATER, INC.
                                RELIANT ENERGY CORPORATE SERVICES, LLC
                                RELIANT ENERGY DEER PARK, INC.
                                ENERGY ELLWOOD, INC.
                                RELIANT ENERGY ETIWANDA, INC.
                                RELIANT ENERGY EUROPE, INC.
                                RELIANT ENERGY FLORIDA, LLC
                                RELIANT ENERGY FLORIDA HOLDINGS, LLC
                                RELIANT ENERGY KEY/CON FUELS, LLC
                                RELIANT ENERGY MANDALAY, INC.
                                RELIANT ENERGY NET VENTURES, INC.
                                RELIANT ENERGY NORTHEAST GENERATION, INC.
                                RELIANT ENERGY NORTHEAST HOLDINGS, INC.
                                RELIANT ENERGY ORMOND BEACH, INC.
                                RELIANT ENERGY POWER GENERATION, INC.
                                RELIANT ENERGY POWER OPERATIONS I, INC.
                                RELIANT ENERGY POWER OPERATIONS II, INC.
                                RELIANT ENERGY RENEWABLES, INC.
                                RELIANT ENERGY RETAIL HOLDINGS, LLC
                                RELIANT ENERGY RETAIL SERVICES, LLC
                                ENERGY SABINE (TEXAS), INC.
                                RELIANT ENERGY SERVICES DESERT BASIN, LLC
                                RELIANT ENERGY SERVICES INTERNATIONAL, INC.
                                RELIANT ENERGY SERVICES MID-STREAM, LLC

                                       91
<PAGE>

                                RELIANT ENERGY SERVICES, INC.
                                RELIANT ENERGY SEWARD, LLC
                                RELIANT ENERGY SHELBY COUNTY II, LP
                                RELIANT ENERGY SHELBY COUNTY, LP
                                RELIANT ENERGY SHELBY DEVELOPMENT CORP.
                                RELIANT ENERGY SHELBY HOLDING CORP.
                                RELIANT ENERGY SHELBY I, LP
                                RELIANT ENERGY SHELBY II, LP
                                RELIANT ENERGY SOLUTIONS, LLC
                                RELIANT ENERGY SOLUTIONS HOLDINGS, LLC
                                RELIANT ENERGY TEXAS RENEWABLES GP, LLC
                                RELIANT ENERGY TEXAS RENEWABLES, LP
                                RELIANT ENERGY TRADING EXCHANGE, INC.
                                RELIANT ENERGY VENTURES, INC.
                                RELIANT ENERGY WHOLESALE GENERATION, LLC
                                RELIANT ENERGY WHOLESALE SERVICE COMPANY
                                RELIANT RESOURCES INTERNATIONAL SERVICES, INC.
                                STAREN POWER, LLC
                                TEXAS STAR ENERGY COMPANY

                                By: _______________________________
                                Name: Andrew Johannesen

                                Title:   Assistant Treasurer of the
                                         corporations and limited liability
                                         companies, and of the general
                                         partners of the limited
                                         partnerships, listed above

                                RELIANT ENERGY CAPTRADES HOLDING CORP.
                                RELIANT ENERGY ELECTRIC SOLUTIONS, LLC
                                RELIANT ENERGY RENEWABLES HOLDINGS II, LLC
                                RELIANT ENERGY SABINE (DELAWARE), INC.
                                RELIANT ENERGY SOLUTIONS EAST, LLC

                                By: _________________________________

                                Name: Andrew Johannesen
                                Title: Attorney-in-fact

Attest:

_________________________________
Name:
Title:

                                       92
<PAGE>

                                WILMINGTON TRUST COMPANY,

                                as Trustee

                                By: ____________________________________
                                    Name:
                                    Title:

                                       93
<PAGE>

                                   SCHEDULE I

                             SCHEDULE OF GUARANTORS

         The following schedule lists each Guarantor under the Supplemental
Indenture as of the Issue Date:

Reliant Energy Asset Management, LLC a Delaware limited liability company

Reliant Energy Aurora Development, LLC, a Delaware limited liability company

Reliant Energy Aurora Holding, LLC, a Delaware limited liability company

Reliant Energy Aurora I, LP, a Delaware limited partnership

Reliant Energy Aurora II, LP, a Delaware limited partnership

Reliant Energy Aurora, LP, a Delaware limited partnership

Reliant Energy Broadband, Inc., a Delaware corporation

Reliant Energy California Holdings, LLC, a Delaware limited liability company

Reliant Energy Capital (Europe), Inc., a Delaware corporation

Reliant Energy CapTrades Holding Corp., a Delaware corporation

Reliant Energy Communications, Inc., a Delaware corporation

Reliant Energy Coolwater, Inc., a Delaware corporation

Reliant Energy Corporate Services, LLC, a Delaware limited liability company

Reliant Energy Deer Park, Inc., a Delaware corporation

Reliant Energy Electric Solutions, LLC, a Delaware limited liability company

Reliant Energy Ellwood, Inc., a Delaware corporation

Reliant Energy Etiwanda, Inc., a Delaware corporation

Reliant Energy Europe, Inc., a Delaware corporation

Reliant Energy Florida, LLC, a Delaware limited liability company

Reliant Energy Florida Holdings, LLC, a Delaware limited liability company

Reliant Energy Key/Con Fuels, LLC, a Delaware limited liability company

Reliant Energy Mandalay, Inc., a Delaware corporation

                                      I-1
<PAGE>

Reliant Energy Net Ventures, Inc., a Delaware corporation

Reliant Energy Northeast Generation, Inc., a Delaware corporation

Reliant Energy Northeast Holdings, Inc., a Delaware corporation

Reliant Energy Ormond Beach, Inc., a Delaware corporation

Reliant Energy Power Generation, Inc., a Delaware corporation

Reliant Energy Power Operations I, Inc., a Delaware corporation

Reliant Energy Power Operations II, Inc., a Delaware corporation

Reliant Energy Renewables, Inc., a Delaware corporation

Reliant Energy Renewables Holdings II, LLC, a Delaware limited liability company

Reliant Energy Retail Holdings, LLC, a Delaware limited liability company

Reliant Energy Retail Services, LLC, a Delaware limited liability company

Reliant Energy Sabine (Delaware), Inc., a Delaware corporation

Reliant Energy Sabine (Texas), Inc., a Delaware corporation

Reliant Energy Services Desert Basin, LLC, a Delaware limited liability company

Reliant Energy Services International, Inc., a Delaware corporation

Reliant Energy Services Mid-Stream, LLC, a Delaware limited liability company

Reliant Energy Services, Inc., a Delaware corporation

Reliant Energy Seward, LLC, a Delaware limited liability company

Reliant Energy Shelby County II, LP, a Delaware limited partnership

Reliant Energy Shelby County, LP, a Delaware limited partnership

Reliant Energy Shelby Development Corp., a Delaware corporation

Reliant Energy Shelby Holding Corp., a Delaware corporation

Reliant Energy Shelby I, LP, a Delaware limited partnership

Reliant Energy Shelby II, LP, a Delaware limited partnership

Reliant Energy Solutions, LLC, a Delaware limited liability company

Reliant Energy Solutions East, LLC, a Delaware limited liability company

                                      I-2
<PAGE>

Reliant Energy Solutions Holdings, LLC, a Delaware limited liability company

Reliant Energy Texas Renewables GP, LLC, a Delaware limited liability company

Reliant Energy Texas Renewables, LP, a Delaware limited partnership

Reliant Energy Trading Exchange, Inc., a Delaware corporation

Reliant Energy Ventures, Inc., a Delaware corporation

Reliant Energy Wholesale Generation, LLC, a Delaware limited liability company

Reliant Energy Wholesale Service Company, a Delaware corporation

Reliant Resources International Services, Inc., a Delaware corporation

StarEn Power, LLC, a Delaware limited liability company

Texas Star Energy Company, a Delaware corporation

                                      I-3
<PAGE>

                                                                       EXHIBIT A

                                 [Face of Note]

                                                           CUSIP/CINS __________

                       6.75% Senior Secured Notes due 2014

No. ___                                                            $____________

                              RELIANT ENERGY, INC.

promises to pay to [CEDE & CO.]

or registered assigns,

the principal sum of ___________________________________________________________

Dollars on December 15, 2014.

Interest Payment Dates:  June 15 and December 15.

Record Dates: June 1 and December 1.

Dated: ________________

         IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed.

                                              RELIANT ENERGY, INC.

                                              By: ______________________________
                                                  Name:
                                                  Title:

Date of Authentication:  December 22, 2004

This Note is one of the Securities of
a series designated therein referred to
in the within-mentioned Indenture:

WILMINGTON TRUST COMPANY,
  as Trustee

By: _______________________________
          Authorized Signatory

                                      A-1
<PAGE>

                                 [Back of Note]
                       6.75% Senior Secured Notes due 2014

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Supplemental Indenture]

         Capitalized terms used herein have the meanings assigned to them in the
Supplemental Indenture referred to below unless otherwise indicated.

                  (1) Interest. Reliant Energy, Inc., a Delaware corporation
         (the "Company"), promises to pay interest on the principal amount of
         this Note at 6.75% per annum from December 22, 2004 until maturity. The
         Company shall pay interest semi-annually in arrears on June 15 and
         December 15 of each year, or if any such day is not a Business Day, on
         the next succeeding Business Day (each, an "Interest Payment Date").
         Interest on the Notes will accrue from the most recent date to which
         interest has been paid or, if no interest has been paid, from the date
         of issuance; provided that if there is no existing Default in the
         payment of interest, and if this Note is authenticated between a record
         date referred to on the face hereof and the next succeeding Interest
         Payment Date, interest shall accrue from such next succeeding Interest
         Payment Date; provided, further, that the first Interest Payment Date
         shall be June 15, 2005. The Company shall pay interest (including
         post-petition interest in any proceeding under any Bankruptcy Law) on
         overdue principal and premium, if any, from time to time on demand at a
         rate that is 1% per annum in excess of the rate then in effect; it
         shall pay interest (including post-petition interest in any proceeding
         under any Bankruptcy Law) on overdue installments of interest (without
         regard to any applicable grace periods) from time to time on demand at
         the same rate to the extent lawful. Interest will be computed on the
         basis of a 360-day year of twelve 30-day months.

                  (2) Method of Payment. The Company shall pay interest on the
         Notes (except defaulted interest) to the Persons who are registered
         Holders of Notes at the close of business on the June 1 or December 1
         next preceding the Interest Payment Date, even if such Notes are
         canceled after such record date and on or before such Interest Payment
         Date, except as provided in Section 307 of the Base Indenture with
         respect to defaulted interest. The Notes will be payable as to
         principal, premium, if any, and interest at the office or agency of the
         Company maintained for such purpose within the City and State of New
         York, or, at the option of the Company, payment of interest and may be
         made by check mailed to the Holders at their addresses set forth in the
         register of Holders; provided that payment by wire transfer of
         immediately available funds will be required with respect to principal
         of and interest and premium, if any, on, all Global Notes and all other
         Notes the Holders of which will have provided wire transfer
         instructions to the Company or the Paying Agent. Such payment shall be
         in such coin or currency of the United States of America as at the time
         of payment is legal tender for payment of public and private debts.

                  (3) Paying Agent and Securities Registrar. Initially,
         Wilmington Trust Company, the Trustee under the Indenture, will act as
         Paying Agent and the Securities Registrar. The Company may change any
         Paying Agent or the Securities Registrar without notice to any Holder.
         The Company or any of its Subsidiaries may act in any such capacity.

                  (4) Indenture. This Note is one of a duly authenticated series
         of securities of the Company issued and to be issued in one or more
         series under a Senior Indenture (the "Base Indenture"), dated as of
         December 22, 2004, between the Company and the Trustee, as amended by a
         First Supplemental Indenture (the "Supplemental Indenture" and,
         together with the Base Indenture, the "Indenture"), dated as of
         December 22, 2004, among the Company, the Guarantors and the Trustee.
         The terms of the Notes include those stated in the Indenture and those
         made part

                                      A-2
<PAGE>

         of the Indenture by reference to the Trust Indenture Act of 1939, as
         amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to
         all such terms, and Holders are referred to the Indenture and such Act
         for a statement of such terms. To the extent any provision of this Note
         conflicts with the express provisions of the Base Indenture, the
         provisions of this Note shall govern and be controlling and to the
         extent any provision of this Note conflicts with the express provisions
         of the Supplemental Indenture, the provisions of the Supplemental
         Indenture shall govern and be controlling. The Notes are secured
         obligations of the Company. The Company shall be entitled to issue
         Additional Notes pursuant to Section 2.13 of the Supplemental
         Indenture.

                  (5) Optional Redemption.

         (a) Except as set forth in subparagraph (b) of this Paragraph 5, the
         Company shall not have the option to redeem the Notes prior to December
         15, 2009. Thereafter, the Company shall have the option to redeem the
         Notes, in whole or in part, upon not less than 30 nor more than 60
         days' notice, at the redemption prices (expressed as percentages of
         principal amount) set forth below plus accrued and unpaid interest
         thereon to the applicable redemption date, if redeemed during the
         twelve-month period beginning on December 15 of the years indicated
         below, subject to the rights of Holders on the relevant record date to
         receive interest on the relevant interest payment date:

<TABLE>
<CAPTION>
Year                                                                                    Percentage
----                                                                                    ----------
<S>                                                                                     <C>
2009.............................................................................        103.375%
2010.............................................................................        102.250%
2011.............................................................................        101.125%
2012 and thereafter..............................................................        100.000%
</TABLE>

         (b) Notwithstanding the provisions of subparagraph (a) of this
         Paragraph 5, at any time prior to December 15, 2007, the Company may on
         one or more occasions redeem up to 35% of the aggregate principal
         amount of Notes issued under the Supplemental Indenture at a redemption
         price of 106.750% of the principal amount, plus accrued and unpaid
         interest to the redemption date with the net proceeds of one or more
         Equity Offerings of the Company; provided that at least 65% in
         aggregate principal amount of the Notes issued under the Supplemental
         Indenture remains outstanding immediately after the occurrence of such
         redemption and that such redemption occurs within 75 days of the date
         of the closing of such Equity Offering.

              (6) No Mandatory Redemption. The Company shall not be required to
         make mandatory redemption or sinking fund payments with respect to the
         Notes.

              (7) Collateral and Security. Subject to the terms of the
         Indenture, the Notes are secured, together with the Credit Agreement
         Debt, all other Parity Secured Debt of the Company and all other Parity
         Secured Obligations of the Company, Equally and Ratably by security
         interests granted to the Collateral Trustee in all of the assets of the
         Company that secure Credit Agreement Obligations, except Excluded
         Property. Subject to the terms of the Indenture, each Note Guarantee is
         secured, together with each Guarantor's guarantee of the Credit
         Agreement Debt, all other guarantees of Parity Secured Debt of each
         Guarantor and all other Parity Secured Obligations of each Guarantor,
         Equally and Ratably by security interests granted to the Collateral
         Trustee in all assets of each Guarantor that secure its guarantee of
         the Credit Agreement Obligations except Excluded Property.

              (8) Repurchase at Option of Holder.

                                      A-3
<PAGE>

         (a) If there is a Change of Control, the Company shall be required to
         make an offer (a "Change of Control Offer") to repurchase all or any
         part (equal to $2,000 or integral multiples of $1,000 in excess of
         $2,000) of each Holder's Notes at a purchase price equal to 101% of the
         aggregate principal amount of notes repurchased plus accrued and unpaid
         interest to the date of purchase (the "Change of Control Payment").
         Within 30 days following any Change of Control, the Company shall mail
         a notice to each Holder setting forth the procedures governing the
         Change of Control Offer as required by the Indenture.

         (b) If the Company or a Restricted Subsidiary consummates any Asset
         Sales, within five days of each date on which the aggregate amount of
         Excess Proceeds exceeds $25 million, the Company shall commence an
         offer to all Holders of Notes and all holders of other Indebtedness
         that is pari passu with the Notes (other than Credit Agreement Debt)
         containing provisions similar to those set forth in the Supplemental
         Indenture with respect to offers to purchase (or repay, prepay or
         redeem, as applicable) an aggregate principal amount of Notes and such
         other pari passu Indebtedness that may be purchased (or repaid, prepaid
         or redeemed) equal to the aggregate Excess Proceeds multiplied by a
         fraction, the numerator of which consists of (A) the aggregate
         principal amount then outstanding on the Notes and all such pari passu
         Indebtedness containing such provisions (not including Credit Agreement
         Debt) and the denominator of which is (B) the sum of (i) such aggregate
         amount in the preceding clause (A) and (ii) the Credit Agreement Debt
         then outstanding (an "Asset Sale Offer") pursuant to Section 3.09 of
         the Supplemental Indenture to purchase the maximum principal amount of
         Notes and other pari passu Indebtedness that may be purchased out of
         the Excess Proceeds at an offer price in cash in an amount equal to
         100% of the principal amount thereof plus accrued and unpaid interest
         to the date fixed for the closing of such offer, in accordance with the
         procedures set forth in the Supplemental Indenture. To the extent that
         the aggregate amount of Notes and other pari passu Indebtedness
         tendered pursuant to an Asset Sale Offer is less than the Excess
         Proceeds, the Company may use such deficiency for any purpose not
         otherwise prohibited by the Indenture. If the aggregate principal
         amount of Notes and other pari passu Indebtedness surrendered by
         holders thereof exceeds the amount of Excess Proceeds, the Company
         shall select the Notes and other pari passu Indebtedness to be
         purchased on a pro rata basis. Holders of Notes that are the subject of
         an offer to purchase will receive an Asset Sale Offer from the Company
         prior to any related purchase date and may elect to have such Notes
         purchased by completing the form entitled "Option of Holder to Elect
         Purchase" on the reverse of the Notes.

              (9) Notice of Redemption. Notice of redemption will be mailed at
         least 30 days but not more than 60 days before the redemption date to
         each Holder whose Notes are to be redeemed at its registered address.
         Notes in denominations larger than $2,000 may be redeemed in part but
         only in whole multiples of $1,000 in excess of $2,000, unless all of
         the Notes held by a Holder are to be redeemed. On and after the
         redemption date interest ceases to accrue on Notes or portions thereof
         called for redemption.

              (10) Denominations, Transfer, Exchange. The Notes are in
         registered form without coupons in denominations of $2,000 and integral
         multiples of $1,000 in excess of $2,000. The transfer of Notes may be
         registered and Notes may be exchanged as provided in the Supplemental
         Indenture. The Securities Registrar and the Trustee may require a
         Holder, among other things, to furnish appropriate endorsements and
         transfer documents and the Company may require a Holder to pay any
         taxes and fees required by law or permitted by the Supplemental
         Indenture. The Company need not exchange or register the transfer of
         any Note or portion of a Note selected for redemption, except for the
         unredeemed portion of any Note being redeemed in part. Also, the
         Company need not exchange or register the transfer of any Notes for a
         period of 15 days before a

                                      A-4
<PAGE>

         selection of Notes to be redeemed or during the period between a record
         date and the corresponding Interest Payment Date.

              (11) Persons Deemed Owners. The registered Holder of a Note may be
         treated as its owner for all purposes.

              (12) Amendment, Supplement and Waiver. The Base Indenture may be
         amended as provided therein. Subject to certain exceptions, the
         Supplemental Indenture, the Note Guarantees or the Notes may be amended
         or supplemented with the consent of the Holders of at least a majority
         in principal amount of the then outstanding Notes, and any existing
         default or compliance with any provision of the Supplemental Indenture,
         the Note Guarantees or the Notes may be waived with the consent of the
         Holders of a majority in principal amount of the then outstanding
         Notes. Without the consent of any Holder of a Note, the Supplemental
         Indenture, the Note Guarantees or the Notes may be amended or
         supplemented (i) to cure any ambiguity, defect or inconsistency, (ii)
         to provide for uncertificated Notes in addition to or in place of
         certificated Notes or to alter the provisions of Article 2 (including
         the related definitions) of the Supplemental Indenture in a manner that
         does not materially adversely affect any Holder, (iii) to provide for
         the assumption of the Company's or any Guarantor's obligations to
         Holders of the Notes by a successor to the Company or such Guarantor
         pursuant to Article 5 or 12 of the Supplemental Indenture, (iv) to make
         any change that would provide any additional rights or benefits to the
         Holders, including the addition of guarantees, or that does not
         adversely affect the legal rights under the Supplemental Indenture of
         any such Holder, (v) to comply with the requirements of the SEC in
         order to effect or maintain the qualification of the Indenture under
         the Trust Indenture Act, (vi) to make, complete or confirm any grant of
         Collateral permitted or required by the Security Documents, the
         Collateral Trust Agreement or the Supplemental Indenture or, with the
         consent of the Credit Agreement Agent, any release of Collateral that
         becomes effective as set forth in the Security Documents, the
         Collateral Trust Agreement or the Supplemental Indenture, (vii) to
         conform the text of the Supplemental Indenture, the Notes or the Note
         Guarantees to any provision of the Description of Notes to the extent
         that such provision in the Description of Notes was intended to be a
         verbatim recitation of a provision of the Supplemental Indenture, the
         Notes or the Note Guarantees, (viii) to reflect any waiver or
         termination of any right arising under the provisions described in
         Section 11.01 of the Supplemental Indenture that otherwise would be
         enforceable by any holder of any Series of Secured Debt other than the
         Notes, at any time issued under the Supplemental Indenture, if such
         waiver or termination is set forth or provided in the indenture or
         agreement governing or giving rise to such Series of Secured Debt (only
         to extent the waiver or amendment will not adversely affect the rights
         of the Holders of the Notes), (ix) to provide for the Issuance of
         Additional Notes in accordance with the limitations set forth in the
         Supplemental Indenture and (x) to allow any Person to execute a
         supplemental indenture and/or Note Guarantee with respect to the Notes
         to become a Guarantor.

              (13) Defaults and Remedies. Events of Default include: (i) default
         for 30 days in the payment when due of interest on the Notes; (ii)
         default in payment when due of principal of or premium, if any, on the
         Notes when the same becomes due and payable at maturity, upon
         redemption or otherwise, (iii) failure by the Company or any of its
         Restricted Subsidiaries for 30 days after to notice to the Company from
         the Trustee or the Holders of at least 25% in the aggregate principal
         amount of Notes then outstanding to comply with the provisions of
         Section 4.10, 4.15 or 5.01 of the Supplemental Indenture; (iv) failure
         by the Company or any of its Restricted Subsidiaries for 60 days after
         notice to the Company from the Trustee or the Holders of at least 25%
         in aggregate principal amount of Notes then outstanding to comply with
         any other covenants, representations, warranties or other agreement in
         the Indenture, the Notes or the Security Documents; (v) default under
         certain other agreements relating to Indebtedness of the

                                      A-5
<PAGE>

         Company and its Restricted Subsidiaries (other than those enumerated in
         Section 6.01(5) of the Supplemental Indenture) which default (i) is a
         Payment Default or (ii) results in the acceleration of such
         Indebtedness prior to its express maturity and, in each case the
         principal amount of any such Indebtedness, together with the principal
         amount of any other such Indebtedness under which there has been a
         Payment Default or the maturity of which has been so accelerated,
         aggregates $50.0 million or more; (vi) failure by the Company or any
         Restricted Subsidiaries to pay final and non-appealable judgments
         aggregating in excess of $50.0 million, which are not covered by
         indemnities or third-party insurance, which judgments are not paid,
         discharged, vacated or stayed for a period of 60 days; (vii) the
         repudiation by the Company or any of its Restricted Subsidiaries of any
         of its obligations under any of the Security Documents or the
         unenforceability of any of the Security Documents against the Company
         or any of its Restricted Subsidiaries for any reason if such
         unenforceability is applicable to Collateral having an aggregate Fair
         Market Value of $50.0 million or more; (viii) any Security Document or
         any Lien purported to be granted thereby on assets having a Fair Market
         Value in excess of $50.0 million is held in any judicial proceeding to
         be unenforceable or invalid, in whole or in part, or ceases for any
         reason within the control of the Company or any of its Restricted
         Subsidiaries (other than pursuant to a release that is delivered or
         becomes effective as set forth in this Supplemental Indenture) to be
         fully enforceable and perfected; (ix) except as permitted by this
         Supplemental Indenture, any Note Guarantee of a Significant Subsidiary
         is held in any judicial proceeding to be unenforceable or invalid or
         ceases for any reason to be in full force and effect or any Guarantor
         that is a Significant Subsidiary, or any Person acting on behalf of any
         Guarantor that is a Significant Subsidiary, denies or disaffirms its
         obligations under its Note Guarantee; and (x) certain events of
         bankruptcy or insolvency with respect to the Company or any of its
         Significant Subsidiaries. If any Event of Default occurs and is
         continuing, the Trustee or the Holders of at least 25% in principal
         amount of the then outstanding Notes may declare all the Notes to be
         due and payable. Notwithstanding the foregoing, in the case of an Event
         of Default arising from certain events of bankruptcy or insolvency, all
         outstanding Notes will become due and payable without further action or
         notice. Holders may not enforce the Indenture or the Notes except as
         provided in the Indenture. Subject to certain limitations, Holders of a
         majority in principal amount of the then outstanding Notes may direct
         the Trustee in its exercise of any trust or power. The Trustee may
         withhold from Holders of the Notes notice of any continuing Default or
         Event of Default (except a Default or Event of Default relating to the
         payment of principal or interest) if and so long as a committee of its
         Responsible Officers in good faith determines that withholding notice
         is in the best interests of the Holders. The Holders of a majority in
         aggregate principal amount of the Notes then outstanding by notice to
         the Trustee may on behalf of the Holders of all of the Notes waive any
         existing Default or Event of Default and its consequences under the
         Indenture except a continuing Default or Event of Default in the
         payment of the principal of, premium, if any, or interest on the Notes
         (including in connection with an offer to purchase). The Company is
         required to deliver to the Trustee annually a statement regarding
         compliance with the Indenture, and the Company is required upon
         becoming aware of any Default or Event of Default, to deliver to the
         Trustee a statement specifying such Default or Event of Default.

              (14) Trustee Dealings with Company. The Trustee, in its individual
         or any other capacity, may make loans to, accept deposits from, and
         perform services for the Company or its Affiliates, and may otherwise
         deal with the Company or its Affiliates, as if it were not the Trustee.
         However, in the event that the Trustee acquires any conflicting
         interest it must eliminate such conflict within 90 days, apply to the
         SEC for permission to continue as trustee or resign. Any Agent may do
         the same with like rights and duties. The Trustee is also subject to
         Sections 611 and 612 of the Base Indenture.

                                      A-6
<PAGE>

              (15) No Recourse Against Others. No director, officer, employee,
         incorporator or stockholder of the Company or any Guarantor, as such,
         will have any liability for any obligations of the Company or the
         Guarantors under the Notes, the Indenture, the Note Guarantees, the
         Security Documents or for any claim based on, in respect of, or by
         reason of, such obligations or their creation. Each Holder of Notes by
         accepting a Note waives and releases all such liability. The waiver and
         release are part of the consideration for issuance of the Notes. The
         waiver may not be effective to waive liabilities under the federal
         securities laws.

              (16) Authentication. This Note will not be valid until
         authenticated by the manual signature of the Trustee or an
         authenticating agent.

              (17) Abbreviations. Customary abbreviations may be used in the
         name of a Holder or an assignee, such as: TEN COM (= tenants in
         common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants
         with right of survivorship and not as tenants in common), CUST (=
         Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

              (18) CUSIP Numbers. Pursuant to a recommendation promulgated by
         the Committee on Uniform Security Identification Procedures, the
         Company has caused CUSIP numbers to be printed on the Notes and the
         Trustee may use CUSIP numbers in notices of redemption as a convenience
         to Holders. No representation is made as to the accuracy of such
         numbers either as printed on the Notes or as contained in any notice of
         redemption and reliance may be placed only on the other identification
         numbers placed thereon.

              (19) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL
         GOVERN AND BE USED TO CONSTRUE THE SUPPLEMENTAL INDENTURE, THE NOTES
         AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
         OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
         ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

         The Company shall furnish to any Holder upon written request and
         without charge a copy of the Base Indenture, the Supplemental Indenture
         and other Note Documents. Requests may be made to:

          Reliant Energy, Inc.
          1000 Main Street
          Houston, Texas 77002
          Attention: Chief Financial Officer

                                      A-7
<PAGE>

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date: _____________

                                        Your Signature: ________________________
                                              (Sign exactly as your name appears
                                               on the face of this Note)

Signature Guarantee*:  ______________________

*       Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

                                      A-8
<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Supplemental Indenture, check the
appropriate box below:

                       [ ] Section 4.10 [ ] Section 4.15

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Supplemental Indenture,
state the amount you elect to have purchased:

                                    $_______________

Date: _______________

                                        Your Signature: ________________________
                                              (Sign exactly as your name appears
                                               on the face of this Note)

                                        Tax Identification No.: ________________

Signature Guarantee*: ______________________

*    Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      B-1
<PAGE>

                                                                       EXHIBIT B

                         [FORM OF NOTATION OF GUARANTEE]

         For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed on a senior basis, to the extent set forth in the Indenture and
subject to the provisions in the senior indenture (the "Base Indenture"), dated
as of December 22, 2004, between Reliant Energy, Inc., (the "Company") and
Wilmington Trust Company, as trustee (the "Trustee"), as amended by the First
Supplemental Indenture (the "Supplemental Indenture" and, together with the Base
Indenture, the "Indenture"), dated as of December 22, 2004, among the Company,
the Guarantors listed on Schedule I thereto and the Trustee, (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Supplemental Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal of and interest on the Notes, if any, if lawful, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms of the Indenture and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. The Obligations of the Guarantors
to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and
the Indenture are expressly set forth in Article 12 of the Supplemental
Indenture and reference is hereby made to the Indenture for the precise terms of
the Note Guarantee. Each Holder of a Note, by accepting the same, agrees to and
shall be bound by such provisions and appoints the Trustee attorney-in-fact of
such Holder for such purpose.

                                          [NAME OF GUARANTOR(S)]

                                           By: _________________________________
                                           Name:
                                           Title:

                                      C-1
<PAGE>

                                                                       EXHIBIT C

                         FORM OF SUPPLEMENTAL INDENTURE
                        ADDITIONAL SUBSIDIARY GUARANTEES

         SUPPLEMENTAL INDENTURE (this "Supplemental Indenture for Additional
Guarantees"), dated as of ________________, 2004, among __________________ (the
"Guaranteeing Subsidiary"), a subsidiary of Reliant Energy, Inc. (or its
permitted successor), a __________ corporation (the "Company"), the Company, the
other Guarantors (as defined in the Indenture referred to herein) and Wilmington
Trust Company, as trustee under the indentures referred to below (the
"Trustee").

                                   WITNESSETH

         WHEREAS, the Company has heretofore executed and delivered to the
Trustee a senior indenture (the "Base Indenture"), dated as of December 22,
2004, between the Company and the Trustee, as amended by a first supplemental
indenture (the "Supplemental Indenture" and, together with the Base Indenture,
the "Indenture"), dated as of December 22, 2004, among the Company, the
Guarantors named therein and the Trustee, providing for the original issuance of
an aggregate principal amount of $750.0 million of 6.75% Senior Secured Notes
due 2014 (the "Initial Notes"), and, subject to the terms of the Supplemental
Indenture, future unlimited issuances of 6.75% Senior Secured Notes due 2014
(the "Additional Notes," and together with the Initial Notes, the "Notes");

         WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture
(the "Note Guarantee"); and

         WHEREAS, pursuant to Section 9.01 of the Supplemental Indenture, the
Trustee, the Company and the other Guarantors are authorized to execute and
deliver this Supplemental Indenture for Additional Guarantees.

         NOW THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary, the Trustee, the Company and the other Guarantors
mutually covenant and agree for the equal and ratable benefit of the Holders of
the Notes as follows:

         1. Capitalized Terms. Unless otherwise defined in this Supplemental
Indenture for Additional Guarantees, capitalized terms used herein without
definition shall have the meanings assigned to them in the Supplemental
Indenture.

         2. Agreement to be Bound; Guarantee. The Guaranteeing Subsidiary hereby
becomes a party to the Supplemental Indenture as a Guarantor and as such will
have all of the rights and be subject to all of the Obligations and agreements
of a Guarantor under the Indenture. The Guaranteeing Subsidiary hereby agrees to
be bound by all of the provisions of the Supplemental Indenture applicable to a
Guarantor and to perform all of the Obligations and agreements of a Guarantor
under the Supplemental Indenture. In furtherance of the foregoing, the
Guaranteeing Subsidiary shall be deemed a Guarantor for purposes of Article 12
of the Supplemental Indenture, including, without limitation, Section 12.02
thereof.

         3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL

                                      D-1
<PAGE>

INDENTURE FOR ADDITIONAL GUARANTEES BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

         4. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture for Additional Guarantees. Each signed copy shall be an
original, but all of them together represent the same agreement.

         5. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.

         6. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture for Additional Guarantees or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Guaranteeing
Subsidiary and the Company.

         7. Ratification of Indenture; Supplemental Indenture for Additional
Guarantees Part of Indenture. Except as expressly amended hereby, the Indenture
is in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect. This Supplemental
Indenture for Additional Guarantees shall form a part of the Indenture for all
purposes, and every Holder of Notes heretofore or hereafter authenticated and
delivered shall by bound hereby.

                                      D-2
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture for Additional Guarantees to be duly executed and attested, all as of
the date first above written.

         Dated:  ______________, 20___

                                           [GUARANTEEING SUBSIDIARY]

                                           By: _______________________________
                                           Name:
                                           Title:

                                           [COMPANY]

                                           By: _______________________________
                                           Name:
                                           Title:

                                           [EXISTING GUARANTORS]

                                           By: _______________________________
                                           Name:
                                           Title:

                                           [TRUSTEE],
                                            as Trustee

                                           By: _______________________________
                                                Authorized Signatory

                                      D-3<PAGE>

                                                                    Exhibit 10.1

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

                           SECOND AMENDED AND RESTATED
                          CREDIT AND GUARANTY AGREEMENT

                          Dated as of December 22, 2004

           (amending and restating the Amended and Restated Credit and
                Guaranty Agreement, dated as of March 28, 2003),

                                      among

                              RELIANT ENERGY, INC.,
                                as the Borrower,

                   The Other Loan Parties Referred To Herein,
                                 as Guarantors,

                         The Other Lenders Party Hereto,

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

               BARCLAYS BANK PLC AND DEUTSCHE BANK SECURITIES INC.
                             as Syndication Agents,

                                       and

    GOLDMAN SACHS CREDIT PARTNERS L.P. AND MERRILL LYNCH CAPITAL
                                  CORPORATION,
                             as Documentation Agents
--------------------------------------------------------------------------------

                         DEUTSCHE BANK SECURITIES INC.,
                              BARCLAYS CAPITAL AND
                         BANC OF AMERICA SECURITIES LLC,
            as Joint Lead Arrangers for the Revolving Credit Facility

                         DEUTSCHE BANK SECURITIES INC.,
                                BARCLAYS CAPITAL,
                         BANC OF AMERICA SECURITIES LLC,
                     GOLDMAN SACHS CREDIT PARTNERS L.P. AND
                       MERRILL LYNCH CAPITAL CORPORATION,
             as Joint Bookrunners for the Revolving Credit Facility

                         DEUTSCHE BANK SECURITIES INC.,
                       BANC OF AMERICA SECURITIES LLC, AND
                                BARCLAYS CAPITAL,
               as Joint Lead Arrangers for the Term Loan Facility

                         DEUTSCHE BANK SECURITIES INC.,
                         BANC OF AMERICA SECURITIES LLC,
                                BARCLAYS CAPITAL,
                     GOLDMAN SACHS CREDIT PARTNERS L.P. AND
                       MERRILL LYNCH CAPITAL CORPORATION,
                 as Joint Bookrunners for the Term Loan Facility

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

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                                TABLE OF CONTENTS

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ARTICLE I.            DEFINITIONS AND ACCOUNTING TERMS.........................................................       1

         1.1      Defined Terms................................................................................       1

         1.2      Other Interpretive Provisions................................................................      54

         1.3      Accounting Terms.............................................................................      55

         1.4      Rounding.....................................................................................      56

         1.5      Times of Day.................................................................................      56

         1.6      Letter of Credit Amounts.....................................................................      56

ARTICLE II.           THE COMMITMENTS AND CREDIT EXTENSIONS....................................................      56

         2.1      The Loans....................................................................................      56

         2.2      Borrowings, Conversions and Continuations of Loans...........................................      56

         2.3      Letters of Credit............................................................................      58

         2.4      Optional and Mandatory Prepayments...........................................................      67

         2.5      Termination or Reduction of Commitments......................................................      73

         2.6      Repayment of Loans...........................................................................      73

         2.7      Interest.....................................................................................      74

         2.8      Fees.........................................................................................      74

         2.9      Computation of Interest and Fees.............................................................      75

         2.10     Evidence of Debt.............................................................................      75

         2.11     Payments Generally; Administrative Agent's Clawback..........................................      76

         2.12     Sharing of Payments by Lenders...............................................................      78

ARTICLE III.          TAXES, YIELD PROTECTION AND ILLEGALITY...................................................      79

         3.1      Taxes........................................................................................      79

         3.2      Illegality...................................................................................      81

         3.3      Inability to Determine Rates.................................................................      81

         3.4      Increased Costs; Capital Adequacy; Reserves on Eurodollar Rate Loans.........................      81

         3.5      Compensation for Losses......................................................................      83

         3.6      Mitigation Obligations; Replacement of Lenders...............................................      83

         3.7      Survival.....................................................................................      84

ARTICLE IV.           CONDITIONS PRECEDENT TO CREDIT EXTENSIONS................................................      84

         4.1      Conditions of Initial Credit Extension.......................................................      84
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         4.2      Conditions to All Credit Extensions..........................................................      88

ARTICLE V.            REPRESENTATIONS AND WARRANTIES...........................................................      89

         5.1      Existence, Qualification and Power; Compliance with Laws.....................................      89

         5.2      Authorization; No Contravention..............................................................      89

         5.3      Governmental Authorization; Other Consents...................................................      89

         5.4      Binding Effect...............................................................................      89

         5.5      Financial Statements; No Material Adverse Effect.............................................      90

         5.6      Litigation...................................................................................      90

         5.7      No Default...................................................................................      90

         5.8      Ownership of Property; Liens.................................................................      90

         5.9      Environmental Matters........................................................................      91

         5.10     Insurance....................................................................................      92

         5.11     Taxes........................................................................................      92

         5.12     ERISA Compliance.............................................................................      92

         5.13     Subsidiaries; Equity Interests...............................................................      93

         5.14     Margin Regulations; Investment Company Act; Public Utility Holding Company Act...............      93

         5.15     Disclosure...................................................................................      94

         5.16     Compliance with Laws.........................................................................      94

         5.17     Intellectual Property; Licenses, Etc.........................................................      94

         5.18     Solvency.....................................................................................      95

         5.19     Perfection, Etc..............................................................................      95

ARTICLE VI.           AFFIRMATIVE COVENANTS....................................................................      95

         6.1      Financial Statements.........................................................................      95

         6.2      Certificates; Other Information..............................................................      96

         6.3      Notices......................................................................................      98

         6.4      Payment of Obligations.......................................................................      99

         6.5      Preservation of Existence, Etc...............................................................      99

         6.6      Maintenance of Properties....................................................................      99

         6.7      Maintenance of Insurance.....................................................................      99
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         6.8      Compliance with Laws.........................................................................      99

         6.9      Books and Records............................................................................      99

         6.10     Inspection Rights............................................................................     100

         6.11     Use of Proceeds..............................................................................     100

         6.12     Additional Loan Parties; Security Interests..................................................     100

         6.13     Further Assurances...........................................................................     101

         6.14     Florida Mortgaged Properties.................................................................     102

ARTICLE VII.          NEGATIVE COVENANTS.......................................................................     102

         7.1      Liens........................................................................................     102

         7.2      Investments..................................................................................     102

         7.3      Indebtedness.................................................................................     102

         7.4      Consolidation and Mergers....................................................................     105

         7.5      Asset Sales..................................................................................     106

         7.6      Restricted Payments..........................................................................     107

         7.7      Line of Business.............................................................................     108

         7.8      Transactions with Affiliates.................................................................     108

         7.9      Restrictive Agreements.......................................................................     109

         7.10     Use of Proceeds..............................................................................     110

         7.11     Financial Covenants..........................................................................     110

         7.12     Capital Expenditures.........................................................................     111

         7.13     Modification of Certain Agreements...........................................................     111

         7.14     Fiscal Year..................................................................................     112

         7.15     Commodity Hedging............................................................................     112

         7.16     Suspension of Certain Covenants upon Release Date............................................     112

         7.17     Orion Subsidiaries...........................................................................     113

         7.18     Designated Entities..........................................................................     113

         7.19     Foreign Investments..........................................................................     114

ARTICLE VIII.         guaranty.................................................................................     114

         8.1      Guaranty; Limitation of Liability............................................................     114

         8.2      Guaranty Absolute............................................................................     115
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         8.3      Waivers and Acknowledgments..................................................................     116

         8.4      Subrogation..................................................................................     117

         8.5      Assumption and Joinder.......................................................................     117

         8.6      Subordination................................................................................     118

         8.7      Continuing Guaranty; Assignments.............................................................     118

ARTICLE IX.           EVENTS OF DEFAULT AND REMEDIES...........................................................     119

         9.1      Events of Default............................................................................     119

         9.2      Remedies upon Event of Default...............................................................     121

         9.3      Application of Funds.........................................................................     122

ARTICLE X.            THE AGENTS AND THE ISSUING BANKS.........................................................     123

         10.1     Appointment and Authority....................................................................     123

         10.2     Rights As a Lender...........................................................................     123

         10.3     Exculpatory Provisions.......................................................................     123

         10.4     Reliance by the Agents.......................................................................     124

         10.5     Delegation of Duties.........................................................................     125

         10.6     Resignation of Administrative Agent..........................................................     125

         10.7     Non-Reliance on Administrative Agent and Other Lenders.......................................     126

         10.8     No Other Duties, Etc.........................................................................     126

         10.9     Administrative Agent May File Proofs of Claim................................................     126

         10.10    Collateral and Guaranty Matters..............................................................     127

ARTICLE XI.           MISCELLANEOUS............................................................................     130

         11.1     Amendments, Etc..............................................................................     130

         11.2     Notices; Effectiveness; Electronic Communication.............................................     131

         11.3     No Waiver; Cumulative Remedies...............................................................     133

         11.4     Expenses; Indemnity; Damage Waiver...........................................................     133

         11.5     Payments Set Aside...........................................................................     135

         11.6     Successors and Assigns.......................................................................     135

         11.7     Confidentiality..............................................................................     139

         11.8     Right of Setoff..............................................................................     140

         11.9     Interest Rate Limitation.....................................................................     140
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         11.10    Counterparts; Integration; Effectiveness.....................................................     140

         11.11    Survival of Representations and Warranties...................................................     141

         11.12    Severability.................................................................................     141

         11.13    Replacement of Lenders.......................................................................     141

         11.14    Governing Law; Jurisdiction; Etc.............................................................     142

         11.15    Waiver of Jury Trial.........................................................................     143

         11.16    USA PATRIOT Act Notice.......................................................................     143

         11.17    No Oral Agreements...........................................................................     143

         11.18    Citibank Intercreditor Agreement.............................................................     143

         11.19    Orion Bank Guarantors........................................................................     143

         11.20    Amended and Restated Credit Agreement........................................................     144

         SIGNATURES............................................................................................     S-1
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                                       -v-

<PAGE>

SCHEDULES

         1.1(a)       Existing Letters of Credit
         1.1(b)       Guarantors
         1.1(c)       Contracts Relating to the California Receivables
         1.1(d)       Subordination Terms
         1.1(e)       Mortgages and Title Policies
         1.1(f)       Secured Hedge Agreements
         1.1(g)       Existing Indebtedness
         2.1          Commitments and Pro Rata Shares
         5.8(c)       Closing Date Mortgaged Properties
         5.9(c)       Environmental Matters
         5.13         Subsidiaries and Other Equity Investments
         5.17         Intellectual Property Matters
         7.3(k)       List of Agreements Prohibiting Subordination of
                      Intercompany Indebtedness
         10.10(e)     Certain Closing Actions
         11.2         Administrative Agent's Office; Certain Addresses for
                      Notices

EXHIBITS

                      FORM OF

         A            Borrowing Notice
         B            L/C Certificate
         C            Continuation/Conversion Notice
         D-1          Revolving Credit Note
         D-2          Term Note
         E            Compliance Certificate
         F            Assignment and Assumption
         G            Assumption and Joinder

                                      -vi-
<PAGE>

            SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT

         This SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT (as
further amended, restated, supplemented or otherwise modified from time to time,
this "Agreement") dated as of December 22, 2004, is among RELIANT ENERGY, INC.,
a Delaware corporation (the "Borrower"), the other LOAN PARTIES referred to
herein, as Guarantors, each lender from time to time party hereto (collectively,
the "Lenders" and individually, a "Lender"), BANK OF AMERICA, N.A., as
Administrative Agent, and BARCLAYS BANK, PLC and DEUTSCHE BANK SECURITIES INC.,
as Syndication Agents and GOLDMAN SACHS CREDIT PARTNERS L.P. and MERRILL LYNCH
CAPITAL CORPORATION, as Documentation Agents.

                             PRELIMINARY STATEMENTS:

         The Borrower and certain of its Subsidiaries (such terms and each other
capitalized term used but not defined in the recitals having the meaning
provided in Section 1.1) have entered into the Amended and Restated Credit and
Guaranty Agreement, dated as of March 28, 2003 (such agreement, as further
amended, restated, supplemented or otherwise modified prior to the date hereof,
the "Existing Credit Agreement") with Bank of America, N.A., as administrative
agent, Barclays Bank PLC and Deutsche Bank AG, New York Branch, as syndication
agents and the other lenders and agents party thereto.

         The Borrower has requested that the parties to the Existing Credit
Agreement amend and restate the terms of the Existing Credit Agreement, and
replace the extensions of credit thereunder (including the loans and letters of
credit governed by the terms of the Existing Credit Agreement), with this
Agreement.

         The parties hereto agree that from and after the effectiveness of this
Agreement, the obligations under the Existing Credit Agreement, including the
terms of the extensions of credit outstanding thereunder, shall be continued as,
and evidenced by, the Loans, Letters of Credit and other Credit Agreement
Obligations and Loan Documents.

         The Lenders have indicated their willingness to continue extensions of
credit under the Existing Credit Agreement as Loans and Letters of Credit
hereunder, and make additional Loans and continue existing or issue additional
Letters of Credit on the terms and subject to the conditions set forth herein.

         In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

                                   ARTICLE I.
                        DEFINITIONS AND ACCOUNTING TERMS

         1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:

<PAGE>

         "Acquired Debt" means with respect to any specified Person:

                  (a) Indebtedness of any other Person existing at the time such
         other Person is merged with or into or became a Subsidiary of such
         specified Person, whether or not such Indebtedness is incurred in
         connection with, or in contemplation of, such other Person merging with
         or into, or becoming a Subsidiary of, such specified Person; and

                  (b) Indebtedness secured by a Lien encumbering any asset
         acquired by such specified Person.

         "Acquisition" means any transaction or any series of related
transactions by which a Person (1) acquires any going business (including a
power generation facility) or all or substantially all of the assets of any
other Person, or division thereof, whether through purchase of assets, merger,
or otherwise or (2) directly or indirectly acquires greater than 50% of the
Voting Stock of any other Person.

         "Acquisition Consideration" means the gross consideration (other than
Equity Interests in the Borrower) paid (including Indebtedness assumed) in
connection with any Acquisition.

         "Actionable Default" means (1) the failure to pay any payment of
principal of or interest on any Series of Secured Debt outstanding in the amount
of $50,000,000 or more resulting in an event of default under the applicable
Series of Secured Debt after payment is due, including payments that are due (or
if any required offer had been timely made would be due) in respect of any
mandatory offer to purchase Parity Secured Debt resulting in an event of default
under the applicable Series of Secured Debt, (2) the failure to pay in full,
when due and payable in full (whether at maturity, upon acceleration or
otherwise), either the Secured Notes or the Loans or any other Series of Secured
Debt outstanding in the amount of $50,000,000 or more, (3) the exercise by the
Collateral Trustee or any of its co-trustees or agents (including the
Administrative Agent) of any right or power that is exercisable by it only upon
default to take sole and exclusive dominion or control over any deposits in a
deposit account, commodity contract in a commodity account or financial asset in
a securities account constituting any Shared Collateral or the delivery of any
instructions to the Collateral Trustee directing it to foreclose or otherwise
enforce, or to disburse the proceeds of enforcement of, any Lien upon any
Collateral, or (4) the occurrence of any Event of Default under this Agreement
or the Secured Note Agreements arising from the commencement of any bankruptcy
case, receivership or other insolvency or liquidation proceeding by or against
the Borrower or any of its Subsidiaries or any similar default provision at any
time in effect under any indenture or agreement governing any Series of Secured
Debt.

         "Additional Guarantor" means each Person (other than the Guarantors
party hereto on the Closing Date) that shall be required to execute and deliver
an Instrument of Assumption and Joinder pursuant to Section 6.12.

         "Administrative Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.

                                       -2-
<PAGE>

         "Administrative Agent's Office" means the Administrative Agent's
address and, as appropriate, account as set forth on Schedule 11.2, or such
other address or account as the Administrative Agent may from time to time
notify to the Borrower and the Lenders.

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

         "Affiliate" of any specified Person means any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person; provided, that a Person will be deemed to be
an Affiliate of the Borrower if the Borrower has knowledge that such Person
beneficially owns 10% or more of the Voting Stock of the Borrower; provided,
further, that the Borrower shall only be deemed to have knowledge of any Person
beneficially owning 10% or more of the Borrower's Voting Stock if such Person
has filed a statement of beneficial ownership pursuant to Sections 13(d) or
13(g) of the Exchange Act or has provided written notice thereof to the
Borrower. Notwithstanding the foregoing, no Person (other than the Borrower or
any Restricted Subsidiary of the Borrower) in whom a Securitization Entity makes
an Investment in connection with a Qualified Securitization Transaction shall be
deemed to be an Affiliate of the Borrower solely by reason of such Investment.

         "Agent-Related Person" means each of the Administrative Agent, the
Collateral Agent, each Joint Lead Arranger and each Joint Bookrunner named on
the cover page of this Agreement, together with their respective Affiliates, and
the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.

         "Agents" means, collectively, the Syndication Agents and the
Documentation Agents (as of the Closing Date), the Administrative Agent and the
Collateral Agent.

         "Aggregate Commitments" means the Commitments of all the Lenders.

         "Aggregate Revolving Credit Commitments" means the Revolving Credit
Commitments of all the Lenders.

         "Agreement" is defined in the preamble.

         "Applicable Margin" means a per annum rate equal to (a) with respect to
Revolving Credit Loans (i) 1.875% with respect to Base Rate Loans and (ii)
2.875% with respect to Eurodollar Rate Loans and Letters of Credit, (b) with
respect to Term Loans (i) 1.375% with respect to Base Rate Loans and (ii) 2.375%
with respect to Eurodollar Rate Loans and (c) 0.50% with respect to the
commitment fee payable under Section 2.8(a); provided, that on and after the
180th day following the consummation by the Borrower or any of its Subsidiaries
of any acquisition of Permitted ERCOT Assets, each of the rates with respect to
Revolving Credit Loans set forth in clause (a) shall increase by 2.00% on the
amount of outstanding Revolving Credit Loans which is equal to the lesser of (x)
the aggregate amount of all Revolving Credit Loans outstanding as of such date
and (y) the amount by which the Acquisition Consideration paid for all
acquisitions of Permitted ERCOT Assets on or after the Closing Date through such
date exceeds the Funded ERCOT Amount as of such date.

                                       -3-
<PAGE>

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

         "Asset Sale" means:

                  (a) the sale, lease, conveyance or other disposition of any
         assets; and

                  (b) the issuance of Equity Interests in any of the Borrower's
         Restricted Subsidiaries.

         Notwithstanding the foregoing, none of the following items will be
deemed to be an Asset Sale:

                  (1) any single transaction or series of related transactions
         that involves assets with gross cash proceeds of $3,000,000 or less;

                  (2) a transfer of assets between or among the Borrower and
         Restricted Subsidiaries;

                  (3) an issuance of Equity Interests by a Restricted Subsidiary
         to the Borrower or to a Restricted Subsidiary of the Borrower;

                  (4) the sale or lease of products, services or accounts
         receivable in the ordinary course of business and any sale or other
         disposition of damaged, worn out or obsolete assets or assets no longer
         used or useful in the Borrower's or any of its Restricted Subsidiaries'
         business;

                  (5) the sale or other disposition of cash or Cash Equivalents;

                  (6) sales of accounts receivable, equipment and related assets
         (including contract rights) of the type specified in the definition of
         Qualified Securitization Transaction to a Securitization Entity;

                  (7) a Restricted Payment that is permitted by the provisions
         of Section 7.6 hereof or a Permitted Investment;

                  (8) a disposition resulting from any Condemnation; provided,
         that if such disposition involves assets with gross cash proceeds in
         excess of $3,000,000, that any cash proceeds received in connection
         therewith are treated as Net Asset Sale Proceeds;

                  (9) the disposition by Reliant Energy Wholesale Generation,
         LLC of the substation at the Bighorn generating facility (and the
         related real property assets) to be conveyed to Nevada Power Company
         pursuant to the terms and provisions of that certain EPC Agreement
         dated December 18, 2002 between Reliant Energy Bighorn, LLC and Nevada
         Power Company; and

                                       -4-
<PAGE>

                  (10) a disposition of assets (other than any assets securing
         Parity Secured Debt) in connection with a foreclosure, transfer or deed
         in lieu of foreclosure or other exercise of remedial action.

         "Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 11.6(b)), and accepted by the Administrative
Agent, in substantially the form of Exhibit F or any other form approved by the
Administrative Agent.

         "Assignment of Leases and Rents" means any assignment of leases and
rents or equivalent document now existing or hereafter entered into, that is
executed and delivered by one or more of the Loan Parties to the Collateral
Trustee (for the benefit of the Secured Parties), and in each case, as such
document may be amended, restated, supplemented or otherwise modified from time
to time.

         "Attributable Debt" means, on any date, (a) in respect of a sale and
leaseback transaction, the present value of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such sale and
leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended (such present value to
be calculated using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with GAAP; provided, that if such
sale and leaseback transaction results in a Capital Lease Obligation, the amount
of Indebtedness represented thereby will be determined in accordance with the
definition of "Capital Lease Obligation") and (b) in respect of any Synthetic
Lease Obligation or financing lease, the amount of the remaining lease payments
under the relevant lease that would as of such date be required to be
capitalized on a balance sheet in accordance with GAAP if such lease were
accounted for as a Capital Lease Obligation.

         "Audited Financial Statements" means the audited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries for the Fiscal Year
ended December 31, 2003, and the related consolidated statements of income or
operations, shareholders' equity and comprehensive income (loss) and cash flows
for such Fiscal Year of the Borrower and its consolidated Subsidiaries,
including the notes thereto.

         "Auto-Renewal Letter of Credit" means a Letter of Credit with an
initial expiry date of one year or less after the date of its issuance that has
automatic renewal provisions.

         "Availability Period" means the period from and including the Closing
Date to but not including the Revolving Credit Termination Date.

         "Bank of America" means Bank of America, N.A. and its successors.

         "Bank Security Agreement" means the Amended and Restated Security
Agreement, dated as of July 1, 2003, among the Borrower, the other Loan Parties
and Bank of America, as Collateral Agent, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

         "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, as codified at 11 U.S.C. Section 101 et seq.

                                       -5-
<PAGE>

         "Barclays Bank" means Barclays Bank PLC and its successors.

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

         "Base Rate Loan" means a Loan that bears interest based on the Base
Rate.

         "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act. The terms "Beneficially Owns" and
"Beneficially Owned" have a corresponding meaning.

         "Board of Directors" means:

                  (1) with respect to a corporation, the board of directors of
         the corporation or any committee thereof duly authorized to act on
         behalf of such board;

                  (2) with respect to a partnership, the Board of Directors of
         the general partner of the partnership;

                  (3) with respect to a limited liability company, the managing
         member or members or any controlling committee of managing members or
         board of directors thereof; and

                  (4) with respect to any other Person, the board or committee
         of such Person serving a similar function.

         "Board Resolution" means a resolution passed by the Board of Directors
of the Borrower.

         "Borrower" has the meaning specified in the introductory paragraph
hereto, and its successors.

         "Borrowing" means a Revolving Credit Borrowing or a Term Borrowing, as
the context may require.

         "Borrowing Notice" means a notice of (a) a Term Borrowing in
substantially the form of Exhibit A, (b) a Revolving Credit Borrowing in
substantially the form of Exhibit A, (c) a conversion (which shall not
constitute a new Borrowing) of Loans from one Type to the other in substantially
the form of Exhibit C, or (d) a continuation (which shall not constitute a new
Borrowing) of Eurodollar Rate Loans, pursuant to Section 2.2(a), substantially
in the form of Exhibit C.

                                       -6-
<PAGE>

         "Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the Laws of, or are in
fact closed in, Houston, Texas or the state where the Administrative Agent's
Office is located and, if such day relates to any Eurodollar Rate Loan, means
any such day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank eurodollar market.

         "California Receivables" means all amounts currently owing to a Loan
Party and withheld on the Closing Date in connection with the contracts set
forth on Schedule 1.1(c).

         "Capital Expenditure" means, with respect to any Person for any period,
the aggregate amount of all expenditures by such Person during that period
which, in accordance with GAAP, are or should be included in "additions to
property, plant and equipment", "capital expenditures" or similar items
reflected in the statement of cash flows of such Person for such period. For
purposes of this definition, the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment or with insurance or
proceeds of any Condemnation shall be included in Capital Expenditures only to
the extent of the gross amount of such purchase price, less the credit granted
by the seller of such equipment for the equipment being traded in at such time
or the amount of such insurance or proceeds of any Condemnation, as the case may
be.

         "Capital Lease Obligation" means, as applied to any Person, at the time
any determination is to be made, the amount of the liability in respect of a
capital lease that would at that time be required to be capitalized on a balance
sheet of such Person in accordance with GAAP in the reasonable judgment of such
Person, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.

         "Capital Stock" means:

                  (a) in the case of a corporation, corporate stock;

                  (b) in the case of an association or business entity, any and
         all shares, interests, participations, rights or other equivalents
         (however designated) of corporate stock;

                  (c) in the case of a partnership or limited liability company,
         partnership interests (whether general or limited) or membership
         interests; and

                  (d) any other interest or participation that confers on a
         Person the right to receive a share of the profits and losses of, or
         distributions of assets of, the issuing Person, but excluding from all
         of the foregoing any debt securities convertible into Capital Stock,
         whether or not such debt securities include any right of participation
         with Capital Stock.

         "Cash Collateralize" means to pledge and deposit with or deliver to the
Collateral Agent, for the benefit of any L/C Issuer and the Revolving Credit
Lenders, as collateral for the L/C Obligations and/or the Revolving Credit
Commitments, cash or deposit account balances pursuant to documentation in form
and substance reasonably satisfactory to the Administrative Agent, the Borrower,
the Collateral Agent and such L/C Issuer; provided, that such cash or

                                       -7-
<PAGE>

deposit account balances shall not be subject to any Lien other than the Lien of
the Lenders to secure the Obligations. Derivatives of such term (including the
term "Cash Collateral") have corresponding meanings.

         "Cash Equivalents" means:

                  (1) United States dollars;

                  (2) securities issued or directly and fully guaranteed or
         insured by the United States government or any agency or
         instrumentality of the United States government (provided, that the
         full faith and credit of the United States is pledged in support of
         those securities) having maturities of not more than one year from the
         date of acquisition;

                  (3) deposit accounts with any lender party to this Agreement,
         Mellon Bank N.A., Wells Fargo Bank, N.A., Wachovia Bank, National
         Association, or any other bank that has a long-term debt rating at the
         time of investment of A+ or better by S&P and A1 or better by Moody's
         (an "Approved Bank");

                  (4) time deposits, certificates of deposit, acceptances or
         prime commercial paper issued by an Approved Bank at the time acquired
         or issued (as applicable and whichever is latest), in each case, having
         a maturity of not more than one year from the date of acquisition;

                  (5) repurchase obligations for underlying securities of the
         types described in clause (2) entered into with an Approved Bank at the
         time acquired, issued or entered into (as applicable and whichever is
         latest), in each case, having a maturity of not more than one year from
         the date of acquisition and secured by securities of the type described
         in clause (2), the market value of which (including accrued interest)
         is not less than the amount of the applicable repurchase agreement;

                  (6) commercial paper with a rating at the time of investment
         of A-1 by S&P and P-1 by Moody's and, in each case, maturing within one
         year after the date of acquisition; and

                  (7) money market funds which invest primarily in Cash
         Equivalents of the kinds described in clauses (1) through (6) of this
         definition.

         "Casualty Event" means the damage or destruction, as the case may be,
of property of any Person; provided, that Casualty Event shall not include any
disposition to which clause (8) of the definition of Asset Sale applies.

         "Change in Law" means the occurrence, after the date of this Agreement,
of any of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

                                       -8-
<PAGE>

         "Change of Control" means the occurrence of any of the following:

                  (a) the direct or indirect sale, transfer, conveyance or other
         disposition (other than by way of merger or consolidation), in one or a
         series of related transactions, of all or substantially all of the
         properties or assets of the Borrower and its Subsidiaries taken as a
         whole to any "person" (as that term is used in Section 13(d) of the
         Exchange Act, but excluding any employee benefit plan of the Borrower
         or any of its Restricted Subsidiaries, and any person or entity acting
         in its capacity as trustee, agent or other fiduciary or administrator
         of any such plan);

                  (b) the adoption of a plan relating to the liquidation or
         dissolution of the Borrower other than (i) the consolidation with,
         merger into or transfer of all or part of the properties and assets of
         any Restricted Subsidiary of the Borrower to the Borrower or any other
         Restricted Subsidiary of the Borrower and (ii) the merger of the
         Borrower with an Affiliate solely for the purpose of reincorporating
         the Borrower or reforming the Borrower in another jurisdiction;

                  (c) the consummation of any transaction (including any merger
         or consolidation) the result of which is that any "person" (as defined
         above) becomes the Beneficial Owner, directly or indirectly, of more
         than 50% of the Voting Stock of the Borrower, measured by voting power
         rather than number of shares;

                  (d) the first day on which a majority of the members of the
         Board of Directors of the Borrower are not Continuing Directors; or

                  (e) the Borrower consolidates with, or merges with or into,
         any Person, or any Person consolidates with, or merges with or into,
         the Borrower, in any such event pursuant to a transaction in which any
         of the outstanding Voting Stock of the Borrower or such other Person is
         converted into or exchanged for cash, securities or other property,
         other than any such transaction where the Voting Stock of the Borrower
         outstanding immediately prior to such transaction is converted into or
         exchanged for Voting Stock (other than Disqualified Stock) of the
         surviving or transferee Person constituting a majority of the
         outstanding shares of such Voting Stock of such surviving or transferee
         Person (immediately after giving effect to such issuance).

         "Channelview" means Reliant Energy Channelview, L.P., a Delaware
limited partnership, and its successors.

         "Closing Date" means the first date all the conditions precedent in
Section 4.1 are satisfied or waived in accordance with Section 11.10.

         "Closing Date Mortgaged Properties" has the meaning specified in
Section 4.1(b)(ii).

         "Code" means the Internal Revenue Code of 1986 as amended from time to
time.

         "Collateral" means, collectively, (i) the "Collateral" as defined in
the Collateral Trust Agreement, and (ii) the "Collateral" as defined in the
Separate Security Agreement.

                                       -9-
<PAGE>

         "Collateral Agent" means Bank of America in its capacity as collateral
agent for the Credit Agreement Secured Parties, or such successor Collateral
Agent as may be appointed pursuant to Article XI.

         "Collateral Trust Agreement" means that certain collateral trust
agreement, dated as of July 1, 2003, entered into among the Borrower, certain of
its Subsidiaries and Wachovia Bank, National Association, as initial Collateral
Trustee, and acknowledged and agreed to by the Administrative Agent (in its
capacity as a collateral trustee agent) and Wilmington Trust Company, as trustee
for the holders of the Secured Notes, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

         "Collateral Trustee" means any collateral trustee for the Secured
Parties under the Collateral Trust Agreement.

         "Commitment" means, as the context may require, a Term Commitment or a
Revolving Credit Commitment.

         "Commodity Hedging Obligations" means, with respect to any specified
Person, the net obligations of such Person under agreements or arrangements
designed to protect such Person against fluctuations in commodity prices.

         "Compliance Certificate" means a certificate substantially in the form
of Exhibit E. "Condemnation" shall mean any condemnation or other taking, or
temporary or permanent requisition of, any property, any interest therein or
right appurtenant thereto, or any change of grade affecting any property, in
each case as the result of the exercise of any right of condemnation or eminent
domain. A sale or other transfer to a Governmental Authority in lieu of, or in
anticipation of, condemnation shall be deemed to be a Condemnation.

         "Consolidated EBITDAR" means, for any Person for any period determined
on a consolidated basis in accordance with GAAP, an amount equal to, without any
duplication, (a) net income (before giving effect to the cumulative effect of
changes in accounting principles and discontinued operations (including Liberty
Electric Power LLC, a Delaware limited liability company) and before income
taxes and franchise taxes to the extent based on the income of such Person and
its Subsidiaries) for such period, plus (b) Consolidated Interest Charges for
such period, plus (c) depreciation, depletion, impairment, abandonment and
amortization expense for such period, plus (d) the book accounting lease expense
under the REMA Lease for such period, plus (e) interest and fees expensed under
any receivables monetization or securitization during such period (other than
interest and fees arising out of a securitization or monetization of the
California Receivables), plus (f) net unrealized losses related to non-trading
energy derivatives, plus (g) cash dividends or distributions actually received
during such period from an entity which is not a consolidated Subsidiary of such
Person other than El Dorado Energy, LLC, plus (h) the Borrower's pro rata share
of the EBITDAR of El Dorado Energy, LLC, and minus (i) net unrealized gains
related to non-trading energy derivatives;

provided, however, for purposes of this definition, (i) gains and losses on the
disposition of assets not in the ordinary course of business, (ii) any other
noncash charge or gain, and (iii) any extraordinary or other non-recurring item
or expense, including severance costs, shall be

                                      -10-
<PAGE>

excluded to the extent incurred or realized during such period in accordance
with GAAP from the calculation of Consolidated EBITDAR.

         If during any period for which Consolidated EBITDAR is being
determined, the Borrower or any Subsidiary shall have (a) made or consummated
any Acquisition for gross consideration of $3,000,000 or more (including
Indebtedness assumed), then Consolidated EBITDAR shall be determined on a pro
forma basis for such period as if such Acquisition had been made or consummated
as of the beginning of the first day of such period or (b) made or consummated
any Asset Sale that is not fully included in discontinued operations, then
Consolidated EBITDAR shall, to the extent such Asset Sale is not excluded from
Consolidated EBITDAR pursuant to the foregoing proviso, be determined on a pro
forma basis for such period as if such Asset Sale had been made or consummated
as of the beginning of the first day of such period.

         "Consolidated Interest Charges" means, without duplication, for any
period for the Borrower and its Subsidiaries on a consolidated basis, (a) the
total interest expense for such period, plus (b) the interest expense during
such period attributable to (i) the REMA Lease, (ii) the fees and yield paid in
connection with, or interest expense attributable to, any account receivables
securitization or monetization permitted hereunder (other than with respect to
the California Receivables), (iii) the Borrower's pro rata share of the net
interest expense of El Dorado Energy, LLC, and (iv) any capitalized interest
during such period, plus (c) all cash dividends and distributions paid on
preferred or preference stock, plus (d) to the extent deducted in determining
total interest expense, net unrealized gains of any Hedging Agreements permitted
hereunder and existing on or prior to the Closing Date (excluding any ongoing
settlement payments in connection with permitted interest rate swap agreements),
minus (e) (i) the total interest income of such Person and its Subsidiaries,
including interest income from any escrow or trust account, but excluding any
interest income attributable to the California Receivables, including any
settlement and collection of the California Receivables for such period, (ii) in
all cases whether expensed or amortized, any interest expense attributable to
(A) any makewhole or premium paid in connection with the repayment of any Debt
permitted hereunder, (B) any upfront direct or indirect costs, expenses, or fees
incurred in connection with, including those arising out of the preparation for
the maturity of, (1) the Existing Credit Agreement, this Agreement and other
Debt, and the restructuring or payoff of the Debt of OPC and its Subsidiaries or
(2) the incurrence of any Debt after the Closing Date, (C) to the extent added
in determining total interest expense, the upfront cost and net unrealized
losses of any Hedging Agreements permitted hereunder and existing on or prior to
the Closing Date (excluding ongoing settlement payments in connection with
permitted interest rate swap agreements), and (D) any of the RRI Warrants; (iii)
any interest expense attributable to the Liberty Project Financing, (iv) any
interest expense attributable to the California Receivables, including any
settlement or collection thereof, and (v) all non-recurring interest expense
with respect to items not constituting Indebtedness.

         "Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated EBITDAR for the period of the four
prior Fiscal Quarters ending on such date to (b) Consolidated Interest Charges
for such period.

                                      -11-
<PAGE>

         "Consolidated Leverage Ratio" means, as of any date of determination,
the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated
EBITDAR for the period of the four Fiscal Quarters most recently ended.

         "Consolidated Total Debt" means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP, (i) all outstanding Debt of the Borrower and its Subsidiaries on such
date, minus (ii) without duplication, all (a) cash and short-term investments,
in an aggregate amount not to exceed $300,000,000 at any time, (b) restricted
cash, in an amount not to exceed the aggregate amount of Indebtedness of the
Borrower or any of its Subsidiaries, the terms of which Indebtedness cause such
cash to appear as restricted cash on the consolidated balance sheet of the
Borrower and its Subsidiaries, and (c) broker, counterparty, and customer
margin/collateral assets and deposits advanced to or held on behalf of such
broker, counterparty or customer, as each of the foregoing appears on the
consolidated balance sheet of the Borrower and its Subsidiaries.

         "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (a) was a member of such
Board of Directors on the Closing Date; or (b) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

         "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.

         "Contribution Agreement" means that certain Second Amended and Restated
Contribution Agreement dated as of the date hereof and executed by each of the
Loan Parties, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time.

         "Control" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; and the terms "controlling," "controlled by" and
"under common control with" have correlative meanings.

         "Control Agreement" means a Deposit Account Control Agreement or a
Securities Account Control Agreement.

         "Convertible Notes" means the Borrower's 5.00% Convertible Senior
Subordinated Notes due 2010 in an aggregate principal amount of $275,000,000,
issued pursuant to that certain Indenture, dated as of June 24, 2003, by and
between the Borrower and Wilmington Trust Company, as trustee.

         "Core Asset Consent" means, as of any date of determination, the
consent of both (a) Lenders having more than 50% of the Revolving Credit
Exposure and (b) Lenders holding in the aggregate more than 50% of the aggregate
Outstanding Amount of all Term Loans; provided, that the Commitment of, and the
portion of the applicable Outstandings held or deemed held by,

                                      -12-
<PAGE>

any Defaulting Lender shall be excluded for purposes of making a determination
as to whether the required consent has been obtained under either clause (a) or
(b) above.

         "Credit Agreement Obligations" means all advances to, and debts,
liabilities, Obligations, covenants and duties of, any Loan Party arising under
or in connection with any Loan Document or otherwise with respect to any Loan or
Letter of Credit, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including Post-Petition Interest.

         "Credit Agreement Secured Parties" means, collectively, the Lenders,
each L/C Issuer, the Administrative Agent, each counterparty to a Secured Hedge
Agreement that is (or at the time such Secured Hedge Agreement was entered into,
was) a Lender or an Affiliate thereof (a "Hedge Bank") and (in each case) each
of their respective successors, transferees and assigns.

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

         "Debt" means, as of any date of determination with respect to the
Borrower and its Subsidiaries, without duplication, in accordance with GAAP the
following: (a) the total amount of indebtedness, including any fair value
adjustments, and other obligations of the Borrower and its Subsidiaries for
borrowed money (whether by loan or the issuance of debt securities), including
the unreimbursed amount of any drawings under letters of credit issued for the
account of the Borrower or any of its Subsidiaries, (b) all Capital Lease
Obligations and, except for the REMA Lease, Attributable Debt in respect of sale
and leaseback transactions, Synthetic Lease Obligations or financing leases, (c)
the unpaid balance owed to the certificate holders under the REMA Lease, (d)
obligations under any accounts securitization or monetization arrangement
permitted hereunder and not recorded on the Borrower balance sheet for that
period (other than with respect to any securitization or monetization of the
California Receivables), (e) all guaranties of payment or collection of any
obligations described in clauses (a) through (d) of this definition of any other
Person, and (f) the Borrower's pro rata share of the net outstanding bank debt
of El Dorado Energy, LLC;

provided, however, that Debt shall not include: (i) any guaranties that may be
incurred by endorsement of negotiable instruments for deposit or collection in
the ordinary course of business or similar transactions, (ii) any Obligations or
guaranties of performance of Obligations under performance bonds, (iii) trade
accounts payable in the ordinary course of business, (iv) customer advance
payments and customer deposits arising in the ordinary course of business, (v)
the liability of any Person as a general partner of a partnership for Debt of
such partnership, if the partnership is not a Subsidiary of such Person, and
(vi) any completion or performance guarantees (or similar guarantees that a
project or a Subsidiary perform as planned).

         In determining the outstanding amount of any Debt: (a) the amount of
money borrowed shall be the outstanding principal amount thereof, (b) the amount
of all unreimbursed letters of credit shall be the unreimbursed amount thereof,
(c) the amount of any accounts monetization or securitization shall be the
amount invested by the investor therein, and (d) the amount of guaranties shall
be the amount of the guaranteed obligations determined as provided above in this
sentence.

                                      -13-
<PAGE>

         "Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

         "Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

         "Default Rate" means (a) when used with respect to Credit Agreement
Obligations other than Loans and L/C Obligations, an interest rate equal to (i)
the Base Rate plus (ii) the Applicable Margin, if any, applicable to Revolving
Credit Loans maintained as Base Rate Loans plus (iii) 2% per annum, and (b) when
used with respect to Loans and L/C Obligations, a rate equal to (i) the rate of
interest applicable thereto hereunder plus (ii) the Applicable Margin, if any,
applicable thereto plus (iii) 2% per annum.

         "Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Term Loans, Revolving Credit Loans or participations in L/C
Obligations required to be funded by it hereunder within one Business Day of the
date required to be funded by it hereunder, (b) has otherwise failed to pay over
to the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within one Business Day of the date when due, unless the
subject of a good faith dispute, or (c) has been deemed insolvent or become the
subject of a bankruptcy or insolvency proceeding.

         "Deposit Account" shall have the meaning given to such term in the
Security Agreement.

         "Deposit Account Control Agreement" means, with respect to any Deposit
Account, a written agreement or other authenticated record, in form and
substance reasonably satisfactory to the Administrative Agent, pursuant to which
the depositary bank in which such Deposit Account is maintained shall agree,
among other things, to comply at any time with instructions from the Collateral
Trustee (or its co-trustees, agents or sub-agents) to such depositary bank
directing the disposition of funds from time to time credited to such Deposit
Account, without further consent of any Loan Party or its nominee, as any such
agreement or record may be amended, restated, supplemented or otherwise modified
from time to time.

         "Designated Entities" means, collectively, OPH, REMA, Channelview and
their respective Subsidiaries.

         "Deutsche Bank" means Deutsche Bank AG, New York Branch, and its
successors.

         "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of the Capital Stock),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the Term Loan Maturity Date. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the

                                      -14-
<PAGE>

right to require the Borrower to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Borrower
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the provisions of Section 7.6
hereof. The amount of Disqualified Stock deemed to be outstanding at any time
for purposes of this Agreement shall be equal to the maximum amount that the
Borrower and its Restricted Subsidiaries may become obligated to pay upon the
maturity of, or pursuant to any mandatory redemption provisions of, such
Disqualified Stock, exclusive of accrued dividends.

         "Documentation Agent" means each of Goldman Sachs and Merrill Lynch.

         "Dollar" and "$" mean lawful money of the United States.

         "Domestic Subsidiary" means a Subsidiary that is organized or
incorporated under the laws of the United States or a State thereof.

         "Draw Amount" means, with respect to any Letter of Credit, the amount
necessary to settle the obligations of any L/C Issuer under any draft or demand
made under such Letter of Credit.

         "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent and each L/C Issuer and (ii) unless an
Event of Default has occurred and is continuing, the Borrower (each such
approval not to be unreasonably withheld or delayed); provided, that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any of the Borrower's Affiliates or Subsidiaries or any Person who
in the ordinary course of its business owns and/or operates power generating
facilities.

         "Environmental Laws" means any and all Federal, state, local, regional
and foreign statutes, laws, rules of common law, constitutional provisions,
regulations, ordinances, rules judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the protection of the environment or Hazardous Materials,
including, without limitation, those relating to the use analysis, generation,
manufacture, storage, discharge, emission, release, disposal, transportation
treatment, investigation, removal, or remediation of Hazardous Materials.
Environmental Laws include, without limitation, those acts commonly referred to
as the Comprehensive Environmental Response, Compensation and Liability Act of
1980; the Superfund Amendments and Reauthorization Act; the National
Environmental Policy Act; the Hazardous Materials Transportation Act; the
Resource Conservation and Recovery Act, the Solid Waste Disposal Act, the Clean
Water Act, the Clean Air Act, the Toxic Substances Control Act, and the
Occupational Safety and Health Act, and their state counterparts.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure

                                      -15-
<PAGE>

to any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

         "Equally and Ratably" means, in reference to sharing of any Liens on
Shared Collateral or proceeds thereof as among the holders of Parity Secured
Obligations, after allowing for the payment priorities in the Order of
Application, that such Liens or proceeds:

                  (1) shall be allocated and distributed to the applicable
         Parity Secured Debt Representative for account of the holders of
         Secured Notes, to the Administrative Agent for account of the Lenders
         and to the Secured Debt Representative for each other Series of Secured
         Debt for account of the holders of such Series of Secured Debt, ratably
         in proportion to the principal, interest, fees and premium (if any)
         outstanding, when the allocation or distribution is made, on (i) the
         Secured Notes, (ii) Credit Agreement Obligations, (iii) Hedging
         Obligations and amounts payable to a Lender in connection with a bank
         account or any other banking services, in each case, that are required
         by this Agreement to be secured on an equal and ratable basis with the
         Credit Agreement Obligations and (iv) all other Series of Secured Debt
         (allocated proportionately to the Secured Debt Representative for each
         other Series of Secured Debt if there is more than one), respectively;
         and thereafter

                  (2) shall be allocated and distributed (if any remain after
         payment in full of all of the principal, interest, fees and premium (if
         any) outstanding on the Secured Notes, Credit Agreement Obligations,
         the Hedging Obligations and other amounts payable to a lender referred
         to in clause (1), and each other Series of Secured Debt) to the
         applicable Secured Debt Representative for account of the holders of
         any remaining Secured Note Obligations, to the Administrative Agent for
         account of the Lenders holding any remaining Credit Agreement
         Obligations, Hedging Obligations or such other amounts and to the
         Secured Debt Representative for each other Series of Secured Debt for
         account of the holders of any remaining Parity Secured Obligations in
         respect of such Series of Secured Debt, ratably in proportion to the
         aggregate unpaid amount of such remaining Secured Note Obligations,
         Credit Agreement Obligations, Hedging Obligations or such other amounts
         and other remaining Parity Secured Obligations, respectively, that are
         due and demanded prior to the date such distribution is made.

         For this purpose:

                  (1) unfunded commitments to extend credit shall not be counted
         as outstanding debt;

                  (2) obligations of the Borrower or any Guarantor in respect of
         outstanding letters of credit, bank guarantees, bankers' acceptances or
         other similar instruments shall be counted as outstanding debt (whether
         or not contingent), except that if any such instrument thereafter
         expires without being funded, an equitable adjustment shall be made in
         any future distribution so that the aggregate amount distributed is
         distributed Equally and Ratably as if such instrument had never been
         outstanding (but all distributions shall be final and non-refundable
         when made);

                                      -16-
<PAGE>

                  (3) during the pendency of any Actionable Default, and subject
         to the Order of Application, if any payment or distribution is made in
         cash to the Lenders or any other holders of Parity Secured Obligations
         from or on account of Separate Collateral by reason of enforcement of
         Liens or realization in a bankruptcy case, receivership or other
         insolvency or liquidation proceeding, then any concurrent or subsequent
         payment or distribution that is to be made in cash to such holders from
         or on account of Shared Collateral by reason of any such enforcement or
         realization shall be reduced, and any concurrent or subsequent payment
         or distribution that is to be made in cash to the remaining holders of
         Parity Secured Obligations from or on account of Shared Collateral by
         reason of any such enforcement or realization shall be increased, to
         the extent necessary to cause the aggregate amount of all payments and
         distributions made in cash to all holders of Parity Secured Obligations
         (whether made from or on account of Separate Collateral or from or on
         account of Shared Collateral) by reason of any such enforcement or
         realization to be distributed Equally and Ratably as fully as if the
         Separate Collateral had been Shared Collateral; and

                  (4) all amounts apportioned and distributed to the
         Administrative Agent or the Secured Debt Representative for any other
         Series of Secured Debt may be allocated, apportioned and distributed by
         it in accordance with the applicable provisions of the Credit Agreement
         or the indenture or agreement governing such other Series of Secured
         Debt, including to give effect to any payment priorities provided for
         therein as among the holders of obligations outstanding thereunder.

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "ERCOT" means the Electric Reliability Council of Texas.

         "ERISA" means the Employee Retirement Income Security Act of 1974.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is a member of the controlled group of the Borrower or under
common control with the Borrower within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

         "ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any

                                      -17-
<PAGE>

liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.

         "Eurodollar Rate" means, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate per annum equal to the British Bankers
Association LIBOR Rate ("BBA LIBOR"), as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as designated by
the Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period. If such rate is not available at such
time for any reason, then the "Eurodollar Rate" for such Interest Period shall
be the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the Eurodollar Rate Loan being
made, continued or converted by Bank of America and with a term equivalent to
such Interest Period would be offered by Bank of America's London Branch to
major banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.

         "Eurodollar Rate Loan" means a Loan that bears interest at a rate based
on the Eurodollar Rate.

         "Event of Default" has the meaning specified in Section 9.1.

         "Excepted Debt" means Indebtedness expressly permitted to be incurred
or issued pursuant to Section 7.3(a) (solely with respect to the Credit
Agreement Obligations in respect of the Revolving Credit Loans and L/C
Obligations), (b), (c), (d), (e), (f), (h), (j) (other than a refinancing of the
Term Loans), (k) and (s).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Excluded Entities" shall mean: (a) Channelview and OPH and (b) each of
their respective Subsidiaries; provided, however, that Channelview and OPH,
together with their respective Subsidiaries, shall no longer be an "Excluded
Entity" in the event that (x) such entity is not prohibited under any agreement
for borrowed money from taking the actions set forth in Section 6.12, and (y)
such entity is no longer restricted or prohibited from paying dividends or other
distributions to a Loan Party, repaying loans or advances owed to a Loan Party
or transferring any of its properties or assets to a Loan Party, other than
restrictions imposed by Law.

         "Excluded Proceeds" means any Net Asset Sale Proceeds that are
designated by the Borrower as Excluded Proceeds; provided, that (a) not more
than $300,000,000 of such Net Asset Sale Proceeds may be designated as Excluded
Proceeds during any single calendar year, (b) not more than $750,000,000 of such
Net Asset Sale Proceeds may be designated as Excluded Proceeds on or after the
Closing Date, and (c) Net Asset Sale Proceeds from Asset Sales of generation
assets or other businesses, in each case acquired by the Borrower or any
Restricted Subsidiary after the Closing Date pursuant to an Acquisition may not
be designated as Excluded Proceeds.

                                      -18-
<PAGE>

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, any L/C Issuer or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located, (b) any branch
profits taxes imposed by the United States or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 11.13), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new Lending Office) or is attributable to such Foreign Lender's
failure or inability (other than as a result of a Change in Law) to comply with
Section 3.1(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 3.1(a).

         "Existing Credit Agreement" is defined in the first recital.

         "Existing Florida Mortgages" means the mortgages listed in Item 1 of
Schedule 1.1(e).

         "Existing Indebtedness" means Indebtedness (other than intercompany
Indebtedness) of the Borrower and its Restricted Subsidiaries in existence on
the Closing Date and set forth on Schedule 1.1(g).

         "Existing Letters of Credit" means the letters of credit described on
Schedule 1.1(a) hereto.

         "Existing Mortgages" means the mortgages listed in Item 2 of Schedule
1.1(e):

         "Existing Title Policies" means the title policies listed in Item 3 of
Schedule 1.1(e):

         "Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person from proceeds of insurance (other than proceeds of
business interruption insurance to the extent such proceeds constitute
compensation for lost earnings).

         "Facility" means the Term Facility, the Revolving Credit Facility or
the L/C Sublimit, as the context may require.

         "Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving distress or necessity
of either party, determined in good faith by the chief financial officer of the
Borrower or Board of Directors of the Borrower or the selling entity (unless
otherwise provided in this Agreement).

         "Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, that (a) if

                                      -19-
<PAGE>

such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate (rounded upward, if necessary, to a whole multiple
of 1/100 of 1%) charged to Bank of America on such day on such transactions as
determined by the Administrative Agent.

         "Fee Letter" means any of (i) the respective letter agreements, each
dated as of December 14, 2004, between or among the Borrower and each Agent or
one of its Affiliates and (ii) the letter agreement, dated as of December 3,
2004, between the Borrower and the Administrative Agent, as each may be amended,
restated, supplemented or otherwise modified from time to time.

         "Fiscal Quarter" means a quarter ending on the last day of March, June,
September or December.

         "Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "2004 Fiscal Year") refer to the Fiscal Year
ending on December 31 of such calendar year.

         "Florida Mortgaged Properties" means the Closing Date Mortgaged
Properties described in the Existing Florida Mortgages.

         "Florida Mortgage Supplement" means a Supplement to the Existing
Florida Mortgages, in a form reasonably acceptable to the Agents and the
Borrower, and completed to include the Credit Agreement Obligations as Secured
Debt under each such Existing Florida Mortgage.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Person" means any Person that is not organized or existing
under the United States or a state thereof.

         "Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.

         "FRB" means the Board of Governors of the Federal Reserve System of the
United States.

         "Free Cash Flow" means, for any period from January 1, 2005 through the
date of its determination:

                  (a) the Borrower's aggregate operating cash flow from
         continuing operations;

         plus

                                      -20-
<PAGE>

                  (b) to the extent deducted in determining operating cash flow
         from continuing operations, any extraordinary or other non-recurring
         item or expense, including severance payments;

         plus (if a reduction) or minus (if an increase)

                  (c) the aggregate changes in margin deposits on energy trading
         and hedging activities, net;

         plus (if a reduction) or minus (if an increase)

                  (d) the aggregate changes in restricted cash, all during such
         period;

         minus

                  (e) capital expenditures during such period;

all, except for clause (b), as indicated on the Borrower's consolidated
statements of cash flows.

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

         "Funded ERCOT Amount" means, as of any date, the sum of the amount of
Free Cash Flow, Net Financing Proceeds and Net Asset Sales Proceeds actually
generated or received, as applicable, under clauses (a), (b), (c), (d) or (f) of
the definition of Permitted Acquisition Limit, on and after the Closing Date
through such date.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

         "Goldman Sachs" means Goldman Sachs Credit Partners L.P. and its
successors.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of, or pertaining to,
government.

         "Granting Lender" has the meaning specified in Section 11.6(h).

         "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness (whether arising by virtue of partnership arrangements,
or

                                      -21-
<PAGE>

by agreements to keep-well, to purchase assets, goods, securities or services,
to take or pay or to maintain financial statement conditions or otherwise). The
term "Guarantee" as a verb has a corresponding meaning.

         "Guaranteed Obligations" has the meaning specified in Section 8.1(a).

         "Guarantors" means each of:

                  (a) the entities listed on Schedule 1.1(b) hereto; and

                  (b) any other Subsidiary of the Borrower that executes this
         Agreement in accordance with the provisions of this Agreement,

and their respective successors and assigns.

         "Guaranty" means the guaranty of the Credit Agreement Obligations
provided by each Guarantor pursuant to the terms of Article VIII of this
Agreement.

         "Hazardous Materials" means all explosive, flammable, corrosive or
radioactive substances or wastes and all hazardous, carcinogenic, mutagenic or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes, toxic mold and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

         "Hedge Bank" has the meaning specified in the definition of "Secured
Parties".

         "Hedge Termination Value" means, in respect of any one or more Hedging
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedging Agreements, (a) for any date on or
after the date such Hedging Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b)
for any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Hedging Agreements, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Hedging Agreements (which
may include a Lender or any Affiliate of a Lender).

         "Hedging Agreement" has the meaning specified in the definition of
"Hedging Obligation".

         "Hedging Obligations" means, with respect to any specified Person, the
net obligations of such Person under:

                  (a) interest rate swap agreements (whether from fixed to
         floating or from floating to fixed), interest rate cap agreements and
         interest rate collar agreements;

                  (b) other agreements or arrangements designed to manage
         interest rate risk; and

                                      -22-
<PAGE>

                  (c) other agreements or arrangements designed to protect such
         Person against fluctuations in currency exchange rates (any agreement
         or arrangement referred to in this clause or any of the foregoing
         clauses (a) and (b), a "Hedging Agreement").

The amount of any net obligation under any Hedging Agreement on any date shall
be deemed to be the Hedge Termination Value thereof as of such date.

         "Honor Date" means the date of any payment by any L/C Issuer under a
Letter of Credit.

         "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses or trade payables),
whether or not contingent (without duplication):

                  (a) in respect of borrowed money;

                  (b) evidenced by bonds, notes, debentures or similar
         instruments or letters of credit or reimbursement agreements in respect
         thereof;

                  (c) in respect of banker's acceptances;

                  (d) representing Capital Lease Obligations or Attributable
         Debt in respect of sale and leaseback transactions (including the REMA
         Lease), Synthetic Lease Obligations or financing leases;

                  (e) representing the balance deferred and unpaid of the
         purchase price of any property or services due more than six months
         after such property is acquired or such services are completed;

                  (f) representing any Hedging Obligations; or

                  (g) consisting of Disqualified Stock.

whether or not any of the preceding items appear as a liability upon a balance
sheet of the specified Person prepared in accordance with GAAP. In addition, the
term "Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person. If obligations
of a Securitization Entity are Indebtedness, for the purposes of calculating the
amount of Indebtedness of a Securitization Entity outstanding as of any date,
the face or notional amount of any interest in receivables or equipment that is
outstanding as of such date shall be deemed to be Indebtedness but any such
interests held by Affiliates of such Securitization Entity shall be excluded for
purposes of such calculation. The amount of any Indebtedness outstanding as of
any date will be:

                  (i) the accreted value of the Indebtedness, in the case of any
         Indebtedness issued with original issue discount;

                                      -23-
<PAGE>

                  (ii) the principal amount of and premium (if any) on the
         Indebtedness, in the case of any other Indebtedness;

                  (iii) in respect of Indebtedness of other Persons secured by a
         Lien on the assets of the specified Person, the lesser of:

                           (A) the Fair Market Value of such asset at such date
                  of determination, and

                           (B) the amount of such Indebtedness of such other
                  Persons; and

                  (iv) in respect of any Guarantee, an amount equal to the
         stated or determinable amount of the related primary obligation, or
         portion thereof, in respect of which such Guarantee is made or, if not
         stated or determinable, the maximum reasonably anticipated liability in
         respect thereof as determined by the guaranteeing Person in good faith.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Indemnitee" has the meaning specified in Section 11.4(b).

         "Instrument of Assumption and Joinder" means an Assumption and Joinder
Agreement substantially in the form of Exhibit G.

         "Intercreditor Confirmation" means the agreement of any holder of
Parity Secured Debt or other Parity Secured Obligations to the provisions
described in the Order of Application and definition of the term "Equally and
Ratably," as set forth in any Secured Debt Document for the benefit of, and
enforceable as a third party beneficiary by, each present and future holder of
Parity Secured Obligations and each present and future Secured Debt
Representative.

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

         "Interest Period" means as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three, six,
nine, or, if available, twelve months thereafter, as selected by the Borrower in
its Borrowing Notice, as the case may be; provided, that:

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

                  (ii) any Interest Period that begins on the last Business Day
         of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar

                                      -24-
<PAGE>

         month at the end of such Interest Period) shall end on the last
         Business Day of the calendar month at the end of such Interest Period;
         and

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

         "Investment" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or similar obligations), advances or capital
contributions (excluding payroll, commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. "Investment"
shall exclude extensions of trade credit by the Borrower and its Restricted
Subsidiaries in the ordinary course of business and Permitted PEDFA Bond
Indebtedness. The acquisition by the Borrower or any Subsidiary of the Borrower
of a Person that holds an Investment in a third Person will be deemed to be an
Investment by the Borrower or such Subsidiary in such third Person in an amount
equal to the Fair Market Value of the Investments held by the acquired Person in
such third Person. Except as otherwise provided in this Agreement, the amount of
an Investment shall be its Fair Market Value at the time the Investment is made
and without giving effect to subsequent changes in value.

         "Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) by Moody's or BBB- (or the equivalent) by S&P.

         "Investment Grade Rating Date" means the date on which (i) the rating
assigned to the Secured Notes by each of S&P and Moody's or, if no Secured Notes
are outstanding, the corporate rating assigned to the Borrower, is an Investment
Grade Rating and (ii) no Default shall have occurred and be continuing.

         "IP Rights" has the meaning specified in Section 5.17.

         "IRS" means the United States Internal Revenue Service.

         "ISP" means, with respect to any Letter of Credit, the "International
Standby Practices 1998" published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time of
issuance).

         "Junior Securities" mean the issuance by the Borrower, solely for cash
proceeds (except for the conversion of any convertible security into ordinary
common stock of the Borrower), of senior subordinated notes (where either (i)
the subordination provisions of such notes shall be at least as favorable to the
Lenders as the subordination provisions set forth in Schedule 1.1(d) or the
Convertible Notes; or (ii) the subordination provisions shall be in all respects
satisfactory to the Agents), or preferred or preference stock of any kind,
common equity securities, or any warrants, options or similar instruments for
the purchase of any equity interest, whether common or preferred; provided, that
any convertible security constituting a "Junior Security" pursuant to the
foregoing shall be convertible only into ordinary common stock of the Borrower.

         "Laws" means, collectively, all international, foreign, federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial

                                      -25-
<PAGE>

precedents or authorities, including the interpretation or administration
thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority.

         "L/C Advance" means, with respect to each Lender, such Lender's funding
of its participation in any L/C Borrowing in accordance with its Pro Rata Share.

         "L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Revolving Borrowing.

         "L/C Certificate" shall mean a certificate, substantially in the form
of Exhibit B, to be delivered by the Borrower to the Administrative Agent and
the applicable L/C Issuer in connection with the issuance of each Letter of
Credit or the amendment of any outstanding Letter of Credit to increase the face
amount thereof (as applicable).

         "L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the increase of the
amount thereof.

         "L/C Exposure" shall mean, at any time, the amount expressed in Dollars
of the aggregate or stated face amount of all drafts which may then or
thereafter be presented by beneficiaries under all Letters of Credit then
outstanding plus (without duplication), the face amount of all drafts which have
been presented or accepted under all Letters of Credit but have not yet been
paid or have been paid, but not reimbursed, whether directly or from the
proceeds of a Revolving Credit Loan hereunder.

         "L/C Issuer" means each of ABN AMRO Bank N.V., Bank of America,
Barclays Bank, Deutsche Bank, JPMorgan Chase Bank, N.A., The Bank of Nova
Scotia, UBS AG, Stamford Branch and any other Lender which agrees (pursuant to a
joinder in form and substance satisfactory to the Administrative Agent) to be an
L/C Issuer after the Closing Date, each in its capacity as an issuer of Letters
of Credit hereunder, and in each case, its successors in such capacity as
provided in Section 11.6(b) hereof; provided, that each of such L/C Issuers
shall be required to issue Letters of Credit only in accordance with the terms
and subject to the conditions set forth herein, up to an aggregate amount, at
any one time, not in excess of the amount opposite such entity's name under the
column entitled "L/C Issuer Amount for Letters of Credit" in Schedule 2.1 hereto
(as such Schedule may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof). Each L/C Issuer may, in
its discretion, arrange for any Letter of Credit to be issued by an Affiliate of
such L/C Issuer as long as such Affiliate is reasonably acceptable to the
beneficiary under such Letter of Credit, in which case, the term "L/C Issuer"
shall include, with respect to Letters of Credit issued by such Affiliate, such
Affiliate.

         "L/C Issuer Amount for Letters of Credit" has the meaning specified in
the definition of L/C Issuer.

         "L/C Obligations" means, as at any date of determination, the aggregate
amount available to be drawn under all outstanding Letters of Credit plus the
aggregate of all Unreimbursed

                                      -26-
<PAGE>

Amounts, including all L/C Borrowings. For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.6. For all purposes of
this Agreement, if on any date of determination a Letter of Credit has expired
by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be
"outstanding" in the amount so remaining available to be drawn.

         "L/C Sublimit" means $1,350,000,000.

         "Lender" has the meaning specified in the introductory paragraph hereto
and, as the context requires, includes any L/C Issuer.

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

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

         "Letter of Credit Fee" has the meaning specified in Section 2.3(i).

         "Letter of Credit Final Expiration Date" means the day that is five
Business Days prior to the Revolving Credit Termination Date.

          "Liberty Project Financing" means the Indebtedness incurred by Liberty
Electric PA, LLC and Liberty Electric Power, LLC to finance the 568 Megawatt
combined cycle gas-fueled electric generating plant located in the Borough of
Eddystone, Delaware County, Pennsylvania, together with any extensions,
amendments, or refinancings thereof to the extent permitted hereunder.

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement and any lease
that constitutes a security interest.

         "Loan" means an extension of credit by a Lender to the Borrower under
Article II in the form of a Term Loan or a Revolving Credit Loan.

         "Loan Documents" means (i) this Agreement, (ii) each Note, (iii) each
L/C certificate, (iv) each Security Document, (v) each Secured Hedge Agreement,
(vi) the Contribution Agreement, (vii) each UCC financing statement, (viii) each
of the Fee Letters, (ix) the Texas Genco Intercreditor Agreement, (x) each
Instrument of Assumption and Joinder, (xi) each other document, agreement,
certificate or instrument required to be or otherwise executed by any Loan Party
in connection with this Agreement or any or any of the other documents listed
above and (xii) solely for purposes of Section 6.13, the Orion Note Documents.

         "Loan Party" means the Borrower and each Guarantor.

                                      -27-
<PAGE>

         "Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, property, financial condition or prospects of the Borrower
and its Subsidiaries taken as a whole; or (b) the validity or enforceability
against any Loan Party of any Loan Document to which it is a party or the
material rights and remedies of the Administrative Agent and the Lenders
thereunder.

         "Material Subsidiary" means, as of any date, any Subsidiary of the
Borrower where either (i) $25,000,000 or more of Consolidated EBITDAR during the
four-Fiscal Quarter period most recently ended was attributable to such
Subsidiary or (ii) as of such date, had assets with a book value of $50,000,000
or more.

         "Maturity Date" means, as the context may require, the Revolving Credit
Termination Date or the Term Loan Maturity Date.

         "Merrill Lynch" means Merrill Lynch Capital Corporation and its
successors.

         "Moody's" shall mean Moody's Investors Service, Inc. or if such company
shall cease to issue ratings, another nationally recognized rating company
selected in good faith by mutual agreement of the Administrative Agent and the
Borrower.

         "Mortgage" shall mean any mortgage, deed of trust, deed to secure debt
or such equivalent document now existing or hereafter entered into covering the
Mortgaged Real Property Assets, that is executed and delivered by one or more of
the Loan Parties to the Collateral Trustee (for the benefit of the Secured
Parties), including the Existing Mortgages, as any such document may be amended,
restated, supplemented or otherwise modified from time to time.

         "Mortgage Supplement" means Supplements to the Existing Mortgages
(except for the Existing Florida Mortgages), substantially in the form of the
form of Supplement attached to each Existing Mortgage, and completed to include
the Sharing Eligible Debt in existence on the Closing Date as an "Additional
Series of Secured Debt" under each such Existing Mortgage.

         "Mortgaged Real Property Assets" means those real property assets of
the Loan Parties on which a Lien has been granted by the applicable Loan Party
to the Collateral Trustee (for the benefit of the Secured Parties).

         "Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.

         "Net Asset Sale Proceeds" means the aggregate cash proceeds received by
the Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale and payments made to retire Indebtedness (other than the Loans)
required to be repaid in connection therewith, including legal, accounting and
investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, taxes paid or payable as a result of the
Asset Sale, in each case, after taking

                                      -28-
<PAGE>

into account any available tax credits or deductions and any tax sharing
arrangements, and amounts reserved for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.

         "Net Casualty Proceeds" means, with respect to any Casualty Event, the
amount of any insurance proceeds or condemnation awards received by the
Borrower, any Loan Party or OPH or any of its Subsidiaries in connection with
such Casualty Event in excess of $10,000,000, individually or in the aggregate
over the course of a Fiscal Year (net of all reasonable and customary collection
expenses thereof), but excluding any proceeds or awards required to be paid to a
creditor (other than the Lenders) which holds a first priority Lien permitted by
Section 7.1 on the property which is the subject of such Casualty Event.

         "Net Financing Proceeds" means with respect to the incurrence or
issuance after the Closing Date by the Borrower to any Person of any Senior Debt
or Junior Securities permitted under this Agreement, the excess of:

                  (a) the gross cash proceeds received by the Borrower from such
         incurrence or issuance, over

                  (b) all reasonable and customary underwriting commissions and
         legal, investment banking, brokerage and accounting and other
         professional fees, sales commissions and disbursements actually
         incurred in connection with such sale or issuance which have not been
         paid to Affiliates of the Borrower in connection therewith.

         "New Secured Notes" means the Borrower's 6.75% Secured Notes due 2014.

         "Non-Recourse" means, with respect to any specified Person and the
Indebtedness of such Person:

                  (1) neither the Borrower nor any of its Restricted
         Subsidiaries (A) provides credit support of any kind (including any
         undertaking, agreement or instrument that would constitute
         Indebtedness) for the Indebtedness of such Person other than a pledge
         of the Equity Interests of such Person or of the Subsidiaries of such
         Person, (B) is directly or indirectly liable as a guarantor or
         otherwise of the Indebtedness of such Person, or (C) constitutes the
         lender with respect to the Indebtedness of such Person; and

                  (2) in the case of an Unrestricted Subsidiary, no default on
         the Indebtedness of such Unrestricted Subsidiary (including any rights
         that the holders of the Indebtedness may have to take enforcement
         action against an Unrestricted Subsidiary) would permit upon notice,
         lapse of time or both any holder of Indebtedness of the Borrower or any
         of its Restricted Subsidiaries to declare a default on such
         Indebtedness of the Borrower or any of its Restricted Subsidiaries or
         cause the payment of such Indebtedness of the Borrower or any of its
         Restricted Subsidiaries to be accelerated or payable prior to its
         stated maturity.

         "Nonrenewal Notice Date" means, for any Letter of Credit, a day (to be
agreed upon at the time such Letter of Credit is issued) before which the
relevant L/C Issuer may prevent the renewal of such Letter of Credit.

                                      -29-
<PAGE>

         "Note" means a promissory note made by the Borrower in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit D-1 or Exhibit D-2, as applicable.

         "Obligations" means any principal, interest, premium, fees,
indemnifications, reimbursements, expenses, damages and other liabilities
payable under the documentation governing any Indebtedness.

         "OPC" means Orion Power Capital, LLC, a Delaware limited liability
company, and its successors.

         "OPH" means Orion Power Holdings, Inc., a Delaware corporation, and its
successors.

         "OPH Asset Sale Proceeds" means any Net Asset Sale Proceeds received by
the Borrower or any of its Subsidiaries from any Asset Sale by OPH or any of its
Subsidiaries.

         "OPH Guaranty" means the Amended and Restated Guaranty Agreement
executed by OPH in favor of the holders of the Secured Obligations (as defined
in the Collateral Trust Agreement).

         "OPH Note Indenture" means the Indenture, dated as of April 27, 2000,
among OPH and Wilmington Trust Company, as trustee, pursuant to which the OPH
Notes were issued, as amended, restated, supplemented or otherwise modified from
time to time.

         "OPH Notes" means OPH's 12% Senior Notes due 2010.

         "OPH Revolving Notes" means, collectively, the OPMW Revolving Note and
the OPNY Revolving Note.

         "OPMW" means Orion Power MidWest, L.P., a Delaware limited partnership,
and its successors.

         "OPMW Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of October 28, 2002, among OPMW, the financial institutions
party thereto as lenders, and Bank of America, N.A., as administrative agent, as
amended, restated, supplemented or otherwise modified from time to time.

         "OPMW New Term Note" means the term note, dated as of the date hereof,
issued by OPMW to the Borrower in an original principal amount equal to
$400,000,000 less the original principal amount of the OPMW Refinancing Note, as
amended, restated, supplemented or otherwise modified from time to time.

         "OPMW Refinancing Note" means the term note, dated as of the date
hereof, issued by OPMW to the Borrower in an original principal amount equal to
the aggregate principal amount of Indebtedness under the OPMW Credit Agreement
assigned to the Borrower on or before the Closing Date, as amended, restated,
supplemented or otherwise modified from time to time.

                                      -30-
<PAGE>

         "OPMW Revolving Note" means the revolving note, dated as of the date
hereof, issued by OPMW to the Borrower in the maximum principal amount of
$75,000,000 as amended, restated, supplemented or otherwise modified from time
to time.

         "OPMW Term Notes" means, collectively, the OPMW Refinancing Note and
the OPMW New Term Note.

         "OPNY Revolving Note" means the revolving note, dated as of the date
hereof, issued by OPMW to the Borrower in the maximum principal amount of
$50,000,000, as amended, restated, supplemented or otherwise modified from time
to time.

         "OPNY Term Note" means the term note, dated as of the date hereof,
issued by OPNY to the Borrower in the original principal amount of $400,000,000,
as amended, restated, supplemented, or otherwise modified from time to time.

         "Order of Application" has the meaning assigned to it in the Collateral
Trust Agreement.

         "Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

         "Orion Guarantors" means, collectively, OPC, OPMW, OPNY, Orion Power
Midwest GP, Inc., Orion Power New York GP, Inc., Orion Power Midwest LP, LLC,
Orion Power New York LP, LLC, Twelvepole Creek LLC and Astoria Generating
Company, L.P.

         "Orion Guaranty" means the Amended and Restated Guaranty Agreement
executed by the Orion Guarantors in favor of Reliant Energy, Inc., as secured
party, as amended, restated, supplemented or otherwise modified from time to
time.

         "Orion Note Document" means each Orion Note and each agreement or other
document executed in connection therewith.

         "Orion Notes" means, collectively, the OPMW Refinancing Note, the OPMW
New Term Note, the OPMW Revolving Note, the OPNY Term Note and the OPNY
Revolving Note.

         "Orion Security Agreement" means the Amended and Restated Security
Agreement executed by OPH and the Orion Guarantors in favor of Reliant Energy,
Inc., as secured party, as amended, restated, supplemented or otherwise modified
from time to time.

         "Other Taxes" means all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or

                                      -31-
<PAGE>

under any other Loan Document or from the execution, delivery or enforcement of,
or otherwise with respect to, this Agreement or any other Loan Document.

         "Outstanding Amount" means (i) with respect to Term Loans and Revolving
Credit Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any borrowings and prepayments or repayments of Term
Loans and Revolving Credit Loans, as the case may be, occurring on such date;
and (ii) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by the
Borrower of Unreimbursed Amounts.

         "Parity Secured Debt" means, collectively:

                  (1) the Secured Notes;

                  (2) the PEDFA Guaranties;

                  (3) the Credit Agreement Obligations; and

                  (4) Sharing Eligible Debt that is designated by the Borrower,
         in a Certificate of a Responsible Officer of the Borrower delivered to
         the Collateral Trustee on or before the date of incurrence of such
         Indebtedness, as entitled to share Equally and Ratably in the benefits
         and proceeds of all Liens held by the Collateral Trustee in Shared
         Collateral.

         "Parity Secured Obligations" means, collectively, the Secured Note
Obligations, the PEDFA Guaranty Obligations, the Credit Agreement Obligations
and all Obligations in respect of each other Series of Secured Debt.

         "Participant" has the meaning specified in Section 11.6(d).

         "PBGC" means the Pension Benefit Guaranty Corporation.

         "PEDFA Guaranties" means collectively, the Borrower's (i) five
Guarantee Agreements, each dated as of December 22, 2004, among the Borrower,
the Guarantors and J.P.Morgan Trust Company, as trustee, and (ii) other
guaranties constituting Permitted PEDFA Bond Indebtedness made by the Borrower
from time to time in accordance with Section 7.3.

         "PEDFA Guaranty Obligations" means:

                  (1) the Obligations of the Borrower under the PEDFA Guaranties
         issued on the Closing Date; or

                  (2) the Obligations of the Borrower under the PEDFA Guaranties
         issued after the Closing Date that constitute another Series of Secured
         Debt.

         "Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA

                                      -32-
<PAGE>

and is sponsored or maintained by the Borrower or any ERISA Affiliate or to
which the Borrower or any ERISA Affiliate contributes or has an obligation to
contribute, or in the case of a multiple employer or other plan described in
Section 4064(a) of ERISA, has made contributions at any time during the
immediately preceding five plan years.

         "Permitted Acquisition" means any Acquisition by the Borrower or any of
its Restricted Subsidiaries that satisfies all of the following conditions: (1)
the aggregate Acquisition Consideration paid or incurred by the Borrower and its
Restricted Subsidiaries in connection with such Acquisition, together with the
aggregate Acquisition Consideration paid by Borrower and its Restricted
Subsidiaries in connection with all other Acquisitions since the Closing Date,
does not exceed the Permitted Acquisition Limit, (2) no Default shall have
occurred and be continuing or would result therefrom on the date of the closing
of such Acquisition, (3) the Borrower shall have delivered to the Administrative
Agent a certificate of an Authorized Officer certifying compliance with Section
7.11 on a pro forma basis after giving effect to the Acquisition (without
supporting calculations), (4) the acquired Person is in (or the acquired assets
are useful in) a Permitted Business, and (5) the assets, including any Capital
Stock, acquired pursuant to such Acquisition shall be pledged as additional
collateral for the Facilities, and any acquired entity shall become a Guarantor,
in each case in accordance with Section 6.12.

         "Permitted Acquisition Limit" means, as of any date, an amount equal to
the sum of (a) the lesser of (i) 50% of Free Cash Flow for the period from the
Closing Date through such date and (ii) $1,000,000,000, (b) in the case of the
acquisition of a Permitted ERCOT Asset, the amount of additional senior secured
Indebtedness issued for such Acquisition, not to exceed $500,000,000, (c) the
amount of additional senior secured Indebtedness issued since the Closing Date,
not to exceed $300,000,000, (d) the amount of unsecured Indebtedness and
Specified Junior Securities issued since the Closing Date, but only to the
extent not required hereunder to be applied to the prepayment of Term Loans, (e)
with respect to acquisitions of Permitted ERCOT Assets through the second
anniversary of the Closing Date, an amount, not less than zero, equal to
$500,000,000 less the amounts under clauses (a), (b), (c), (d), and (f) of this
definition used for Acquisition Consideration of Permitted ERCOT Assets;
provided, that not more than $200,000,000 of the foregoing $500,000,000 amount
under this clause (e) may be utilized for Acquisition Consideration from the
first through the second anniversary of the Closing Date, and (f) the amount of
Excluded Proceeds since the Closing Date, in each case to the extent such
amounts are actually received by the Borrower and permitted to be retained by it
under this Agreement.

         "Permitted Business" means the business of providing services and
products in the energy market and any businesses incidental or reasonably
related thereto.

         "Permitted Debt" has the meaning assigned to it in Section 7.3.

         "Permitted Encumbrances" has the meaning specified in the Mortgages.

         "Permitted ERCOT Assets" means (1) electric generating assets together
with assets related thereto (including any assets related to the operation and
fuel supply of such electric generating assets) which assets support the
Borrower's and/or its Restricted Subsidiaries' retail business in the State of
Texas and (2) all (but not less than all) of the Capital Stock of any Person

                                      -33-
<PAGE>

that owns solely Permitted ERCOT Assets (whether directly or through one or more
wholly owned Subsidiaries) described in clause (1) above.

         "Permitted Exceptions" means secured Indebtedness of the Borrower or
any of its Restricted Subsidiaries incurred pursuant to Section 7.3(b), (c),
(d), (h) (other than Secured Note Obligations) and (s) (solely with respect to
Indebtedness to which clause (6) or (7) of the definition of Permitted Liens
applies) and Permitted Refinancing Indebtedness with respect to the foregoing.

         "Permitted Investments" means:

                  (1) any Investment by the Borrower or any Restricted
         Subsidiary in the Borrower or in a Restricted Subsidiary;

                  (2) any Investment in Cash Equivalents and, in the case of any
         Person, cash equivalents or other liquid investments permitted under
         any credit facility constituting Permitted Debt to which such Person is
         a party;

                  (3) any Investment by the Borrower or any Restricted
         Subsidiary constituting a Permitted Acquisition;

                  (4) any Investments in any Person having an aggregate Fair
         Market Value (measured on the date each such Investment was made and
         without giving effect to subsequent changes in value), when taken
         together with (i) all other Investments made pursuant to this clause
         that are at the time outstanding and (ii) the aggregate amount of
         Restricted Payments made pursuant to Section 7.6, not to exceed
         $75,000,000 since the Closing Date;

                  (5) any Investment made as a result of the receipt of non-cash
         consideration from an Asset Sale that was made pursuant to and in
         compliance with the provisions of Section 7.5;

                  (6) any acquisition of assets or Capital Stock solely in
         exchange for the issuance of Equity Interests (other than Disqualified
         Stock) of the Borrower;

                  (7) any Investments received in compromise or resolution of
         (A) Obligations of trade creditors or customers that were incurred in
         the ordinary course of business of the Borrower or any of its
         Restricted Subsidiaries, including pursuant to any plan of
         reorganization or similar arrangement upon the bankruptcy or insolvency
         of any trade creditor or customer; or (B) litigation, arbitration or
         other disputes with Persons who are not Affiliates;

                  (8) Investments represented by Hedging Obligations;

                  (9) loans or advances to employees made in the ordinary course
         of business up to an aggregate principal amount not to exceed
         $10,000,000 at any one time;

                                      -34-
<PAGE>

                  (10) any Investment acquired by the Borrower or any of its
         Restricted Subsidiaries on account of any claim against, or interest
         in, any other Person (A) acquired in good faith in connection with or
         as a result of a bankruptcy, workout, reorganization or
         recapitalization of such other Person or (B) as a result of a bona fide
         foreclosure by the Borrower or any of its Restricted Subsidiaries with
         respect to any claim against any other Person;

                  (11) repurchases of the Secured Notes or other Parity Secured
         Debt (not using proceeds of Revolving Credit Loans except as expressly
         permitted hereunder);

                  (12) any Investment by the Borrower or a Restricted Subsidiary
         of the Borrower in a Securitization Entity or any Investment by a
         Securitization Entity in any other Person in connection with a
         Qualified Securitization Transaction;

                  (13) payment of consolidated taxes pursuant to the Tax Sharing
         Agreement, dated as of October 1, 2002, among the Borrower and its
         Subsidiaries named therein, as amended, supplemented or modified from
         time to time and any other tax allocation agreements among the Borrower
         and its Subsidiaries;

                  (14) receivables owing to the Borrower or a Restricted
         Subsidiary, if created or acquired in the ordinary course of business
         and payable or dischargeable in accordance with customary trade terms;
         provided, that such trade terms may include such concessionary trade
         terms as the Borrower or such Restricted Subsidiary deems reasonable
         under the circumstances; and

                  (15) other Investments in any Person having an aggregate Fair
         Market Value (measured on the date each such Investment was made and
         without giving effect to subsequent changes in value), when taken
         together with all other Investments made pursuant to this clause that
         are at the time outstanding not to exceed $125,000,000.

         "Permitted Liens" means:

                  (1) Liens held by the Collateral Trustee Equally and Ratably
         securing all Indebtedness that is Parity Secured Debt and Equally and
         Ratably securing all other Parity Secured Obligations;

                  (2) Liens that are granted or maintained by the Borrower and
         the Restricted Subsidiaries as security for Credit Agreement
         Obligations;

                  (3) Liens on assets of REMA and its Subsidiaries securing
         Indebtedness of REMA and its Subsidiaries permitted to be incurred
         pursuant to clause (c) of Section 7.3, including cash collateral for
         letters of credit issued thereunder and Liens encumbering assets of
         REMA and/or any of its Subsidiaries securing obligations under, or in
         connection with, or which constitute, Qualifying Credit Support (as
         defined in the participation agreements to which REMA is a party);

                                      -35-
<PAGE>

                  (4) Liens on assets of the Seward Subsidiary securing
         Permitted PEDFA Bond Indebtedness incurred by the Seward Subsidiary and
         that is Non-Recourse to the Borrower and all of its other Restricted
         Subsidiaries (other than an unsecured Guarantee, if any, provided by
         the Borrower or any Guarantor);

                  (5) Liens on assets of a Restricted Subsidiary in existence on
         the date on which such Person becomes a Restricted Subsidiary
         (provided, that (i) such Liens existed at the time such Person became a
         Restricted Subsidiary and were not created in anticipation thereof,
         (ii) no such Lien shall attach to any asset acquired by such Person,
         after such Person became a Restricted Subsidiary, pursuant to an
         Investment in such Person by the Borrower or any Restricted Subsidiary,
         or in an Affiliate Transaction that does not satisfy the requirements
         of Section 7.8(a) and (iii) the amount of Indebtedness secured thereby
         is not increased);

                  (6) Liens securing Capital Lease Obligations and purchase
         money obligations, in each case permitted to be incurred pursuant to
         clause (s) of Section 7.3, covering only the assets acquired with or
         financed by such Indebtedness;

                  (7) Liens securing obligations under sale leaseback
         transactions and Synthetic Lease Obligations, in each case permitted to
         be incurred pursuant to clause (s) of Section 7.3, covering only the
         assets acquired with or financed by such Indebtedness;

                  (8) Liens in favor of the Borrower or the Guarantors;

                  (9) Liens for taxes, assessments or governmental charges or
         claims that are not yet delinquent or that are being contested in good
         faith by appropriate proceedings promptly instituted and diligently
         concluded; provided, that any reserve or other appropriate provision as
         is required in conformity with GAAP has been made therefor;

                  (10) Liens imposed by law, such as carriers', warehousemen's,
         landlord's and mechanics' Liens, in each case, incurred in the ordinary
         course of business;

                  (11) survey exceptions, encumbrances, easements or
         reservations, including those for licenses, rights-of-way, sewers,
         electric lines, telegraph and telephone lines, other utilities, mineral
         reservations and rights and leases, zoning restrictions and other
         restrictions as to the use of real property or other exceptions to
         title that were not incurred in connection with Indebtedness and that
         (A) exist on the Closing Date and are recorded on such date, (B) are
         permitted under the terms of the Security Documents or (C) do not in
         the aggregate materially adversely affect the value of said properties
         or materially impair their use in the operation of the business of such
         Person;

                  (12) Liens to secure any Permitted Refinancing Indebtedness
         permitted to be incurred under this Agreement if such Permitted
         Refinancing Indebtedness is incurred by the same obligor on the
         Indebtedness being extended, refinanced, renewed, replaced, defeased or
         refunded (except as provided in clause (4) of the definition of
         Permitted Refinancing Indebtedness); provided, that:

                                      -36-
<PAGE>

                           (a) the new Lien shall be limited to all or part of
                  the same categories of property and assets that secured or,
                  under the written agreements pursuant to which the original
                  Lien arose, could secure the original Lien (plus improvements
                  and accessions to, such property or proceeds or distributions
                  thereof), except, if Permitted PEDFA Bond Indebtedness is
                  Sharing Eligible Debt, it may be secured by Liens held by the
                  Collateral Trustee on the Shared Collateral;

                           (b) the Indebtedness secured by the new Lien is not
                  increased to any amount greater than the sum of (i) the
                  outstanding principal amount or, if greater, committed amount
                  of the Permitted Refinancing Indebtedness and (ii) an amount
                  necessary to pay any fees and expenses, including premiums,
                  related to such refinancings, refunding, extension, renewal or
                  replacement and (iii) any protective advances with respect to
                  the property and assets that secure such Permitted Refinancing
                  Indebtedness;

                  (13) Liens on assets transferred to a Securitization Entity or
         on assets of a Securitization Entity, in either case incurred in
         connection with a Qualified Securitization Transaction;

                  (14) financing statements (including precautionary statements)
         filed in connection with a Capital Lease Obligation, financing lease,
         Synthetic Lease Obligation or an operating lease, in each case, not
         prohibited hereunder; provided, that no such financing statement
         extends to, covers or refers to as collateral, any property or assets
         of the Borrower or a Restricted Subsidiary, other than the property or
         assets which are subject to such Capital Lease Obligation, financing
         lease, Synthetic Lease Obligation, or operating lease;

                  (15) Liens arising out of or in connection with any judgment
         that does not constitute an Event of Default or in connection with any
         litigation or other legal proceeding as to which an appeal to contest
         or review is timely commenced in good faith by appropriate proceedings
         and as to which adequate reserves have been established in accordance
         with GAAP; provided, that any right to levy, seizure, attachment,
         sequestration, foreclosure or garnishment of any property and assets of
         the Borrower or a Restricted Subsidiary thereof arising out of or in
         connection with any such Lien has been and continues to be enjoined or
         effectively stayed;

                  (16) inchoate statutory Liens arising under ERISA;

                  (17) Liens (A) on cash and short-term investments (i)
         deposited by the Borrower or any of its Subsidiaries in margin accounts
         with or on behalf of futures contract brokers or paid over to other
         counterparties or (ii) pledged or deposited as collateral to a contract
         counterparty or issuer of surety bonds by the Borrower or any of its
         Subsidiaries, in the case of clause (i) or (ii), to secure obligations
         with respect to (a) contracts for commercial and trading activities in
         the ordinary course of business and contracts (including physical
         delivery, option (whether cash or financial), exchange, swap and
         futures contracts) for the purchase, transmission, distribution, sale,
         lease or hedge of

                                      -37-
<PAGE>

         any energy-related commodity or service or (b) interest rate, commodity
         price, or currency rate management contracts or derivatives and (B)
         encumbering assets other than accounts or receivables arising out of
         contracts or agreements relating to the generation, distribution or
         transmission of energy; provided, that all such agreements or contracts
         are entered into in the ordinary course of business;

                  (18) Liens arising by virtue of any statutory or common law
         provision relating to banker's liens, rights of set off or similar
         rights, contractual rights of setoff or netting arrangements entered
         into in the ordinary course of business and similar rights with respect
         to deposit accounts, commodity accounts and/or securities accounts;

                  (19) Liens arising under Section 9.343 of the Texas Uniform
         Commercial Code or similar statutes of states other than Texas;

                  (20) Liens created under the Security Agreement dated as of
         March 28, 2003 among Reliant Energy Retail Services, LLC ("RERS"),
         StarEn Power, LLC ("StarEn") and Reliant Energy Solutions, LLC
         ("Solutions"), as debtors, and Texas Genco, L.P. as secured party
         securing up to $250,000,000 of obligations owing to Texas Genco, L.P.
         under the Master Power Purchase and Sale Agreement dated as of October
         1, 2002 between Texas Genco, L.P and Reliant Energy Electric Solutions,
         LLC, as each may be amended, amended and restated, supplemented or
         otherwise modified, renewed or replaced from time to time, and the
         related Guaranty dated as of October 1, 2002 by Reliant Energy Retail
         Holdings, LLC, RERS, StarEn and Solutions in favor of Texas Genco,
         L.P., as the same may be amended, amended and restated, supplemented or
         otherwise modified, renewed or replaced from time to time, provided,
         that such Liens are subject always to the terms of the Texas Genco
         Intercreditor Agreement, as such agreement may be amended, amended and
         restated, supplemented or otherwise modified, renewed or replaced from
         time to time;

                  (21) pledges and deposits to secure the payment of worker's
         compensation, unemployment insurance, social security benefits or
         obligations under similar laws, or to secure the payment or performance
         of statutory or public obligations (including environmental, municipal
         and public utility commission obligations and requirements),
         reimbursement or indemnity obligations arising out of surety,
         performance, or other similar bonds, and other obligations of a like
         nature, in each case incurred in the ordinary course of business;

                  (22) Liens granted by a Person in favor of a commercial
         trading counterparty pursuant to a netting agreement, which Liens
         encumber rights under agreements that are subject to such netting
         agreement and which Liens secure such Person's obligations to such
         counterparty under such netting agreement; provided, that any such
         agreements and netting agreements are entered into in the ordinary
         course of business; and provided, further, that the Liens are incurred
         in the ordinary course of business and when granted, do not secure
         obligations which are past due;

                                      -38-
<PAGE>

                  (23) Liens on proceeds from the issuance of Seward Tax-Exempt
         Bonds or Permitted PEDFA Bond Indebtedness and Liens on Indebtedness of
         the Borrower held by the Seward Subsidiary securing the Seward
         Tax-Exempt Bonds or Permitted PEDFA Bond Indebtedness;

                  (24) Liens on assets of Reliant Energy Channelview L.P. and
         Liens on the Equity Interests in Reliant Energy Channelview (Delaware)
         LLC and Reliant Energy Channelview (Texas) LLC, to the extent such
         Liens are existing on the Closing Date;

                  (25) Liens on assets of REMA and its Subsidiaries created in
         connection with the sale-leaseback of REMA's interests in the Keystone,
         Conemaugh and Shawville generating facilities consummated in August,
         2000;

                  (26) Liens created in connection with the indemnity and
         contribution obligations in favor of underwriters or note purchasers in
         connection with the Seward Tax-Exempt Bonds;

                  (27) Liens on assets of Reliant Energy Solutions, LLC created
         in connection with Delivery Order No. DABT39-97-C-4046 dated September
         1997 and issued by the Directorate of Contracting, Contract Support
         Division, Ft. Sill, Oklahoma;

                  (28) Liens incurred in the ordinary course of business of the
         Borrower or any Restricted Subsidiary of the Borrower securing
         obligations that do not exceed $25,000,000 in the aggregate at any one
         time outstanding; and

                  (29) Liens on certain of Reliant Energy Wholesale Generation
         LLC's switchyard equipment at the Choctaw generating facility granted
         to Entergy in connection with an Operating and Maintenance Agreement.

         "Permitted PEDFA Bond Indebtedness" means Indebtedness incurred or
guaranteed by the Borrower and/or the Guarantors in tax-exempt Pennsylvania
industrial development act financings that are not supported by Letters of
Credit outstanding under this Agreement, the proceeds of which are used:

                  (a) to build the Seward Facility;

                  (b) to reimburse the Borrower, its Restricted Subsidiaries or
         the Seward Subsidiary for amounts advanced or incurred, or for
         Indebtedness incurred to fund such construction costs, prior to the
         date of incurrence of such Indebtedness; or

                  (c) to refund or defease the Seward-Tax Exempt Bonds or
         refinance Indebtedness evidenced by or in support of the Seward-Tax
         Exempt Bonds.

         "Permitted Prior Liens" means (1) Liens described in clauses (5), (6),
(7), (9), (10), (11), (14), (17), (18), (19), (20), (21), (22), (26), (27) and
(29) of the definition of "Permitted Liens," (2) Liens refinancing or replacing
any of the Liens contemplated in clause (1) of this definition,

                                      -39-
<PAGE>

and (3) Liens that arise by operation of law and are not voluntarily granted, to
the extent entitled by law to priority over the security interests created by
the Security Documents.

         "Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Borrower or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided, that:

                  (1) the principal amount (or accreted value, if applicable) of
         such Permitted Refinancing Indebtedness does not exceed the principal
         amount (or accreted value, if applicable) of the Indebtedness extended,
         refinanced, renewed, replaced, defeased or refunded (plus all accrued
         interest on the Indebtedness and the amount of all expenses, costs and
         fees and premiums incurred in connection therewith);

                  (2) except for Permitted PEDFA Bond Indebtedness, such
         Permitted Refinancing Indebtedness has a final maturity date later than
         the final maturity date of, and has a Weighted Average Life to Maturity
         equal to or greater than the Weighted Average Life to Maturity of, the
         Indebtedness being extended, refinanced, renewed, replaced, defeased or
         refunded;

                  (3) if the Indebtedness being extended, refinanced, renewed,
         replaced, defeased or refunded is subordinated in right of payment to
         the Credit Agreement Obligations, such Permitted Refinancing
         Indebtedness is subordinated in right of payment to the Credit
         Agreement Obligations on terms at least as favorable to the Lenders as
         those contained in the documentation governing the Indebtedness being
         extended, refinanced, renewed, replaced, defeased or refunded, as
         reasonably determined by the Borrower or such Restricted Subsidiary;

                  (4) such Indebtedness is incurred either by the Borrower or by
         the Restricted Subsidiary who is the obligor on the Indebtedness being
         extended, refinanced, renewed, replaced, defeased or refunded, except
         that Permitted PEDFA Bond Indebtedness may be (A) incurred by the
         Borrower and/or guaranteed by the Borrower and/or the Guarantors if the
         assets of the Seward Subsidiary (other than Investments in the Borrower
         pledged to secure such Permitted PEDFA Bond Indebtedness and proceeds
         from the issuance of Permitted PEDFA Bond Indebtedness that secures
         Permitted PEDFA Bond Indebtedness) remain free of all Liens securing
         Indebtedness, except Liens held by the Collateral Trustee as security
         for Parity Secured Obligations or (B) guaranteed by the Borrower on an
         unsecured basis if such Indebtedness is otherwise Non-Recourse to the
         Borrower and its other Restricted Subsidiaries (other than the Seward
         Subsidiary) and is secured solely by Liens on the assets of the Seward
         Subsidiary and/or the Equity Interests of the Seward Subsidiary;

                  (5) if incurred by the Borrower, such Indebtedness may be
         guaranteed by the Guarantors; and

                  (6) such Indebtedness (other than Indebtedness permitted
         pursuant to clause (d) or (e) of Section 7.3 and letter of credit
         facilities refinancing the Revolving

                                      -40-
<PAGE>

         Credit Facility and permanently reducing the Revolving Credit
         Commitments, Dollar for Dollar) has a final maturity date that is at
         least six years after the Closing Date and provides for the
         amortization of not more than 10% of its original outstanding principal
         amount prior to such final maturity date.

         "Person" means any individual, corporation, firm, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

         "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

         "Post-Petition Interest" means interest accruing after the filing of
any petition in bankruptcy, or the commencement of any case, proceeding or
action relating to the bankruptcy, reorganization or insolvency of the Borrower
or any other Loan Party (or interest that would accrue but for the operation of
applicable bankruptcy, reorganization or insolvency laws), whether or not a
claim for post-filing or post-petition interest is allowed or allowable as a
claim in any such case, proceeding or action.

         "Pro Rata Percentage" means, on any date of determination and with
respect to Net Asset Sale Proceeds to be applied in accordance with Section
2.4(b)(i), a percentage equal to (i) the Total Outstandings on such date,
divided by (ii) the sum of (A) the Total Outstandings on such date, plus (B) the
amount of the unused Aggregate Revolving Credit Commitments then in effect, plus
(C) the aggregate outstanding principal amount of Parity Secured Debt described
in clause (Y) of Section 2.4(b)(i)(A) or clause (Z) of Section 2.4(b)(i)(B) with
respect to which an offer to repurchase or prepay is required to be made, or
which must be otherwise repurchased or prepaid (in part), with the Net Asset
Sale Proceeds described in such clause (Y) of Section 2.4(b)(i)(A) or clause (Z)
of Section 2.4(b)(i)(B).

         "Pro Rata Share" means, with respect to each Lender and with respect to
any Facility at any time, a fraction (expressed as a percentage, carried out to
the ninth decimal place), (a) with respect to the Revolving Credit Facility, the
numerator of which is the amount of the Revolving Credit Commitment of the
relevant Revolving Credit Lender (or, in the case of the L/C Sublimit, the
amount of such Revolving Credit Lender's obligation to participate therein) at
such time and the denominator of which is the aggregate Revolving Credit
Commitments (or, in the case of the L/C Sublimit, the aggregate amount of the
Revolving Credit Lenders' obligations to participate therein) at such time;
provided, that if the commitment of each Revolving Credit Lender to make
Revolving Credit Loans and the obligation of any L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 9.2, then the Pro Rata Share
of each Revolving Credit Lender shall be determined based on the Pro Rata Share
of such Revolving Credit Lender immediately prior to such termination and after
giving effect to any subsequent assignments made pursuant to the terms hereof
and (b) with respect to the Term Facility, the numerator of which is the
outstanding principal amount of the Term Loans of the relevant Term Lender at
such time and the denominator of which is the aggregate outstanding principal
amount of the Term Loans at such time.

                                      -41-
<PAGE>

         "Purchase Money Note" means a promissory note of a Securitization
Entity evidencing amounts owed to the Borrower or any Restricted Subsidiary of
the Borrower in connection with a Qualified Securitization Transaction to a
Securitization Entity, which note shall be repaid from cash available to the
Securitization Entity other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest and
principal and amounts paid in connection with the purchase of newly generated
receivables or newly acquired equipment.

         "Qualified Securitization Transaction" means any transaction or series
of transactions that may be entered into by the Borrower or any of its
Restricted Subsidiaries pursuant to which the Borrower or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to: (a) a Securitization
Entity (in the case of a transfer by the Borrower or any of its Restricted
Subsidiaries); and (b) any other Person (in the case of a transfer by a
Securitization Entity), or may grant a security interest in any accounts
receivable or equipment (whether now existing or arising or acquired in the
future) of the Borrower or any of its Restricted Subsidiaries, and any assets
related thereto, including all collateral securing such accounts receivable and
equipment, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable and equipment, proceeds of
such accounts receivable and equipment and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable and equipment.

         "Quarterly Payment Date" means the first day of each April, July,
October and January, or, if any such date is not a Business Day, the next
succeeding Business Day; provided, that the initial "Quarterly Payment Date"
shall be April 1, 2005.

         "Reduction Amount" is defined in Section 2.4(b)(viii).

         "Register" has the meaning specified in Section 11.6(c).

         "Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.

         "Release Date" means the date on which both (a) as of the last day of
two consecutive Fiscal Quarters, both (i) the Consolidated Leverage Ratio for
the applicable immediately preceding four Fiscal Quarters was 2:75:1 or less and
(ii) the Consolidated Interest Coverage Ratio for the applicable immediately
preceding four Fiscal Quarters was 3.25:1 or more, and (b) the Term Loans have
been repaid in full in accordance with the terms of this Agreement.

         "REMA" shall mean Reliant Energy Mid-Atlantic Power Holdings, LLC, a
Delaware limited liability company, and its successors.

         "REMA Lease" shall mean, collectively, the obligations of REMA as
facility lessee under the Facility Lease Agreements, each dated as of August 24,
2000 and each between REMA and, respectively, Conemaugh Lessor Genco, LLC,
Keystone Lessor Genco, LLC, and Shawville Lessor Genco, LLC, and under the
related participation agreements and other documents executed in connection
therewith.

                                      -42-
<PAGE>

         "Remedial Action" shall have the meaning ascribed to it in Section
101(24) of the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et. seq. or any other Environmental Law.

         "Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than events for which the 30 day notice period has been waived.

         "Request for Credit Extension" means (a) with respect to a Borrowing,
conversion or continuation of Term Loans or Revolving Credit Loans, a Borrowing
Notice and (b) with respect to an L/C Credit Extension, an L/C Certificate.

         "Required Cash Collateral Amount" has the meaning specified in Section
2.3(a)(ii)(B).

         "Required Lenders" means, as of any date of determination, Lenders
having more than 50% of the sum of (a) the Total Outstandings (with the
aggregate amount of each Lender's risk participation and funded participation in
L/C Obligations being deemed "held" by such Lender for purposes of this
definition) and (b) the aggregate unused Revolving Credit Commitments; provided,
that the unused Revolving Credit Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

         "RERH" means Reliant Energy Retail Holdings, LLC, a Delaware limited
liability company, and its successors.

         "Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer or assistant treasurer of a Loan Party. Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

         "Restricted Payment" means any of the following:

                  (1) any declaration or payment of any dividend or the making
         of any other payment or distribution on account of the Borrower's or
         any of its Restricted Subsidiaries' Equity Interests (including any
         payment in connection with any merger or consolidation involving the
         Borrower or any of its Restricted Subsidiaries) or to the direct or
         indirect holders of the Borrower's or any of its Restricted
         Subsidiaries' Equity Interests in their capacity as such (other than
         dividends or distributions payable in Equity Interests (other than
         Disqualified Stock) of the Borrower or to the Borrower or a Restricted
         Subsidiary of the Borrower);

                  (2) any purchase, redemption or other acquisition or
         retirement for value (including in connection with any merger or
         consolidation involving the Borrower) of any Equity Interests of the
         Borrower;

                  (3) any payment on or with respect to, or purchase,
         redemption, defeasance or other acquisition or retirement for value of
         any Indebtedness of the Borrower or of any

                                      -43-
<PAGE>

         Guarantor that is contractually subordinated to the Credit Agreement
         Obligations (excluding any intercompany Indebtedness, intercompany
         receivables or intercompany advances between or among any of the
         Borrower and its Restricted Subsidiaries and Permitted PEDFA Bond
         Indebtedness), except a payment of interest or principal at the Stated
         Maturity thereof.

         "Restricted Subsidiary" means a Subsidiary organized or incorporated
under the laws of the United States or a State thereof that is not an
Unrestricted Subsidiary.

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

         "Revolving Credit Commitment" means, as to each Revolving Credit
Lender, its obligation to (a) make Revolving Credit Loans to the Borrower
pursuant to Section 2.1(b) (in an aggregate amount for all Revolving Credit
Lenders not to exceed $1,700,000,000), and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to
exceed, initially, the amount set forth opposite such Lender's name on Schedule
2.1 under the caption "Revolving Credit Commitment" or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

         "Revolving Credit Exposure" means, as of any date of determination, (i)
the aggregate Revolving Credit Commitments or (ii) if the commitment of each
Lender to make Revolving Credit Loans and the obligation of the L/C Issuers to
make L/C Credit Extensions have been terminated pursuant to Section 9.2, the
Total Revolving Credit Outstandings (with the aggregate amount of each Lender's
risk participation and funded participation in L/C Obligations being deemed
"held" by such Lender for purposes of this definition).

         "Revolving Credit Facility" means, at any time, the aggregate Revolving
Credit Exposures of all Revolving Credit Lenders at such time.

         "Revolving Credit Lender" means, at any time, any Lender that has a
Revolving Credit Commitment at such time.

         "Revolving Credit Loan" means a loan by a Revolving Credit Lender to
the Borrower under Section 2.1(b).

         "Revolving Credit Note" means a promissory note of the Borrower payable
to the order of any Revolving Credit Lender, in substantially the form of
Exhibit D-1 hereto, evidencing the aggregate indebtedness of the Borrower to
such Revolving Credit Lender resulting from the Revolving Credit Loans made by
such Revolving Credit Lender.

         "Revolving Credit Termination Date" means the earlier of (a) December
22, 2009 and (b) the date of termination in whole of the Revolving Credit
Commitments and the L/C Sublimit pursuant to Section 2.5 or 9.2.

                                      -44-
<PAGE>

         "RRI Warrants" means the warrants issued by the Borrower pursuant to
the Warrant Agreement.

         "S&P" shall mean Standard & Poor's Ratings Group (presently a division
of The McGraw-Hill Companies, Inc.), together with its successors, or, if such
company shall cease to issue ratings, another nationally recognized rating
company selected in good faith by mutual agreement of the Administrative Agent
and the Borrower.

         "SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

         "Secured Debt Documents" means, collectively, the Credit Documents, the
Texas Genco Intercreditor Agreement, the Secured Note Agreements, the PEDFA
Guaranties and the indenture, agreement and other documents governing each other
Series of Secured Debt and all agreements binding on any obligor related
thereto.

         "Secured Debt Representative" means:

                  (1) in the case of the Secured Notes, Wilmington Trust
         Company, as Trustee;

                  (2) the Seward Bond Trustee;

                  (3) in the case of Indebtedness under this Agreement, the
         Administrative Agent; or

                  (4) in the case of any other Series of Secured Debt, the
         trustee, agent or representative of the holders of such Series of
         Secured Debt who maintains, or on whose behalf is maintained, the
         transfer register for or who acts as administrative agent for such
         Series of Secured Debt and is appointed as Secured Debt Representative
         (for purposes related to the administration of the Security Documents)
         pursuant to the indenture or agreement governing such Series of Secured
         Debt.

         "Secured Hedge Agreement" means any Hedging Agreement permitted under
Article VI or VII that is entered into by and between the Borrower and any Hedge
Bank, including each of the Hedging Agreements listed on Schedule 1.1(f).

         "Secured Note Agreements" means, collectively (a) the Indenture, dated
as of July 1, 2003, among the Borrower, the guarantors referred to therein, and
Wilmington Trust Company, as trustee, pursuant to which the Borrower's 9.25%
Secured Notes due 2010 were issued, (b) the Indenture, dated as of July 1, 2003,
among the Borrower, the guarantors referred to therein, and Wilmington Trust
Company, as trustee, pursuant to which the Borrower's 9.50% Secured Notes due
2013 were issued, (c) the Indenture, dated as of December 22, 2004 among the
Borrower, the guarantors referred to therein, and Wilmington Trust Company, as
trustee, pursuant to which the New Secured Notes were issued, and (d) each other
indenture among the Borrower, the guarantors referred to therein (if applicable)
and the indenture trustee thereunder, and each other loan or note purchase
agreement among the Borrower, the guarantors referred to therein (if
applicable), the Lenders or note purchasers thereunder and the administrative
agent (if any) thereunder, in each case pursuant to which a series of Secured
Notes was issued or a loan was

                                      -45-
<PAGE>

made constituting a series of Secured Notes, as each such agreement or indenture
may be amended, restated, supplemented or otherwise modified from time to time.

         "Secured Note Obligations" means:

                  (1) the Secured Notes issued on the dates of the respective
         Secured Note Agreements; or

                  (2) the Secured Notes issued by the Borrower after the dates
         of the respective Secured Note Agreements that constitute another
         Series of Secured Debt; or

                  (3) all related exchange notes;

together with the Guarantees of the foregoing and all other Obligations
(including all Obligations owing to the applicable Secured Debt Representatives)
of any obligor under the Secured Note Agreements.

         "Secured Notes" means, collectively, the Borrower's (i) 9.25% Secured
Notes due 2010, (ii) 9.50% Secured Notes due 2013, (iii) New Secured Notes and
(iv) other senior secured notes issued from time to time in a private placement,
registered offering, exchange offering, or loan transaction, in which notes have
been issued in accordance with Section 7.3.

         "Secured Parties" means, collectively, the Lenders, each L/C Issuer,
the Administrative Agent, each counterparty to a Secured Hedge Agreement that is
(or at the time such Secured Hedge Agreement was entered into, was) a Lender or
an Affiliate thereof (a "Hedge Bank") and (in each case) each of their
respective successors, transferees and assigns and each of the other "Secured
Parties" as defined in the Collateral Trust Agreement.

         "Securities Account" shall mean any securities account as such term is
defined in the UCC, now or hereafter held in the name of any Loan Party.

         "Securities Account Control Agreement" shall mean, with respect to any
Pledged Securities or other Investment Property (as such terms are defined in
the Security Agreement), a written agreement or other authenticated record, in
form and substance reasonably satisfactory to the Administrative Agent, pursuant
to which the securities intermediary which holds such Pledged Securities or such
other Investment Property shall agree, among other things, to comply with
entitlement orders or other instructions from the Collateral Trustee (or its
co-trustees, agents or sub-agents) to such securities intermediary as to Pledged
Securities or other Investment Property, without further consent of any Loan
Party or its nominee, as any such agreement or record may be amended, amended,
restated, supplemented or otherwise modified from time to time.

         "Securitization Entity" means RE Retail Receivables, LLC, and any
Person in which the Borrower or any Restricted Subsidiary of the Borrower makes
an Investment and to which the Borrower or any Restricted Subsidiary of the
Borrower transfers accounts receivable or equipment (and related assets,
including contract rights) which engages in no activities other than in
connection with the financing, sale, or purchase of accounts receivable or
equipment or related

                                      -46-
<PAGE>

assets (including contract rights) and which is designated by the Borrower (as
provided below) as a Securitization Entity:

                  (a) no portion of the Indebtedness or any other Obligations
         (contingent or otherwise) of which:

                           (i) is guaranteed by the Borrower or any Restricted
                  Subsidiary of the Borrower (excluding guarantees of
                  Obligations (other than the principal of, and interest on,
                  Indebtedness)) pursuant to Standard Securitization
                  Undertakings;

                           (ii) is recourse to or obligates the Borrower or any
                  Restricted Subsidiary of the Borrower in any way other than
                  pursuant to Standard Securitization Undertakings; or

                           (iii) subjects any property or asset of the Borrower
                  or any Restricted Subsidiary of the Borrower, directly or
                  indirectly, contingently or otherwise, to the satisfaction
                  thereof, other than pursuant to Standard Securitization
                  Undertakings;

                  (b) with which neither the Borrower nor any Restricted
         Subsidiary of the Borrower has any material contract, agreement,
         arrangement or understanding (except in connection with a Purchase
         Money Note or Qualified Securitization Transaction) other than on terms
         no less favorable to the Borrower or such Restricted Subsidiary than
         those that might be obtained at the time from Persons that are not
         Affiliates of the Borrower, as determined by the Borrower, other than
         amounts payable in the ordinary course of business in connection with
         servicing receivables and other assets of such entity; and

                  (c) which neither the Borrower nor any Restricted Subsidiary
         of the Borrower has any obligation to maintain or preserve such
         Person's financial condition or cause such Person to achieve certain
         levels of operating results.

The Borrower shall notify the Administrative Agent of any such designation,
which notice shall include delivery to the Administrative Agent of a certificate
of a Responsible Officer certifying that such designation complied with the
foregoing conditions.

         "Security Agreement" means the Amended and Restated Security Agreement,
dated as of July 1, 2003, among the Borrower, the other Loan Parties and the
Collateral Trustee (for the benefit of the Secured Parties), as such agreement
may be amended, restated, supplemented or otherwise modified from time to time.

         "Security Documents" shall mean (i) the Collateral Trust Agreement, the
Security Agreement and the Separate Security Agreement, (ii) each Control
Agreement, (iii) each Mortgage, (iv) each Assignment of Leases and Rents, and
(v) each other security agreement, pledge agreement, mortgage, deed of trust,
assignment agreement and other instrument being executed concurrently herewith
or from time to time hereafter pursuant to which a Lien has been granted by any
of the Loan Parties in favor of the Collateral Agent (for the benefit of the
Secured Parties) or the Collateral Trustee (for the benefit of the Secured
Parties under the Collateral Trust Agreement) on any of its assets to secure any
of the Obligations.

                                      -47-
<PAGE>

         "Senior Debt" means Indebtedness that is not subordinated in right of
payment to the Credit Agreement Obligations.

         "Separate Collateral" has the meaning assigned to it in the Collateral
Trust Agreement.

         "Separate Security Agreement" shall mean that certain Amended and
Restated Security Agreement dated as of July 1, 2003, among the Borrower, the
other Loan Parties and the Collateral Agent (for the benefit of the Secured
Parties), as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.

         "Series of Secured Debt" means, severally, the Secured Notes, the PEDFA
Guaranties, the Indebtedness under this Agreement and each other issue or series
of Parity Secured Debt.

         "Seward Bond Issuer" has the meaning given to such term in the
definition of "Seward Bond Trust Indentures" set forth in this Article.

         "Seward Bond Trust Indentures" means (a) the Trust Indenture, dated as
of December 1, 2001, between Pennsylvania Economic Development Financing
Authority (the "Seward Bond Issuer") and the Seward Bond Trustee pursuant to
which the Seward Series 2001A Bonds were issued by the Seward Bond Issuer, (b)
the Trust Indenture, dated as of April 1, 2002, between the Seward Bond Issuer
and the Seward Bond Trustee pursuant to which the Seward Series 2002A Bonds were
issued by the Seward Bond Issuer, (c) the Trust Indenture, dated as of April 1,
2002, between the Seward Bond Issuer and the Seward Bond Trustee pursuant to
which the Seward Series 2002B Bonds were issued by the Seward Bond Issuer, as
such Trust Indentures may be amended, restated, supplemented or otherwise
modified from time to time, (d) the Trust Indenture, dated as of September 1,
2003, between the Seward Bond Issuer and the Seward Bond Trustee pursuant to
which the Seward Series 2003A Bonds were issued by the Seward Bond Issuer, (e)
the Trust Indenture, dated as of December 22, 2004, between the Seward Bond
Issuer and the Seward Bond Trustee pursuant to which the Seward Series 2004A
Bonds were issued by the Seward Bond Issuer, and (f) trust indentures entered
into by the Seward Bond Issuer after the Closing Date as permitted hereunder in
connection with any Seward Tax-Exempt Bonds issued after the Closing Date.

         "Seward Bond Trustee" means J.P. Morgan Trust Company, National
Association, as Trustee, and any successor or other trustee, under the Seward
Bond Trust Indentures.

         "Seward Facility" means the 521 MW coal facility and related assets
owned by Reliant Energy Seward, LLC, or its successors, and located in New
Florence, Indiana County, Pennsylvania.

         "Seward Series 2001A Bonds" has the meaning given to such term in the
definition of "Seward Tax-Exempt Bonds".

         "Seward Series 2002A Bonds" has the meaning given to such term in the
definition of "Seward Tax-Exempt Bonds".

         "Seward Series 2002B Bonds" has the meaning given to such term in the
definition of "Seward Tax-Exempt Bonds".

                                      -48-
<PAGE>

         "Seward Series 2003A Bonds" has the meaning given to such term in the
definition of "Seward Tax Exempt Bonds."

         "Seward Series 2004A Bonds" has the meaning given to such term in the
definition of "Seward Tax Exempt Bonds."

         "Seward Subsidiary" means Reliant Energy Seward, LLC, a Delaware
limited liability company, and its successors.

         "Seward Tax-Exempt Bonds" shall mean (1) the Pennsylvania Economic
Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC
Project), Series 2001A, in the original aggregate principal amount of
$150,000,000 (the "Seward Series 2001A Bonds"), (2) the Pennsylvania Economic
Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC
Project), Series 2002A, in the original aggregate principal amount of
$75,000,000 (the "Seward Series 2002A Bonds"), (3) the Pennsylvania Economic
Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC
Project), Series 2002B, in the original aggregate principal amount of
$75,000,000 (the "Seward Series 2002B Bonds"), (4) the Pennsylvania Economic
Financing Authority Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC
Project), Series 2003A, in the original aggregate principal amount of
$100,000,000 (the "Seward Series 2003A Bonds"), and (5) any bonds issued by
PEDFA on or after the Closing Date as permitted hereunder and supported by
letters of credit outstanding hereunder.

         "Shared Collateral" has the meaning assigned to it in the Collateral
Trust Agreement.

         "Sharing Eligible Debt" means:

                  (1) Indebtedness under clauses (a), (e) and (f) of the
         definition of Permitted Debt;

                  (2) Indebtedness under clause (s) of the definition of
         Permitted Debt;

                  (3) the Secured Notes;

                  (4) the PEDFA Guaranties;

                  (5) Permitted Refinancing Indebtedness of the Borrower or, if
         it constitutes Permitted PEDFA Bond Indebtedness, Indebtedness of the
         Borrower and/or the Seward Subsidiary and/or guaranteed by the Borrower
         and/or the Guarantors, the net proceeds of which are used to refinance
         Indebtedness evidenced by or in support of the Seward Tax-Exempt Bonds;
         provided, that in the case of Permitted PEDFA Bond Indebtedness, the
         assets of the Seward Subsidiary (other than Investments in the Borrower
         pledged to secure such Permitted PEDFA Bond Indebtedness and proceeds
         from the issuance of Permitted PEDFA Bond Indebtedness that secures
         Permitted PEDFA Bond Indebtedness) shall remain free of all Liens
         securing Indebtedness, except Permitted Prior Liens and Liens held by
         the Collateral Trustee as security for the Parity Secured Debt; and

                                      -49-
<PAGE>

                  (6) Permitted Refinancing Indebtedness, the net proceeds of
         which are used to refinance Parity Secured Debt;

provided, that each category of Indebtedness described above:

                  (1) must be guaranteed by any of the Restricted Subsidiaries
         that, on the date of incurrence of such Indebtedness, is obligated as a
         Guarantor under a Guarantee of the Credit Agreement Obligations;

                  (2) must not be subordinated in right of payment or in respect
         of the application of the proceeds of the Collateral Trustee's Liens on
         the Collateral to any other Indebtedness of the Borrower or any
         Guarantor (whether or not such other Indebtedness is part of the same
         series of Indebtedness), except in accordance with the Order of
         Application; and

                  (3) is governed by an indenture or agreement that appoints a
         Secured Debt Representative and includes an Intercreditor Confirmation.

         "Solvent" and "Solvency" mean, with respect to any Person on any date
of determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability; provided, that if the context in which "Solvent" or
"Solvency" is used refers to a Person together with its Subsidiaries, Person as
used above shall be deemed to be a reference to such Person together with its
Subsidiaries.

         "SPC" has the meaning specified in Section 11.6(h).

         "Specified Junior Securities" means subordinated debt securities issued
by the Borrower that:

                  (1) are subordinated to the Loans pursuant to subordination
         provisions (A) at least as favorable to the Lenders as either the
         subordination provisions set forth in Schedule 1.1(d) hereto or the
         subordination provisions applicable to the Borrower's 5.00% Convertible
         Senior Subordinated Notes due 2010 issued pursuant to that certain
         indenture, dated as of June 24, 2003, by and between the Borrower and
         Wilmington Trust Company, as trustee, or (B) otherwise acceptable to
         the Agents;

                  (2) have a final maturity date occurring at least 91 days
         after the Term Loan Maturity Date and have a Weighted Average Life to
         Maturity at least 91 days longer than the Weighted Average Life to
         Maturity of the Term Loans;

                                      -50-
<PAGE>

                  (3) are not guaranteed by any Subsidiary of the Borrower
         except for any guarantee by a Guarantor that is contractually
         subordinated in right of payment to the prior payment in full in cash
         to the Guaranty; and

                  (4) are not convertible into any other securities except
         Equity Interests of the Borrower (other than Disqualified Stock).

         "Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower, which are substantially similar to those in
existence on the Closing Date or are otherwise reasonably customary in an
accounts receivable or equipment securitization transaction, in each case, as
determined by the Borrower.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the Closing Date, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

         "Subordinated Indebtedness" means any Indebtedness of a Person that is
contractually subordinated to the Credit Agreement Obligations.

         "Subordinated Obligations" has the meaning specified in Section 8.6.

         "Subsidiary" of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary", "Restricted Subsidiary", "Restricted Subsidiaries" or
"Subsidiaries" shall refer to a Subsidiary, Restricted Subsidiary, Restricted
Subsidiaries or Subsidiaries of the Borrower.

         "Syndication Agent" means each of Barclays Bank and Deutsche Bank
Securities Inc.

         "Synthetic Lease Obligation" means the monetary obligation of a Person
under a so-called synthetic, off-balance sheet or tax retention lease.

         "Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.

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

                                      -51-
<PAGE>

         "Term Commitment" means, as to each Term Lender, its obligation to make
Term Loans to the Borrower pursuant to Section 2.1(a) in an aggregate amount at
any one time outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule 2.1 under the caption "Term Commitment" or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable (in an aggregate amount for all Term Lenders not to exceed
$1,300,000,000).

         "Term Facility" means, at any time, the aggregate Term Loans of all
Term Lenders at such time.

         "Term Lender" means, at any time, any Lender that has a Term Commitment
at such time.

         "Term Loan" means a loan made by a Term Lender to the Borrower under
Section 2.1(a).

         "Term Loan Maturity Date" means April 30, 2010.

         "Term Note" means a promissory note of the Borrower payable to the
order of any Term Lender, in substantially the form of Exhibit D-2 hereto,
evidencing the aggregate indebtedness of the Borrower to such Term Lender
resulting from the Term Loans made by such Term Lender.

         "Termination Date" means the date on which (i) all of the Credit
Agreement Obligations have been indefeasibly paid in full in cash, (ii) the
Commitments have been permanently terminated in their entirety, (iii) all
Letters of Credit shall have expired or been terminated or canceled or the
Borrower shall have provided Cash Collateral for such unexpired or
non-terminated Letters of Credit in accordance with the terms of this Agreement,
and (iv) (A) each Secured Hedge Agreement shall have (1) expired, (2) been
terminated or canceled or (3) been transferred by the applicable Hedge Bank in a
manner (satisfactory in all respects to such Hedge Bank) so that such Hedge Bank
no longer has any obligations whatsoever with respect to such Secured Hedge
Agreement, or (B) the Credit Agreement Obligations under such Secured Hedge
Agreement shall have been collateralized in a manner reasonably satisfactory to
the applicable Hedge Bank(s).

         "Texas Genco Intercreditor Agreement" means (1) the Intercreditor
Agreement dated as of July 1, 2003, among Texas Genco, L.P., Bank of America,
N.A. and the Collateral Trustee and (2) any other intercreditor agreement on
similar terms relating to other secured power supply arrangements permitted
hereunder.

         "Threshold Amount" means, on any date of determination, except as
otherwise set forth in Section 6.12 as to any Domestic Subsidiary or group of
Domestic Subsidiaries which are not Loan Parties, that such Subsidiary or
Subsidiaries had either (i) $25,000,000 or more of Consolidated EBITDAR during
the four-Fiscal Quarter period most recently ended or (ii) had assets the
aggregate book value of which was $50,000,000 or more.

         "Title Company" means a title insurance company of recognized national
standing which is acceptable to the Administrative Agent in its sole discretion.

                                      -52-
<PAGE>

         "Title Policy" shall mean, with respect to any Mortgage, a mortgagee
policy of title insurance (ALTA or the equivalent) or marked "commitment" of
title insurance insuring the applicable Mortgage as a first priority Lien on
such real property asset in favor of the Collateral Trustee (for the benefit of
the holders of the Parity Secured Obligations, including the Secured Parties) to
secure the Parity Secured Obligations, free of all Liens other than the
Permitted Encumbrances, which policy of title insurance shall be issued by a
Title Company in such policy amounts, with such endorsements and affirmative
insurance, and in form and substance reasonably satisfactory to the
Administrative Agent, and shall contain no exceptions to coverage other than
matters satisfactory to the Administrative Agent in its judgment reasonably
exercised and which policy of title insurance shall have been fully paid for by
the Borrower.

         "Total Outstandings" means the aggregate Outstanding Amount of all
Loans and all L/C Obligations.

         "Total Revolving Credit Outstandings" means the aggregate Outstanding
Amount of all Revolving Credit Loans and all L/C Obligations.

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

         "Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

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

         "Unreimbursed Amount" has the meaning specified in Section 2.3(c)(i).

         "Unrestricted Subsidiary" means (a) as of the Closing Date, RE Retail
Receivables, LLC, and (b) thereafter, any Subsidiary of the Borrower that is
designated by the Board of Directors of the Borrower as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that:

                  (a) such Subsidiary has no Indebtedness other than
         Indebtedness that is Non-Recourse to the Borrower and its Restricted
         Subsidiaries;

                  (b) except as permitted pursuant to Section 7.8, such
         Subsidiary is not party to any agreement, contract, arrangement or
         understanding with the Borrower or any Restricted Subsidiary unless the
         terms of any such agreement, contract, arrangement or understanding are
         no less favorable to the Borrower or such Restricted Subsidiary than
         those that might be obtained at the time from Persons who are not
         Affiliates of the Borrower;

                  (c) such Subsidiary is a Person with respect to which neither
         the Borrower nor any of its Restricted Subsidiaries has any direct or
         indirect obligation (i) to subscribe for additional Equity Interests or
         (ii) to maintain or preserve such Person's financial condition or to
         cause such Person to achieve any specified levels of operating results;
         and

                                      -53-
<PAGE>

                  (d) the aggregate Fair Market Value of all outstanding
         Investments owned by the Borrower and its Restricted Subsidiaries in
         the Subsidiary properly designated and of all outstanding Investments
         owned by such Subsidiary properly designated would be Permitted
         Investments under Section 7.2 as of the time of the designation.

Any designation of a Subsidiary of the Borrower as an Unrestricted Subsidiary
will be evidenced to the Administrative Agent by filing with the Administrative
Agent a certified copy of the Board Resolution giving effect to such designation
and a certificate of a Responsible Officer of the Borrower certifying that such
designation complied with the preceding conditions and was permitted by Section
7.2. If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it will thereafter cease
to be an Unrestricted Subsidiary for purposes of this Agreement and the other
Loan Documents and any Indebtedness of such Subsidiary will be deemed to be
incurred by a Restricted Subsidiary of the Borrower as of such date and, if such
Indebtedness is not permitted to be incurred as of such date pursuant to Section
7.3, the Borrower will be in default of such covenant. The Board of Directors of
the Borrower may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Borrower of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
will only be permitted if (i) such Indebtedness is permitted pursuant to Section
7.3; and (ii) no Default would be in existence following such designation. Upon
any such designation of an Unrestricted Subsidiary as a Restricted Subsidiary,
the redesignated Subsidiary will become a Guarantor pursuant to and if required
by Section 6.12; provided, that any redesignated Restricted Subsidiary that is
not a Material Subsidiary need not become a Subsidiary Guarantor until such time
as it becomes a Material Subsidiary.

         "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

                  (1) the sum of the products obtained by multiplying (A) the
         amount of each then remaining installment, sinking fund, serial
         maturity or other required payments of principal, including payment at
         final maturity, in respect of the Indebtedness, by (B) the number of
         years (calculated to the nearest one-twelfth) that will elapse between
         such date and the making of such payment; by

                  (2) the then outstanding principal amount of such
         Indebtedness.

         1.2 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

         (a) The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "will" shall be construed to have
the same meaning and effect as the word "shall." Unless the context

                                      -54-
<PAGE>

requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (iii) the words
"herein," "hereof" and "hereunder," and words of similar import when used in any
Loan Document, shall be construed to refer to such Loan Document in its entirety
and not to any particular provision thereof, (iv) all references in a Loan
Document to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

         (b) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words "to"
and "until" each mean "to but excluding;" and the word "through" means "to and
including."

         (c) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.

         1.3 ACCOUNTING TERMS.

         (a) Generally. All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, except as otherwise specifically prescribed
herein.

         (b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders
and the Borrower); provided, that until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP. Unless otherwise noted, computation of financial
covenants and financial requirements under the Loan Documents shall be made on a
consolidated basis for the Borrower and its Subsidiaries, without duplication.

                                      -55-
<PAGE>

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

         1.5 TIMES OF DAY. Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

         1.6 LETTER OF CREDIT AMOUNTS. Unless otherwise specified herein, the
amount of a Letter of Credit at any time shall be deemed to be the stated amount
of such Letter of Credit in effect at such time.

                                   ARTICLE II.
                      THE COMMITMENTS AND CREDIT EXTENSIONS

         2.1 THE LOANS.

         (a) The Term Borrowings. Subject to the terms and conditions set forth
herein, each Term Lender severally agrees to make a term loan to the Borrower on
the Closing Date in an amount equal to the Term Commitment of such Term Lender.
Amounts borrowed under this clause and repaid or prepaid may not be reborrowed.
Term Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein.

         (b) The Revolving Credit Borrowings. Subject to the terms and
conditions set forth herein, each Revolving Credit Lender severally agrees to
make loans to the Borrower from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time
outstanding the amount of such Lender's Revolving Credit Commitment; provided,
that after giving effect to any Revolving Credit Borrowing, the sum of the
aggregate Outstanding Amount of the Revolving Credit Loans of any Lender plus
such Lender's Pro Rata Share of the Outstanding Amount of all L/C Obligations
shall not exceed such Lender's Revolving Credit Commitment. Within the limits of
each Lender's Revolving Credit Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this clause, prepay under
Section 2.4, and reborrow under this clause. Revolving Credit Loans may be Base
Rate Loans or Eurodollar Rate Loans, as further provided herein.

         2.2 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

         (a) Each Borrowing, each conversion of Loans from one Type to the
other, and each continuation of Eurodollar Rate Loans shall be made upon the
Borrower's irrevocable notice to the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Administrative Agent not
later than 11:00 a.m. (New York time) (i) three Business Days prior to the
requested date of any Borrowing of, conversion to or continuation of Eurodollar
Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans and
(ii) on the requested date of any Borrowing of Base Rate Loans. Each telephonic
notice by the Borrower pursuant to this clause must be confirmed promptly by
delivery to the Administrative Agent of a written Borrowing Notice,
appropriately completed and signed by a Responsible Officer of the Borrower.
Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof. Except as provided in Section 2.3(c), each Borrowing of or
conversion to Base Rate Loans shall be

                                      -56-
<PAGE>

in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof. Each Borrowing Notice (whether telephonic or written) shall specify (i)
whether the Borrower is requesting a Term Borrowing or a Revolving Credit
Borrowing, a conversion of Term Loans or Revolving Credit Loans from one Type to
the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date
of the Borrowing, conversion or continuation, as the case may be (which shall be
a Business Day), (iii) the principal amount of Loans to be borrowed, converted
or continued, (iv) the Type of Loans to be borrowed or to which existing Loans
are to be converted, and (v) if applicable, the duration of the Interest Period
with respect thereto. If the Borrower fails to specify a Type of Loan in a
Borrowing Notice or if the Borrower fails to give a timely notice requesting a
conversion or continuation, then the applicable Loans shall be made as, or
converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans
shall be effective as of the last day of the Interest Period then in effect with
respect to the applicable Eurodollar Rate Loans. If the Borrower requests a
Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any
such Borrowing Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.

         (b) Following receipt of a Borrowing Notice, the Administrative Agent
shall promptly notify each Lender under the applicable Facility of the amount of
its Pro Rata Share of the applicable Loans, and if no timely notice of a
conversion or continuation is provided by the Borrower, the Administrative Agent
shall notify each Lender of the details of any automatic conversion to Base Rate
Loans described in Section 2.2(a). In the case of a Borrowing, each Lender under
the applicable Facility shall make the amount of its Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent's Office not later than 1:00 p.m. (New York time) on the Business Day
specified in the applicable Borrowing Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.2 (and, if such Borrowing is the
initial Credit Extension, Section 4.1), the Administrative Agent shall make all
funds so received available to the Borrower in like funds as received by the
Administrative Agent by 3:00pm (New York time) on the Business Day specified in
the applicable Borrowing Notice, either by (i) crediting the account of the
Borrower on the books of Bank of America with the amount of such funds or (ii)
wire transfer of such funds, in each case in accordance with instructions
provided to (and reasonably acceptable to) the Administrative Agent by the
Borrower; provided, that if, on the date the Borrowing Notice with respect to
such Borrowing is given by the Borrower, there are L/C Borrowings outstanding,
then the proceeds of such Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and second, shall be made available to the
Borrower as provided above.

         (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of an Event of Default, no Loans may
be requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders.

         (d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for Eurodollar
Rate Loans upon determination of such interest rate. The determination of the
Eurodollar Rate by the Administrative Agent shall be conclusive in the absence
of manifest error. At any time that Base Rate Loans are

                                      -57-
<PAGE>

outstanding, the Administrative Agent shall notify the Borrower and the Lenders
of any change in the Administrative Agent's prime rate used in determining the
Base Rate promptly following the public announcement of such change.

         (e) After giving effect to all Borrowings, all conversions of Loans
from one Type to the other, and all continuations of Loans as the same Type,
there shall not be more than ten Interest Periods in effect.

         (f) The failure of any Lender to make the Loan to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.

         2.3 LETTERS OF CREDIT.

         (a) The L/C Sublimit.

                  (i) Subject to the terms and conditions set forth herein, (A)
         the L/C Issuers agree, in reliance upon the agreements of the other
         Revolving Credit Lenders set forth in this Section, (1) from time to
         time on any Business Day during the period from the Closing Date until
         the Letter of Credit Final Expiration Date, to issue Letters of Credit
         for the account of the Borrower or its Subsidiaries, and to amend or
         renew Letters of Credit previously issued by it, in accordance with
         Section 2.3(b), and (2) to honor drawings if presented in accordance
         with the terms and conditions of such Letters of Credit; and (B) the
         Revolving Credit Lenders severally agree to participate in Letters of
         Credit issued for the account of the Borrower or its Subsidiaries;
         provided, that no L/C Issuer shall be obligated to make any L/C Credit
         Extension with respect to any Letter of Credit, if as of the date of
         such L/C Credit Extension, (x) the Total Outstandings under the
         Revolving Credit Facility would exceed the aggregate Revolving Credit
         Commitments, (y) the L/C Exposure would exceed the L/C Sublimit;
         provided, further, that no L/C Issuer shall be required to issue, amend
         or renew any Letter of Credit if, after giving effect thereto, all L/C
         Obligations held by such L/C Issuer with respect to all Letters of
         Credit issued by such L/C Issuer (or its Affiliates) would exceed the
         amount set forth on Schedule 2.1, opposite the name of such L/C Issuer,
         under the column entitled "L/C Issuer Amount for Letters of Credit", or
         (z) the sum of the aggregate Outstanding Amount of the Revolving Credit
         Loans of any Revolving Credit Lender plus such Lender's Pro Rata Share
         of the L/C Exposure would exceed such Lender's Revolving Credit
         Commitment. Each request by the Borrower for the issuance or amendment
         of a Letter of Credit shall be deemed to be a representation by the
         Borrower that the L/C Credit Extension so requested complies with the
         conditions set forth in each proviso to the preceding sentence. Within
         the foregoing limits, and subject to the terms and conditions hereof,
         the Borrower's ability to obtain Letters of Credit shall be fully
         revolving, and accordingly the Borrower may, during the foregoing
         period, obtain Letters of Credit to replace Letters of Credit that have
         expired or that have been drawn upon and paid. All Existing Letters of
         Credit shall be deemed to have been issued pursuant hereto, and from
         and after the Closing Date shall be Letters of Credit and shall be
         subject to and governed by the terms and conditions hereof.

                                      -58-
<PAGE>

                  (ii) No L/C Issuer shall be under any obligation to issue any
         Letter of Credit if:

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

                           (B) the expiry date of such requested Letter of
                  Credit would occur after the earlier of (1) the first
                  anniversary of its date of issuance and (2) the Letter of
                  Credit Final Expiration Date; provided, that notwithstanding
                  the foregoing, any Letter of Credit issued or extended
                  (including any automatic renewal) no later than 30 days prior
                  to the Revolving Credit Termination Date may have an
                  expiration date of up to 90 days after the Revolving Credit
                  Termination Date so long as the Borrower has provided Cash
                  Collateral on or before the date of such issuance or extension
                  in an amount equal to the sum (the "Required Cash Collateral
                  Amount") of (x) the then-undrawn amount of such Letter of
                  Credit plus (y) the aggregate amount of fees that would accrue
                  pursuant to Section 2.3(i) and (j) (assuming the application
                  of clause (ii) thereof) with respect to such Letter of Credit
                  if such undrawn amount were the daily amount available to be
                  drawn thereunder through the expiry date thereof, and
                  otherwise in accordance with Section 2.3(g);

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

                           (D) such Letter of Credit is to be denominated in a
                  currency other than Dollars, or such Letter of Credit allows
                  for payments more than three Business days after the expiry
                  date of such Letter of Credit; or

                           (E) a default on any Revolving Credit Lender's
                  obligations to fund under Section 2.3(c) exists or any
                  Revolving Credit Lender is at such time a Defaulting Lender
                  hereunder, unless such L/C Issuer had entered into
                  satisfactory arrangements with the Borrower or such Revolving
                  Credit Lender to eliminate such L/C Issuer's risk with respect
                  to such Lender.

                  (iii) No L/C Issuer shall be under any obligation to amend any
         Letter of Credit in any way (whether or not such amendment increases
         the amount of the applicable Letter of Credit) (A) at any time on or
         after the Revolving Credit Termination Date, or (B) if the

                                      -59-
<PAGE>

         beneficiary of such Letter of Credit does not accept the proposed
         amendment to such Letter of Credit on the basis that the stated amount
         of the Letter of Credit has been reduced, the expiry date thereof has
         been accelerated or any term relating to the procedure for drawing
         thereunder has changed. In addition, and without limiting the terms of
         the first sentence of this clause, no L/C Issuer shall be under any
         obligation to amend any Letter of Credit to increase the amount thereof
         if such L/C Issuer would have no obligation at such time to issue such
         Letter of Credit in its amended form under the terms hereof by reason
         of the provisions of Section 2.3(a)(i), Section 2.3(a)(ii), Section 4.2
         or otherwise.

                  (iv) Each L/C Issuer shall act on behalf of the Revolving
         Credit Lenders with respect to any Letters of Credit issued by it and
         the documents associated therewith, and such L/C Issuer shall have all
         of the benefits and immunities (A) provided to the Administrative Agent
         in Article X with respect to any acts taken or omissions suffered by an
         L/C Issuer in connection with Letters of Credit issued by it or
         proposed to be issued by it and Issuer Documents pertaining to such
         Letters of Credit as fully as if the term "Administrative Agent" as
         used in Article X included such L/C Issuer with respect to such acts or
         omissions, and (B) as additionally provided herein with respect to such
         L/C Issuer.

         (b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.

                  (i) Each Letter of Credit shall be issued upon the request of
         the Borrower delivered to the relevant L/C Issuer (with a copy to the
         Administrative Agent) in the form of an L/C Certificate, appropriately
         completed and signed by a Responsible Officer of the Borrower. Such L/C
         Certificate must be received by such L/C Issuer and the Administrative
         Agent not later than 3:00 p.m. (New York time) at least two Business
         Days (or such later date and time as the Administrative Agent and such
         L/C Issuer may agree in a particular instance in their sole discretion)
         prior to the proposed issuance date. In the case of a request for an
         initial issuance of a Letter of Credit, such L/C Certificate shall
         specify in form and detail reasonably satisfactory to such L/C Issuer:
         (A) the proposed issuance date of the requested Letter of Credit (which
         shall be a Business Day); (B) the amount thereof; (C) the expiry date
         thereof; (D) the name and address of the beneficiary thereof; (E) the
         account party or parties thereof; (F) the full text of any certificate
         to be presented by such beneficiary in case of any drawing thereunder;
         and (G) the transactions or obligations to be supported thereby. In the
         case of a request for an amendment of any outstanding Letter of Credit,
         such L/C Certificate shall specify in form and detail reasonably
         satisfactory to the relevant L/C Issuer (1) the Letter of Credit to be
         amended; (2) the proposed date of amendment thereof (which shall be a
         Business Day); (3) the nature of the proposed amendment; and (4) such
         other matters consistent with the items set forth in clauses (A)-(G) in
         the preceding sentence as such L/C Issuer may reasonably require.

                  (ii) Promptly after receipt of any L/C Certificate, subject to
         the terms and conditions hereof, such L/C Issuer shall, on the
         requested date, issue a Letter of Credit for the account of the
         Borrower (or the applicable Subsidiary) or enter into the applicable

                                      -60-
<PAGE>

         amendment, as the case may be, in each case in accordance with such L/C
         Issuer's usual and customary business practices. Immediately upon the
         issuance of each Letter of Credit, each Revolving Credit Lender shall
         be deemed to, and hereby irrevocably and unconditionally agrees to,
         purchase from the relevant L/C Issuer a risk participation in such
         Letter of Credit in an amount equal to the product of such Lender's Pro
         Rata Share times the amount of such Letter of Credit. No L/C Issuer
         shall be obligated to make any independent determination as to whether
         the requested issuance or amendment is permitted in accordance with the
         terms hereof, and, unless and until such L/C Issuer receives such
         confirmation from the Administrative Agent, such L/C Issuer shall have
         no obligation to issue the requested Letter of Credit.

                  (iii) If the Borrower so requests in any applicable L/C
         Certificate, any L/C Issuer shall issue an Auto-Renewal Letter of
         Credit. Unless otherwise directed by such L/C Issuer, the Borrower
         shall not be required to make a specific request to such L/C Issuer for
         any such renewal. Once an Auto-Renewal Letter of Credit has been
         issued, the Borrower and the Revolving Credit Lenders shall be deemed
         to have authorized (but may not require) such L/C Issuer to permit the
         renewal of such Letter of Credit at any time to an expiry date not
         later than the Letter of Credit Final Expiration Date; provided, that
         (A) such L/C Issuer may give a notice of non-renewal and thereby
         prevent the renewal of an Auto-Renewal Letter of Credit if such L/C
         Issuer has determined at any time prior to the Nonrenewal Notice Date
         of such Auto-Renewal Letter of Credit, in accordance with the terms of
         the Letter of Credit, that it would have no obligation at such time to
         extend such Letter of Credit in its renewed form under the terms hereof
         (by reason of the provisions of Section 2.3(a)(i), Section 2.3(a)(ii),
         Section 2.3(a)(iii) or otherwise), and (B) such L/C Issuer shall not
         permit any such renewal if it has received notice (which may be by
         telephone, if immediately confirmed in writing, or in writing) on or
         before the day that is ten days before the Nonrenewal Notice Date from
         the Administrative Agent or the Borrower that one or more of the
         applicable conditions specified in Section 2.3(a)(i) is not then
         satisfied; and provided, further, that notwithstanding the foregoing,
         any Letter of Credit so renewed no later than 30 days prior to the
         Revolving Credit Termination Date may have an expiration date of up to
         90 days after the Revolving Credit Termination Date so long as the
         Borrower has provided Cash Collateral on or before the date of such
         issuance or extension in an amount equal to the then-applicable
         Required Cash Collateral Amount.

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

         (c) Drawings and Reimbursements; Funding of Participations.

                  (i) Upon receipt from the beneficiary of any Letter of Credit
         of any notice of a drawing under such Letter of Credit, the relevant
         L/C Issuer shall promptly notify the Borrower and the Administrative
         Agent thereof (which may be telephonic, promptly confirmed by
         telecopy). Not later than 12:00 p.m. (New York time) on an Honor Date,
         the Borrower may reimburse such L/C Issuer through the Administrative
         Agent in an

                                      -61-
<PAGE>

         amount equal to the amount of such drawing. If the Borrower does not so
         reimburse such L/C Issuer on the date necessary to settle the
         obligations of the L/C Issuer under any draft drawn or demand made
         under a Letter of Credit, the Administrative Agent shall promptly
         notify each Revolving Credit Lender of the Honor Date, the amount of
         the unreimbursed drawing (the "Unreimbursed Amount"), and the amount of
         such Lender's Pro Rata Share thereof. In such event, the Unreimbursed
         Amount shall automatically be converted (unless the Borrower is in
         Default under Section 9.1(f) or (g)) to a Revolving Credit Borrowing of
         Base Rate Loans to be disbursed on the Honor Date in an amount equal to
         the Unreimbursed Amount, without regard to the minimum and multiples
         specified in Section 2.2(a) for the principal amount of Base Rate Loans
         and without regard to whether the conditions in Section 4.2 are then
         satisfied, but subject to the amount of the unutilized portion of the
         Aggregate Commitments. Any notice given by any L/C Issuer or the
         Administrative Agent pursuant to this clause may be given by telephone
         if immediately confirmed in writing; provided, that the lack of such an
         immediate confirmation shall not affect the conclusiveness or binding
         effect of such notice.

                  (ii) Each Revolving Credit Lender (including the Revolving
         Credit Lender acting as L/C Issuer) shall upon any notice pursuant to
         Section 2.3(c)(i) make funds available to the Administrative Agent for
         the account of the relevant L/C Issuer at the Administrative Agent's
         Office in an amount equal to its Pro Rata Share of the Unreimbursed
         Amount not later than 1:00 p.m. (New York time) on the Business Day
         specified in such notice by the Administrative Agent, whereupon,
         subject to the provisions of Section 2.3(c)(iii), each Revolving Credit
         Lender that so makes funds available shall be deemed to have made a
         Base Rate Loan to the Borrower in such amount. The Administrative Agent
         shall remit the funds so received to such L/C Issuer.

                  (iii) Such Base Rate Loan shall be made as of the date of such
         settlement of such Letter of Credit. The proceeds of such Base Rate
         Loan shall be paid by the Lenders to the Administrative Agent for
         payment to the relevant L/C Issuer of such Letter of Credit (and the
         Administrative Agent shall promptly pay such proceeds to such L/C
         Issuer) to reimburse such L/C Issuer of such Letter of Credit for each
         Lender's Pro Rata Share of the Dollar Equivalent of the amount actually
         disbursed by such L/C Issuer of such Letter of Credit pursuant to such
         draft or demand. With respect to any Unreimbursed Amount that is not
         fully refinanced by a Revolving Credit Borrowing of Base Rate Loans
         because the Borrower is in Default under Section 9.1(f) or (g) or for
         any other reason, the Borrower shall be deemed to have incurred from
         the relevant L/C Issuer an L/C Borrowing in the amount of the
         Unreimbursed Amount that is not so refinanced, which L/C Borrowing
         shall be due and payable on demand (together with interest) and shall
         bear interest at the Default Rate. In such event, each Revolving Credit
         Lender's payment to the Administrative Agent for the account of such
         L/C Issuer pursuant to Section 2.3(c)(ii) shall be deemed payment in
         respect of its participation in such L/C Borrowing and shall constitute
         an L/C Advance from such Lender in satisfaction of its participation
         obligation under this Section.

                  (iv) Until each Revolving Credit Lender funds its Revolving
         Credit Loan or L/C Advance pursuant to this clause (c) to reimburse any
         L/C Issuer for any amount

                                      -62-
<PAGE>

         drawn under any Letter of Credit, interest in respect of such Lender's
         Pro Rata Share of such amount shall be solely for the account of such
         L/C Issuer.

                  (v) Each Revolving Credit Lender's obligation to make
         Revolving Credit Loans or L/C Advances to reimburse any L/C Issuer for
         amounts drawn under Letters of Credit, as contemplated by this clause
         (c), shall be absolute and unconditional and shall not be affected by
         any circumstance, including (A) any setoff, counterclaim, recoupment,
         defense or other right which such Lender may have against such L/C
         Issuer, the Borrower or any other Person for any reason whatsoever, (B)
         the occurrence or continuance of a Default, or (C) any other
         occurrence, event or condition, whether or not similar to any of the
         foregoing; provided, that each Revolving Credit Lender's obligation to
         make Revolving Credit Loans (but not its obligation to make L/C
         Advances) pursuant to this clause (c) is subject to the Borrower not
         being in Default under Section 9.1(f) or (g). No such making of an L/C
         Advance shall relieve or otherwise impair the obligation of the
         Borrower to reimburse such L/C Issuer for the amount of any payment
         made by such L/C Issuer under any Letter of Credit, together with
         interest as provided herein.

                  (vi) If any Revolving Credit Lender fails to make available to
         the Administrative Agent for the account of any L/C Issuer any amount
         required to be paid by such Lender pursuant to the foregoing provisions
         of this clause (c) by the time specified in this clause (c)(ii), such
         L/C Issuer shall be entitled to recover from such Lender (acting
         through the Administrative Agent), on demand, such amount with interest
         thereon for the period from the date such payment is required to the
         date on which such payment is immediately available to such L/C Issuer
         at a rate per annum equal to the Federal Funds Rate from time to time
         in effect for the first three days and, thereafter, at a rate of
         interest equal to the Base Rate. A certificate of the relevant L/C
         Issuer submitted to any Revolving Credit Lender (through the
         Administrative Agent) with respect to any amounts owing under this
         clause (c)(vi) shall be conclusive absent manifest error.

                  (vii) If at any time a distribution is to be made by the
         Administrative Agent to any Lender and such Lender has failed to make
         available to the Administrative Agent for the account of the relevant
         L/C Issuer any amount required to be paid by such Lender pursuant to
         the foregoing provisions of this clause (c), the Administrative Agent
         shall pay such distribution to such L/C Issuer, to the extent of such
         unpaid amount together with any interest thereon accrued pursuant to
         Section 2.3(c)(vi).

         (d) Repayment of Participations.

                  (i) At any time after any L/C Issuer has made a payment under
         any Letter of Credit and has received from any Revolving Credit Lender
         such Lender's L/C Advance in respect of such payment in accordance with
         Section 2.3(c), if the Administrative Agent receives for the account of
         such L/C Issuer any payment in respect of the related Unreimbursed
         Amount or interest thereon (whether directly from the Borrower or
         otherwise, including proceeds of Cash Collateral applied thereto by the
         Administrative Agent), the Administrative Agent will distribute to such
         Lender its Pro Rata Share thereof (appropriately adjusted, in the case
         of interest payments, to reflect the period of time

                                      -63-
<PAGE>

         during which such Lender's L/C Advance was outstanding) in the same
         funds as those received by the Administrative Agent.

                  (ii) If any payment received by the Administrative Agent for
         the account of any L/C Issuer pursuant to Section 2.3(c)(i) is required
         to be returned under any of the circumstances described in Section 11.5
         (including pursuant to any settlement entered into by such L/C Issuer
         in its discretion), each Revolving Credit Lender shall pay to the
         Administrative Agent for the account of such L/C Issuer its Pro Rata
         Share thereof on demand of the Administrative Agent, plus interest
         thereon from the date of such demand to the date such amount is
         returned by such Lender, at a rate per annum equal to the Federal Funds
         Rate from time to time in effect for the first three days and,
         thereafter, at a rate of interest equal to the Base Rate. The
         obligations of the Revolving Credit Lenders under this clause shall
         survive the payment in full of the Credit Agreement Obligations and the
         termination of this Agreement.

         (e) Obligations Absolute. The obligation of the Borrower to reimburse
any relevant L/C Issuer for each drawing under each Letter of Credit and
(without duplication) to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including the following:

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

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

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

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

                  (v) any exchange, release or nonperfection of any Collateral,
         or any release or amendment or waiver of or consent to departure from
         the Guaranty or any other

                                      -64-
<PAGE>

         guarantee, for all or any of the Credit Agreement Obligations of the
         Borrower in respect of such Letter of Credit; or

                  (vi) any other circumstance or happening whatsoever, whether
         or not similar to any of the foregoing, including any other
         circumstance that might otherwise constitute a defense available to, or
         a discharge of, the Borrower, except as otherwise provided in clause
         (f) of this Section.

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

         (f) Role of L/C Issuer. Each Revolving Credit Lender and the Borrower
agree that, in paying any drawing under a Letter of Credit, no L/C Issuer shall
have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of any
L/C Issuer, any Agent-Related Person nor any of the respective correspondents,
participants or assignees of any L/C Issuer shall be liable to any Lender for
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful misconduct
as determined by a court of competent jurisdiction; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or L/C Certificate. The Borrower hereby assumes all
risks of the acts or omissions of any beneficiary or transferee with respect to
its use of any Letter of Credit; provided, that this assumption is not intended
to, and shall not, preclude the Borrower's pursuing such rights and remedies as
it may have against the beneficiary or transferee at law or under any other
agreement. None of any L/C Issuer, any Agent-Related Person, nor any of the
respective correspondents, participants or assignees of any L/C Issuer, shall be
liable or responsible for any of the matters described in clauses (i) through
(iv) of Section 2.3(e); provided, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against an L/C Issuer, and such
L/C Issuer may be liable to the Borrower, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by such L/C Issuer's willful
misconduct or gross negligence as determined by a court of competent
jurisdiction or such L/C Issuer's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit AND THE BORROWER FOR ITSELF AND ITS SUBSIDIARIES, HEREBY WAIVES AND
RELINQUISHES ANY AND ALL CLAIMS IT MAY HAVE FOR INCIDENTAL, CONSEQUENTIAL OR
EXEMPLARY DAMAGES AND FOR DIRECT DAMAGES RESULTING FROM NEGLIGENCE BY ANY L/C
ISSUER WHICH DOES NOT RISE TO THE LEVEL OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. In furtherance and not in limitation of the foregoing, any L/C
Issuer may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and such L/C Issuer shall not be responsible for
the

                                      -65-
<PAGE>

validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

         (g) Cash Collateral. Upon the request of the Administrative Agent or
any L/C Issuer to the Borrower, if, as of the Letter of Credit Final Expiration
Date, any Letter of Credit may for any reason remain outstanding and partially
or wholly undrawn, the Borrower shall immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the Letter of Credit Final Expiration Date).
As required pursuant to Section 2.3(a)(ii) or 2.3(b)(iii), the Borrower shall
immediately Cash Collateralize the relevant Letter(s) of Credit in the amount
specified therein. The Borrower hereby grants to the Collateral Agent, for the
benefit of the L/C Issuers and the Revolving Credit Lenders, a security interest
in all such cash, deposit accounts and all balances therein and all proceeds of
the foregoing. Cash Collateral shall be maintained in a Cash Collateral Account.
If at any time the Collateral Agent determines that any funds held as Cash
Collateral are subject to any right or claim of any Person other than the
Collateral Agent or that the total amount of such funds is less than the
aggregate Outstanding Amount of all L/C Obligations that are required to be Cash
Collateralized at such time, the Borrower will, forthwith upon demand by the
Collateral Agent, pay to the Collateral Agent, as additional funds to be
deposited and held in such Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Outstanding Amount over (b) the total amount of
funds, if any, then held as Cash Collateral that the Collateral Agent determines
to be free and clear of any such right and claim. Upon the drawing of any Letter
of Credit for which funds are on deposit as Cash Collateral, such funds shall be
applied, to the extent permitted under applicable law, to reimburse the relevant
L/C Issuers. So long as no Event of Default shall have occurred and be
continuing, upon payment, expiration or termination of a Letter of Credit that
was Cash Collateralized, applicable amounts on deposit in Cash Collateral
Accounts shall be promptly returned to the Borrower.

         (h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed
by the relevant L/C Issuer and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit), (i)
the rules of the "International Standby Practices 1998" published by the
Institute of International Banking Law & Practice (or such later version thereof
as may be in effect at the time of issuance) shall apply to each standby Letter
of Credit, or (ii) the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce
(the "ICC") at the time of issuance (including the ICC decision published by the
Commission on Banking Technique and Practice on April 6, 1998 regarding the
European single currency (euro)) shall apply to each commercial Letter of
Credit, and in each case to the extent not inconsistent with the above referred
rules, the laws of the State of New York shall apply to each Letter of Credit.

         (i) Letter of Credit Fees. The Borrower shall pay to the Administrative
Agent for the account of each Revolving Credit Lender in accordance with its Pro
Rata Share a Letter of Credit fee (the "Letter of Credit Fee") for each Letter
of Credit equal to (x) for so long as such Letter of Credit shall be Cash
Collateralized, 1.00% per annum times the daily amount available to be drawn
under such Letter of Credit and (y) otherwise, the Applicable Margin for
Eurodollar Rate Loans times the daily amount available to be drawn under such
Letter of Credit. For purposes of computing the daily amount available to be
drawn under any Letter of Credit, the amount of such

                                      -66-
<PAGE>

Letter of Credit shall be determined in accordance with Section 1.6. Letter of
Credit Fees shall be (i) computed on a quarterly basis in arrears and (ii) due
and payable on each Quarterly Payment Date, commencing with the first such date
to occur after the issuance of such Letter of Credit, on the Letter of Credit
Final Expiration Date with respect to such Letter of Credit and thereafter on
demand. If there is any change in the Applicable Margin for Eurodollar Rate
Loans during any quarter, for purposes of clause (y) above the remaining daily
amount available to be drawn under each Letter of Credit shall be computed and
multiplied by the Applicable Margin for Eurodollar Rate Loans separately for
each period during such quarter that such Applicable Margin was in effect.
Notwithstanding anything to the contrary contained herein, upon the request of
the Required Lenders, while any Event of Default exists under Section 9.1(a),
all Letter of Credit Fees shall accrue at the Default Rate.

         (j) Fronting Fee and Documentary and Processing Charges Payable to L/C
Issuer. The Borrower shall pay directly to each L/C Issuer for its own account a
fronting fee with respect to Letters of Credit issued by such L/C Issuer, at a
rate per annum equal to (i) to the extent the aggregate stated amount of all
outstanding Letters of Credit issued by such L/C Issuer is less than or equal to
$250,000,000, 0.15% and (ii) to the extent the aggregate stated amount of all
outstanding Letters of Credit issued by such L/C Issuer is in excess of $250
million, 0.25% (but only on such excess), computed on the daily amount available
to be drawn under such Letters of Credit on a quarterly basis in arrears, and
due and payable on each Quarterly Payment Date, commencing with the first such
date to occur after the issuance of such Letter of Credit, on the Letter of
Credit Final Expiration Date with respect to such Letter of Credit and
thereafter on demand. For purposes of computing the daily amount available to be
drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.6. In addition, the Borrower shall pay
directly to each L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of such L/C Issuer relating to letters of credit as from time to time
in effect. Such customary fees and standard costs and charges are due and
payable on demand and are nonrefundable.

         (k) Conflict with Issuer Documents. In the event of any conflict
between the terms hereof and the terms of any L/C Certificate, the terms hereof
shall control.

         (l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, the Borrower shall be
obligated to reimburse each L/C Issuer hereunder for any and all drawings under
such Letter of Credit. The Borrower hereby acknowledges that the issuance of
Letters of Credit for the account of Subsidiaries inures to the benefit of the
Borrower, and that the Borrower's business derives substantial benefits from the
businesses of such Subsidiaries.

         2.4 OPTIONAL AND MANDATORY PREPAYMENTS.

         (a) Optional. The Borrower may, upon notice to the Administrative
Agent, at any time or from time to time voluntarily prepay Loans in whole or in
part without premium or penalty; provided, that (1) such notice must be received
by the Administrative Agent not later than 11:00 a.m. (A) three Business Days
prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (2) any prepayment of Eurodollar

                                      -67-
<PAGE>

Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof; (3) any prepayment of Base Rate Loans shall be in
a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding; and (4) any prepayments of Term Loans shall be applied ratably to
the principal repayment installments thereof on a pro rata basis. Each such
notice shall specify the date and amount of such prepayment and the Type(s) of
Loans to be prepaid. The Administrative Agent will promptly notify each Lender
of its receipt of each such notice, and of the amount of such Lender's Pro Rata
Share of such prepayment. If such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein. Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest on the amount prepaid,
together with any additional amounts required pursuant to Section 3.5. Each such
prepayment shall be applied to the Loans of the Lenders in accordance with their
respective Pro Rata Shares.

         (b) Mandatory. (i) If the Borrower or any of its Restricted
Subsidiaries consummates any Asset Sale which in the aggregate results in the
realization by the Borrower or such Restricted Subsidiary of Net Asset Sale
Proceeds (determined as of the date of such Asset Sale, whether or not such Net
Asset Sale Proceeds are then received by the Borrower or such Restricted
Subsidiary), the Borrower shall apply all Net Asset Sale Proceeds received
pursuant to Section 7.5 and all other Net Asset Sale Proceeds other than
Excluded Proceeds, in each case, to the extent not previously applied in such
Fiscal Year to make mandatory prepayments of Term Loans under this clause (b)(i)
(it being understood that Net Asset Sale Proceeds subject to this clause (b)(i)
applied in such Fiscal Year to make prepayments of Term Loans prior to receipt
of such Net Asset Sale Proceeds other than Excluded Proceeds shall be deemed to
have been made as a mandatory prepayment under this clause (b)(i)), within three
Business Days after the date of receipt thereof by the Borrower or such
Restricted Subsidiary subject to the provisions of Section 2.4(b)(ix)), as
follows:

                           (A) to the extent such Net Asset Sale Proceeds are
                  not OPH Asset Sale Proceeds, (X) if none of such Net Asset
                  Sale Proceeds is required by the terms of any Parity Secured
                  Debt to be offered to any holder of any Parity Secured Debt or
                  otherwise used to repurchase or prepay any Parity Secured
                  Debt, to prepay Loans (determined as provided in Section
                  2.4(b)(vii) and (viii) below) in an amount equal to 100% of
                  such Net Asset Sale Proceeds received and (Y) if any of such
                  Net Asset Sale Proceeds is required by the terms of any Parity
                  Secured Debt to be offered to any holder of any Parity Secured
                  Debt or otherwise used to repurchase or prepay any Parity
                  Secured Debt, to prepay Loans (determined as provided in
                  Section 2.4(b)(vii) and (viii) below) in an amount equal to
                  100% of such Net Asset Sale Proceeds received multiplied by
                  the Pro Rata Percentage; and

                           (B) to the extent such Net Asset Sale Proceeds are
                  OPH Asset Sale Proceeds, (X) if none of such Net Asset Sale
                  Proceeds is required by the terms of any Parity Secured Debt
                  or the OPH Note Indenture to be offered to any holder of any
                  Parity Secured Debt or any holder of an OPH Note or otherwise
                  used to repurchase or prepay any Parity Secured Debt or OPH
                  Notes, to prepay Loans (determined as provided in Section
                  2.4(b)(vii) and (viii) below) in an amount equal to 100% of
                  such Net Asset Sale Proceeds received, to the extent the OPH

                                      -68-
<PAGE>

                  Note Indenture does not prohibit the distribution of such Net
                  Asset Sale Proceeds to the Borrower, (Y) to the extent such
                  OPH Asset Sale Proceeds in the aggregate are equal to or less
                  than the outstanding principal amount of the OPMW Term Notes
                  and the OPNY Term Note, to prepay (without any offer to
                  repurchase or prepay any OPH Notes) on first, the OPMW New
                  Term Note and the OPNY Term Note on a pro rata basis and
                  second the OPMW Refinancing Note, and, in turn, to prepay
                  Loans (determined as provided in Section 2.4(b)(vii) and
                  (viii) below) (without any offer to repurchase or prepay any
                  other Parity Secured Debt), and (Z) to the extent such OPH
                  Asset Sale Proceeds (I) in the aggregate exceed the
                  outstanding principal amount of the OPMW Term Notes and the
                  OPNY Term Note, (II) are not otherwise required, in accordance
                  with the OPH Note Indenture, to be offered to prepay any OPH
                  Notes, and (III) are required by the terms of any Parity
                  Secured Debt to be offered to any holder of Parity Secured
                  Debt or otherwise used to repurchase or prepay any Parity
                  Secured Debt, to pay a dividend in the amount of such proceeds
                  to the Borrower and, in turn, to prepay Loans (determined as
                  provided in Section 2.4(b)(vii) and (viii) below) in an amount
                  equal to 100% of such Net Asset Sale Proceeds received
                  multiplied by the Pro Rata Percentage, but only (so long as
                  and to the extent such Net Asset Sale Proceeds are not
                  accepted by any such holder of Parity Secured Debt) to the
                  extent the OPH Note Indenture does not prohibit the
                  distribution of such Net Asset Sale Proceeds to the Borrower.

                  In addition, in the event any such Net Asset Sale Proceeds
         described in the foregoing sentence (x) are required by the terms of
         any Parity Secured Debt to be and are offered to any holder of Parity
         Secured Debt but are not accepted by such holder, or (y) are required
         by the terms of the OPH Note Agreement to be and are offered to any
         holder of an OPH Note but are accepted neither by such holder nor
         subsequently by any holder of any Parity Secured Debt to whom they are
         required by the terms of any Parity Secured Debt Agreement to be and
         are offered, and are permitted in accordance with the OPH Note
         Indenture to be distributed to the Borrower (such Net Asset Sale
         Proceeds being referred to herein as "Available Proceeds"), then
         promptly, but in any event no later than three (3) Business Days after
         the last day for, in each case, such holder of any Parity Secured Debt
         to accept the repurchase or prepayment offer, the Borrower shall prepay
         Loans (determined as provided in Section 2.4(b)(vii) and (viii) below)
         in an amount equal to 100% of such Available Proceeds.

                  (ii) Upon the incurrence or issuance by the Borrower or any of
         its Subsidiaries of any secured Senior Debt (other than Excepted Debt)
         and any Permitted Refinancing Indebtedness of any of the foregoing, the
         Borrower shall prepay an aggregate principal amount of Loans equal to
         100% of all Net Financing Proceeds received therefrom within three
         Business Days after the date of receipt thereof by the Borrower or such
         Subsidiary subject to the provisions of Section 2.4(b)(ix).

                  (iii) Upon the incurrence or issuance by the Borrower or any
         of its Subsidiaries of any unsecured Senior Debt (other than Excepted
         Debt), the Borrower shall prepay an aggregate principal amount of Loans
         equal to (x) if the Consolidated Leverage Ratio determined on a pro
         forma basis after giving effect to such incurrence or issuance as of

                                      -69-
<PAGE>

         the last day of the Fiscal Quarter most recently ended equals or
         exceeds to 4.0:1, 75% of all Net Financing Proceeds received therefrom
         and (y) if the Consolidated Leverage Ratio so determined is less than
         4.0:1, 50% of all Net Financing Proceeds received therefrom, within
         three Business Days after the date of receipt thereof by the Borrower
         or such Subsidiary subject to the provisions of Section 2.4(b)(ix);
         provided, that so long as no Event of Default shall have occurred and
         be continuing, (A) if the Borrower intends to reinvest any Net
         Financing Proceeds in accordance with this proviso, it shall deliver
         written notice of such intention to the Administrative Agent on or
         prior to the third Business Day immediately following the date on which
         Borrower receives such Net Financing Proceeds, (B) if the Borrower
         shall have delivered such notice, it may reinvest all or any portion of
         such Net Financing Proceeds in an aggregate amount, together with the
         aggregate amount of Net Financing Proceeds reinvested pursuant to
         Section 2.4(b)(iv), not to exceed $500,000,000 in ERCOT Assets so long
         as, pending such reinvestment, the Net Financing Proceeds are applied
         to repay Revolving Credit Loans or maintained as Collateral for the
         Credit Agreement Obligations, and (C) on the date the Borrower
         consummates such purchase of ERCOT Assets, it shall deliver a
         certificate of a Responsible Officer to the Administrative Agent
         certifying that all, or, subject to the immediately succeeding proviso,
         part of, such Net Financing Proceeds have been reinvested in accordance
         with the proviso of this clause (b)(iii) and, as a result, no mandatory
         prepayments are required under this clause (b)(iii); provided, further,
         that any Net Financing Proceeds not so reinvested shall be immediately
         applied to the prepayment of the Loans as set forth in this Section.

                  (iv) Upon the incurrence or issuance by the Borrower of any
         Junior Securities (other than Excepted Debt and other than in
         connection with the exercise of employee options or the RRI Warrants),
         the Borrower shall prepay an aggregate principal amount of Loans equal
         to 50% of all Net Financing Proceeds received therefrom, within three
         Business Days after the date of receipt thereof by the Borrower subject
         to the provisions of Section 2.4(b)(ix); provided, that so long as no
         Event of Default shall have occurred and be continuing, (A) if the
         Borrower intends to reinvest any Net Financing Proceeds in accordance
         with this proviso, it shall deliver written notice of such intention to
         the Administrative Agent on or prior to the Business Day immediately
         following the date on which Borrower receives such Net Financing
         Proceeds, (B) if the Borrower shall have delivered such notice, it may
         reinvest all or any portion of such Net Financing Proceeds in an
         aggregate amount, together with the aggregate amount of Net Financing
         Proceeds reinvested pursuant to Section 2.4(b)(iii), not to exceed
         $500,000,000 in ERCOT Assets so long as, pending such reinvestment, the
         Net Financing Proceeds are applied to repay Revolving Credit Loans or
         maintained as Collateral for the Credit Agreement Obligations, and (C)
         on the date the Borrower consummates such purchase of ERCOT Assets, it
         shall deliver a certificate of a Responsible Officer to the
         Administrative Agent certifying that all, or, subject to the
         immediately succeeding proviso, part of, such Net Financing Proceeds
         have been reinvested in accordance with the proviso of this clause
         (b)(iv) and, as a result, no mandatory prepayments are required under
         this clause (b)(iv); provided, further, that any Net Financing Proceeds
         not so reinvested shall be immediately applied to the prepayment of the
         Loans as set forth in this Section.

                                      -70-
<PAGE>

                  (v) Upon any Extraordinary Receipt received by or paid to or
         for the account of the Borrower, any of the Loan Parties or OPH or any
         of its Subsidiaries in respect of its property or assets, and not
         otherwise included in clause (i), (ii), (iii) or (iv) of this clause
         (b), the Borrower shall prepay an aggregate principal amount of Loans
         equal to 100% of all Net Casualty Proceeds received therefrom within
         three Business Days after the date of receipt thereof by the Borrower
         or such Subsidiary subject to the provisions of Section 2.4(b)(ix);
         provided, that with respect to proceeds of insurance and Condemnation
         awards (or payments in lieu thereof), (A) if the Borrower intends to
         reinvest the Net Casualty Proceeds thereof in accordance with this
         proviso, it shall deliver written notice of such intention to the
         Administrative Agent on or prior to the Business Day immediately
         following the date on which Borrower receives such Net Casualty
         Proceeds, (B) if the Borrower shall have delivered such notice, the Net
         Casualty Proceeds thereof may be reinvested, so long as such
         reinvestment is to restore, repair or replace the assets or property or
         purchase other assets with substantially the same utility and in the
         same line of business in respect of which such Net Casualty Proceeds
         were received, and so long as such reinvestment is consummated or
         irrevocably committed to be consummated within 365 days after the
         receipt of such Net Casualty Proceeds so long as, pending such
         reinvestment, the Net Casualty Proceeds are applied to repay Revolving
         Credit Loans or maintained as Collateral for the Credit Agreement
         Obligations, and (C) on the date the Borrower consummates or commits to
         consummate such restoration, repair or replacement or purchase, it
         shall deliver a certificate of a Responsible Officer to the
         Administrative Agent certifying that all, or, subject to the
         immediately succeeding proviso, part of, such Net Casualty Proceeds
         have been reinvested in accordance with the first proviso of this
         clause (b)(v) and, as a result, no mandatory prepayments are required
         under this clause (b)(v); provided, further, that any Net Casualty
         Proceeds not so reinvested (or such lesser percentage which represents
         the remaining portion of such proceeds not expended or committed
         pursuant to the foregoing and less any amounts required to pay for
         necessary remediation expenses with respect to a condition affecting
         the applicable property, to pay reasonable expenses incurred in
         connection with the closure of the applicable property and to pay any
         costs reasonably incurred in connection with such casualty event) shall
         be immediately applied to the prepayment of the Loans in accordance
         with the foregoing or, to the extent the Collateral Trustee is loss
         payee under any insurance policy (if applicable), the Borrower shall
         irrevocably direct the Collateral Trustee to transfer to the
         Administrative Agent to be applied (in each case, promptly, but in no
         event later than three (3) Business Days following receipt of such
         proceeds) as a prepayment of Loans in accordance with the foregoing;
         provided, that if an Event of Default shall have occurred and be
         continuing, all Net Casualty Proceeds which would otherwise be payable
         to the Borrower pursuant to this clause (b)(v) shall be paid to the
         Collateral Trustee and applied pursuant to the Collateral Trust
         Agreement; provided, however, that with respect to tangible property
         subject to any Permitted Encumbrance, no such prepayment shall be
         required to the extent that this clause (b)(v) would require an
         application of Net Casualty Proceeds that would violate or breach any
         of the provisions of the instruments or documents under which such
         Permitted Encumbrance arises or which governs the application of
         proceeds.

                  (vi) If, as a result of the Borrower reducing the Aggregate
         Revolving Credit Commitments, the Total Revolving Outstandings at any
         time exceed the Aggregate

                                      -71-
<PAGE>

         Revolving Credit Commitments then in effect, the Borrower shall
         immediately prepay Revolving Credit Loans and/or Cash Collateralize the
         L/C Obligations in an aggregate amount equal to such excess; provided,
         that the Borrower shall not be required to Cash Collateralize the L/C
         Obligations pursuant to this clause (b)(vi) unless after the prepayment
         in full of the Revolving Credit Loans the Total Revolving Credit
         Outstandings exceed the Aggregate Revolving Credit Commitments then in
         effect.

                  (vii) Each prepayment of Loans pursuant to clauses (i), (ii),
         (iii), (iv) or (v) of this clause (b) shall be applied, first, ratably
         to the Term Loans to the principal repayment installments thereof on a
         pro rata basis and, thereafter, to the Revolving Credit Loans in the
         manner set forth in clause (b)(viii).

                  (viii) Prepayments of the Revolving Credit Loans made pursuant
         to clause (i), (ii), (iii), (iv) or (v) of this clause (b) shall be
         applied, first, to prepay L/C Borrowings outstanding at such time until
         all such L/C Borrowings are paid in full, second, to prepay Revolving
         Credit Loans outstanding at such time until all such Revolving Credit
         Loans are paid in full and, third, to Cash Collateralize the L/C
         Obligations; and, in the case of prepayments of the Revolving Credit
         Loans required pursuant to clause (i), (ii), (iii), (iv) or (v) of this
         clause (b), the amount remaining, if any, after the prepayment in full
         of all Loans and L/C Borrowings outstanding at such time and the L/C
         Obligations have been Cash Collateralized (the sum of such prepayment
         amounts, cash collateralization amounts and remaining amount being,
         collectively, the "Reduction Amount") may be retained by the Borrower
         for use in the ordinary course of its business. Upon the drawing of any
         Letter of Credit, which has been Cash Collateralized, such funds shall
         be applied (without any further action by or notice to or from the
         Borrower or any other Person) to reimburse the applicable L/C Issuer or
         the Revolving Credit Lenders, as applicable.

                  (ix) Notwithstanding the provisions of Sections 2.4(b)(i),
         (ii), (iii), (iv) and (v), if any mandatory prepayments under any such
         clause of this clause (b) would result in the Borrower incurring any
         obligation (as determined in the reasonable judgment of the Borrower)
         under Section 3.5 as a result of any such mandatory prepayment of
         Eurodollar Loans prior to the last day of an Interest Period, so long
         as no Default has occurred and is continuing, the Borrower may defer
         the making of such mandatory prepayment until the earlier of (A) the
         last day of such Interest Period and (B) the date thirty days after the
         date on which such mandatory prepayment would otherwise have been
         required to be made; provided that, pending such mandatory prepayment,
         the related amounts shall be applied to repay Revolving Credit Loans or
         maintained as Collateral for the Credit Agreement Obligations.

                  (x) Notwithstanding anything to the contrary contained herein,
         all of the foregoing provisions of Section 2.4(b) shall be suspended
         following the Release Date; provided, that (i) no Default or Event of
         Default shall have occurred and been existing as of the Release Date
         and (ii) if, after the Investment Grade Rating Date, the ratings
         assigned to the Secured Notes by both Moody's and S&P should decline to
         below an Investment Grade Rating, all of the foregoing provisions of
         Section 2.4(b) shall be reinstituted as of and from the date of such
         rating decline.

                                      -72-
<PAGE>

         2.5 TERMINATION OR REDUCTION OF COMMITMENTS.

         (a) Optional. The Borrower may, upon notice to the Administrative
Agent, terminate the unused portion of the Revolving Credit Commitments, or from
time to time permanently reduce the unused portion of the Revolving Credit
Commitments; provided, that (i) any such notice shall be received by the
Administrative Agent not later than 11:00 a.m. five Business Days prior to the
date of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof, (iii) the Borrower shall not terminate or reduce the unused portions of
the Revolving Credit Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Outstanding Amount of Revolving Credit
Loans and L/C Obligations would exceed the Aggregate Revolving Credit
Commitments.

         (b) Mandatory. The Term Commitment shall be automatically and
permanently reduced to zero on the Closing Date (after giving effect to the
Borrowing of Term Loans).

         (c) Application of Commitment Reductions; Payment of Fees. The
Administrative Agent will promptly notify the Lenders of any termination or
reduction of unused portions of the Term Commitment or the unused Revolving
Credit Commitment under this Section. Each reduction of the unused portion of
the Term Commitments pursuant to Section 2.5(a) shall be applied ratably to the
Term Loans and to the principal repayment installments thereof on a pro rata
basis. Upon any reduction of unused Commitments, the Commitment of each Lender
shall be reduced by such Lender's Pro Rata Share of the amount by which such
Commitment is reduced. All fees accrued until the effective date of any
termination of the Aggregate Commitments shall be paid on the effective date of
such termination.

         2.6 REPAYMENT OF LOANS.

         (a) Term Loans. The Borrower shall repay to the Administrative Agent
for the ratable account of the Term Lenders on each Quarterly Payment Date the
aggregate principal amount of Term Loans set forth opposite such Quarterly
Payment Date (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.4);
provided, that the final principal repayment installment of the Term Loans shall
be repaid on the Term Loan Maturity Date in an amount equal to the aggregate
principal amount of all Term Loans outstanding on such date:

<TABLE>
<CAPTION>
      Quarterly Payment Date                 Amount of Term Loan Repayment
--------------------------------------------------------------------------------
<S>                                          <C>
April 1, 2005 through (and including)        $3,250,000
January 1, 2010

April 30, 2010                               The remaining amount of Term Loans
</TABLE>

                                      -73-
<PAGE>

         (b) Revolving Credit Loans. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Revolving Credit Termination Date the aggregate principal amount of all
Revolving Credit Loans outstanding on such date.

         2.7 INTEREST.

         (a) Subject to the provisions of clause (b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Margin.

         (b)      (i) During all times that an Event of Default under Section
9.1(a) shall have occurred and be continuing, the Borrower shall pay interest on
the principal amount of all outstanding Loans and Unreimbursed Amounts and all
overdue interest, fees and other amounts, at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

                  (ii) Accrued and unpaid interest on past due amounts
         (including interest on past due interest) shall be due and payable upon
         demand.

         (c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.

         2.8 FEES. In addition to certain fees described in clauses (i) and (j)
of Section 2.3:

         (a) Commitment Fee. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share, a
commitment fee equal to the Applicable Margin times the actual daily amount by
which the Aggregate Commitments for Revolving Credit Loans exceed the sum of (i)
the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding Amount
of L/C Obligations; provided, that any commitment fee accrued with respect to
any of the Commitments of a Defaulting Lender during the period prior to the
time such Lender became a Defaulting Lender and unpaid at such time shall not be
payable by the Borrower so long as such Lender shall be a Defaulting Lender
except to the extent that such commitment fee shall otherwise have been due and
payable by the Borrower prior to such time; provided, further, that no
commitment fee shall accrue on any of the Commitments of a Defaulting Lender so
long as such Lender shall be a Defaulting Lender. The commitment fee shall
accrue at all times during the Availability Period, including at any time during
which one or more of the conditions in Article IV is not met, and shall be due
and payable quarterly in arrears on each Quarterly Payment Date, commencing with
the first such date to occur after the Closing Date, and on the Revolving
Commitment Termination Date. The commitment fee shall be calculated quarterly in
arrears, and if there is any change in the Applicable Margin during any quarter,
the actual daily amount shall be computed and multiplied

                                      -74-
<PAGE>

by the Applicable Margin separately for each period during such quarter that
such Applicable Margin was in effect.

         (b) Draw-Down Fee. The Borrower shall pay draw-down fees to the
Administrative Agent for the account of each Revolving Credit Lender in
accordance with its Pro Rata Share, as follows:

                  (i) within five Business Days following the date of
         consummation by the Borrower or any of its Subsidiaries of any
         acquisition of Permitted ERCOT Assets, a draw-down fee equal to 0.50%
         of the amount by which the Acquisition Consideration paid for all
         acquisitions of Permitted ERCOT Assets on or after the Closing Date
         through such date exceeds the Funded ERCOT Amount as of such date; and

                  (ii) on the 180th day following the date of consummation by
         the Borrower or any of its Subsidiaries of any acquisition of Permitted
         ERCOT Assets, a draw-down fee equal to 1.50% of the amount by which the
         Acquisition Consideration paid for all acquisitions of Permitted ERCOT
         Assets on or after the Closing Date through such date exceeds the
         Funded ERCOT Amount as of such date.

         (c) Other Fees. (i) The Borrower shall pay to the Agents and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times specified in the Fee Letter. Such fees shall be fully earned when
paid and shall not be refundable for any reason whatsoever.

                  (ii) The Borrower shall pay to the Administrative Agent such
         fees as shall have been separately agreed upon in writing in the
         amounts and at the times so specified. Such fees shall be fully earned
         when paid and shall not be refundable for any reason whatsoever.

         2.9 COMPUTATION OF INTEREST AND FEES. All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided, that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.11(a),
bear interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

         2.10 EVIDENCE OF DEBT.

         (a) The Credit Extensions made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Credit Extensions made by the Lenders to the Borrower
and the interest and payments thereon. Any failure to so record or

                                      -75-
<PAGE>

any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Credit Agreement Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrower shall
promptly execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender's Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

         (b) In addition to the accounts and records referred to in clause (a),
each Lender and the Administrative Agent shall maintain in accordance with its
usual practice accounts or records evidencing the purchases and sales by such
Lender of participations in Letters of Credit. In the event of any conflict
between the accounts and records maintained by the Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of the Administrative Agent shall control in the absence of manifest
error.

         (c) Entries made in good faith by the Administrative Agent in the
Register pursuant to Section 2.10(a), and by each Lender in its account or
accounts pursuant to Section 2.10(a), shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement and the other
Loan Documents, absent manifest error; provided, that the failure of the
Administrative Agent or such Lender to make an entry, or any finding that an
entry is incorrect, in the Register or such account or accounts shall not limit
or otherwise affect the obligations of the Borrower under this Agreement and the
other Loan Documents.

         2.11 PAYMENTS GENERALLY; ADMINISTRATIVE AGENT'S CLAWBACK.

         (a) General. All payments to be made by the Borrower shall be made
without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account of
the respective Lenders to which such payment is owed, at the Administrative
Agent's Office in Dollars and in immediately available funds not later than 2:00
p.m. on the date specified herein. The Administrative Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as
provided herein) of such payment in like funds as received by wire transfer to
such Lender's Lending Office. All payments received by the Administrative Agent
after 2:00 p.m. shall be deemed received on the next succeeding Business Day and
any applicable interest or fee shall continue to accrue. If any payment to be
made by the Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

         (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's

                                      -76-
<PAGE>

share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with Section 2.2 and
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount in immediately available
funds with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to
the Administrative Agent, at (A) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays its share of the applicable Borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender's Loan included in
such Borrowing. Any payment by the Borrower shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

                  (ii) Payments by Borrower; Presumptions by Administrative
         Agent. Unless the Administrative Agent shall have received notice from
         the Borrower prior to the date on which any payment is due to the
         Administrative Agent for the account of the Lenders or an L/C Issuer
         hereunder that the Borrower will not make such payment, the
         Administrative Agent may assume that the Borrower has made such payment
         on such date in accordance herewith and may, in reliance upon such
         assumption, distribute to the Lenders or such L/C Issuer, as the case
         may be, the amount due. In such event, if the Borrower has not in fact
         made such payment, then each of the Lenders or such L/C Issuer, as the
         case may be, severally agrees to repay to the Administrative Agent
         forthwith on demand the amount so distributed to such Lender or such
         L/C Issuer, in immediately available funds with interest thereon, for
         each day from and including the date such amount is distributed to it
         to but excluding the date of payment to the Administrative Agent, at
         the greater of the Federal Funds Rate and a rate determined by the
         Administrative Agent in accordance with banking industry rules on
         interbank compensation.

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

         (c) Failure to Satisfy Conditions Precedent. If any Lender makes
available to the Administrative Agent funds for any Loan to be made by such
Lender as provided in the foregoing provisions of this Article, and such funds
are not made available to the Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

                                      -77-
<PAGE>

         (d) Obligations of Lenders Several. The obligations of the Lenders
hereunder to make Loans, to fund participations in Letters of Credit and to make
payments pursuant to Section 11.4(c) are several and not joint. The failure of
any Lender to make any Loan, to fund any such participation or to make any
payment under Section 11.4(c) on any date required hereunder shall not relieve
any other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan, to purchase its participation or to make its payment under Section
11.4(c).

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

         2.12 SHARING OF PAYMENTS BY LENDERS. If any Lender shall, by exercising
any right of setoff or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of the Loans made by it or the
participations in L/C Obligations held by it resulting in such Lender's
receiving payment of a proportion of the aggregate amount of such Loans or
participations and accrued interest thereon greater than its pro rata share
thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and subparticipations in L/C
Obligations of the other Lenders, or make such other adjustments as shall be
equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them;
provided, that:

                  (i) if any such participations or subparticipations are
         purchased and all or any portion of the payment giving rise thereto is
         recovered, such participations or subparticipations shall be rescinded
         and the purchase price restored to the extent of such recovery, without
         interest; and

                  (ii) the provisions of this Section shall not be construed to
         apply to (x) any payment made by the Borrower pursuant to and in
         accordance with the express terms of this Agreement or (y) any payment
         obtained by a Lender as consideration for the assignment of or sale of
         a participation in any of its Loans or subparticipations in L/C
         Obligations to any assignee or participant, other than to the Borrower
         or any Subsidiary thereof (as to which the provisions of this Section
         shall apply).

         Each Loan Party consents to the foregoing and agrees, to the extent it
may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

                                      -78-
<PAGE>

                                  ARTICLE III.
                     TAXES, YIELD PROTECTION AND ILLEGALITY

         3.1 TAXES.

         (a) Payments Free of Taxes. Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes; provided, that if the Borrower shall be
required by applicable law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, each Lender or each L/C Issuer, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall timely pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.

         (b) Payment of Other Taxes by the Borrower. Without limiting the
provisions of clause (a) above, the Borrower shall timely pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.

         (c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Lender and each L/C Issuer, within 10 days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or such L/C Issuer, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to the Borrower by a Lender or
an L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or an L/C
Issuer, shall be conclusive absent manifest error.

         (d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

         (e) Status of Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the

                                      -79-
<PAGE>

Borrower or the Administrative Agent, shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.

         Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States, any Foreign Lender
shall deliver to the Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

                  (i) duly completed copies of Internal Revenue Service Form
         W-8BEN claiming eligibility for benefits of an income tax treaty to
         which the United States is a party,

                  (ii) duly completed copies of Internal Revenue Service Form
         W-8ECI,

                  (iii) in the case of a Foreign Lender claiming the benefits of
         the exemption for portfolio interest under section 881(c) of the Code,
         (x) a certificate to the effect that such Foreign Lender is not (A) a
         "bank" within the meaning of section 881(c)(3)(A) of the Code, (B) a
         "10 percent shareholder" of the Borrower within the meaning of section
         881(c)(3)(B) of the Code, or (C) a "controlled foreign corporation"
         described in section 881(c)(3)(C) of the Code and (y) duly completed
         copies of Internal Revenue Service Form W-8BEN, or

                  (iv) any other form prescribed by applicable law as a basis
         for claiming exemption from or a reduction in United States Federal
         withholding tax duly completed together with such supplementary
         documentation as may be prescribed by applicable law to permit the
         Borrower to determine the withholding or deduction required to be made.

         (f) Treatment of Certain Refunds. If the Administrative Agent, any
Lender or any L/C Issuer determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent, such Lender or such L/C Issuer, as the
case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent, such Lender or such L/C
Issuer, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or such L/C Issuer in the
event the Administrative Agent, such Lender or such L/C Issuer is required to
repay such refund to such Governmental Authority. This clause shall not be
construed to require the Administrative Agent, any Lender or any L/C Issuer to
make available

                                      -80-
<PAGE>

its tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.

         3.2 ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.

         3.3 INABILITY TO DETERMINE RATES. If the Required Lenders determine
that for any reason in connection with any request for a Eurodollar Rate Loan or
a conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the obligation of the Lenders
to make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders) revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending request
for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for a
Borrowing of Base Rate Loans in the amount specified therein.

         3.4 INCREASED COSTS; CAPITAL ADEQUACY; RESERVES ON EURODOLLAR RATE
LOANS.

         (a) Increased Costs Generally. If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit, compulsory loan, insurance charge or similar requirement
         against assets of, deposits with or for the account of, or credit
         extended or participated in by, any Lender (except any reserve
         requirement contemplated by Section 3.4(e)) or any L/C Issuer;

                  (ii) subject any Lender or any L/C Issuer to any tax of any
         kind whatsoever with respect to this Agreement, any Letter of Credit,
         any participation in a Letter of

                                      -81-
<PAGE>

         Credit or any Eurodollar Rate Loan made by it, or change the basis of
         taxation of payments to such Lender or such L/C Issuer in respect
         thereof (except for Indemnified Taxes or Other Taxes covered by Section
         3.1 and the imposition of, or any change in the rate of, any Excluded
         Tax payable by such Lender or such L/C Issuer); or

                  (iii) impose on any Lender or any L/C Issuer or the London
         interbank market any other condition, cost or expense affecting this
         Agreement or Eurodollar Rate Loans made by such Lender or any Letter of
         Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
such L/C Issuer of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or such L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or such L/C Issuer, the Borrower will
pay to such Lender or such L/C Issuer, as the case may be, such additional
amount or amounts as will compensate such Lender or such L/C Issuer, as the case
may be, for such additional costs incurred or reduction suffered.

         (b) Capital Requirements. If any Lender or any L/C Issuer determines
that any Change in Law affecting such Lender or such L/C Issuer or any Lending
Office of such Lender or such Lender's or such L/C Issuer's holding company, if
any, regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or such L/C Issuer's capital or on the capital
of such Lender's or such L/C Issuer's holding company, if any, as a consequence
of this Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such L/C Issuer, to a level below that which such Lender or
such L/C Issuer or such Lender's or such L/C Issuer's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's or
such L/C Issuer's policies and the policies of such Lender's or such L/C
Issuer's holding company with respect to capital adequacy), then from time to
time the Borrower will pay to such Lender or such L/C Issuer, as the case may
be, such additional amount or amounts as will compensate such Lender or such L/C
Issuer or such Lender's or such L/C Issuer's holding company for any such
reduction suffered.

         (c) Certificates for Reimbursement. A certificate of a Lender or an L/C
Issuer setting forth the amount or amounts necessary to compensate such Lender
or such L/C Issuer or its holding company, as the case may be, as specified in
clause (a) or (b) of this Section and delivered to the Borrower shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such L/C
Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.

         (d) Delay in Requests. Failure or delay on the part of any Lender or
any L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender's or such L/C Issuer's
right to demand such compensation; provided, that the Borrower shall not be
required to compensate a Lender or such L/C Issuer pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than six months prior to the date that such Lender or such L/C
Issuer, as the case may be, notifies

                                      -82-
<PAGE>

the Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender's or such L/C Issuer's intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

         (e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as "Eurocurrency liabilities"), additional interest
on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall
be due and payable on each date on which interest is payable on such Loan;
provided, that the Borrower shall have received at least 10 days' prior notice
(with a copy to the Administrative Agent) of such additional interest from such
Lender. If a Lender fails to give notice 10 days prior to the relevant Interest
Payment Date, such additional interest shall be due and payable 10 days from
receipt of such notice.

         3.5 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

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

         (b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Loan) to prepay, borrow, continue or convert any Loan
other than a Base Rate Loan on the date or in the amount notified by the
Borrower; or

         (c) any assignment of a Eurodollar Rate Loan on a day other than the
last day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 11.13;

excluding any loss of anticipated profits, but including any loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
such Loan or from fees payable to terminate the deposits from which such funds
were obtained. The Borrower shall also pay any customary administrative fees
charged by such Lender in connection with the foregoing.

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

         3.6 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.

         (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.4, or the Borrower is required to pay any
additional amount to any Lender or any

                                      -83-
<PAGE>

Governmental Authority for the account of any Lender pursuant to Section 3.1, or
if any Lender gives a notice pursuant to Section 3.2, then such Lender shall use
reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.1 or 3.4, as the case may be, in the future, or
eliminate the need for the notice pursuant to Section 3.2, as applicable, and
(ii) in each case, would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

         (b) Replacement of Lenders. If any Lender requests compensation under
Section 3.4, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.1, the Borrower may replace such Lender in accordance with Section
11.13.

         3.7 SURVIVAL. All of the Borrower's obligations under this Article
shall survive termination of the Aggregate Commitments and repayment of all
other Credit Agreement Obligations hereunder.

                                   ARTICLE IV.
                    CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

         4.1 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of each L/C
Issuer and each Lender to make its initial Credit Extension hereunder is subject
to satisfaction of the following conditions precedent:

         (a) The Administrative Agent's receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of certificates
of governmental officials, a recent date before the Closing Date) and each in
form and substance satisfactory to the Administrative Agent and each of the
Lenders:

                  (i) executed counterparts of this Agreement, sufficient in
         number for distribution to the Administrative Agent, each Lender and
         the Borrower;

                  (ii) a Note executed by the Borrower in favor of each Lender
         requesting a Note;

                  (iii) such certificates of resolutions or other action,
         incumbency certificates and/or other certificates of Responsible
         Officers of each Loan Party as the Administrative Agent may require
         evidencing the identity, authority and capacity of each Responsible
         Officer thereof authorized to act as a Responsible Officer in
         connection with this Agreement and the other Loan Documents to which
         such Loan Party is a party;

                  (iv) such documents and certifications as the Administrative
         Agent may reasonably require to evidence that each Loan Party is duly
         organized or formed, and that each of the Borrower and its Subsidiaries
         is validly existing, in good standing and

                                      -84-
<PAGE>

         qualified to engage in business in each jurisdiction where its
         ownership, lease or operation of properties or the conduct of its
         business requires such qualification, except to the extent that failure
         to do so could not reasonably be expected to have a Material Adverse
         Effect;

                  (v) a favorable opinion of Bracewell and Patterson, L.L.P.,
         counsel to the Loan Parties, addressed to the Administrative Agent and
         each Lender, in form and substance reasonably satisfactory to the
         Administrative Agent;

                  (vi) favorable opinions of local counsel for the Loan Parties
         in jurisdictions in which the Closing Date Mortgaged Properties are
         located, including, among other things, opinions with respect to the
         enforceability and perfection of the Mortgages covering the Closing
         Date Mortgaged Properties and any related fixture filings, in form and
         substance reasonably satisfactory to the Administrative Agent;

                  (vii) a favorable opinion of general counsel to the Loan
         Parties, OPMW and OPNY, in form and substance reasonably satisfactory
         to the Administrative Agent; and

                  (viii) a certificate signed by a Responsible Officer of the
         Borrower certifying (A) that the conditions specified in Sections
         4.2(a) and (b) have been satisfied, and (B) that there has been no
         event or circumstance since December 31, 2003 that, except as disclosed
         in any Exchange Act filings made on or before five Business Days before
         the Closing Date, has had or could be reasonably expected to have,
         either individually or in the aggregate, a Material Adverse Effect;

         (b) The Collateral Agent's receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party:

                  (i) With respect to the personal property Collateral:

                           (A) an amendment to the Security Agreement, executed
                  by the Collateral Trustee, making certain modifications to the
                  Security Agreement with respect to this Agreement, in form and
                  substance reasonably satisfactory to the Administrative Agent;

                           (B) an amendment to the Bank Security Agreement,
                  making certain modifications to the Bank Security Agreement
                  with respect to this Agreement, in form and substance
                  reasonably satisfactory to the Administrative Agent;

                           (C) delivery of each originally executed Orion Note,
                  together with undated note powers executed in blank with
                  respect thereto;

                           (D) UCC-3 amendments, restating the collateral
                  description in the UCC financing statements relating to the
                  Security Agreement as necessary in connection with the
                  amendment referenced above, in form and substance reasonably
                  satisfactory to the Administrative Agent; and

                                      -85-
<PAGE>

                           (E) UCC-3 amendments, restating the collateral
                  description in the UCC financing statements relating to the
                  Bank Security Agreement as necessary in connection with the
                  amendment referenced above, in form and substance reasonably
                  satisfactory to the Administrative Agent.

                  (ii) Recorded copies of the Existing Mortgages with respect to
         each of the properties indicated on Schedule 5.8(c) hereto (the
         "Closing Date Mortgaged Properties"), which, upon the Closing Date,
         will create valid and subsisting Liens on the Closing Date Mortgaged
         Properties in favor of the Collateral Agent for the benefit of the
         Secured Parties, together with:

                           (A) evidence that (i) counterparts of the Mortgage
                  Supplements have been duly executed, acknowledged and
                  delivered for filing in the filing or recording offices in
                  which each Existing Mortgage being supplemented by an
                  associated Mortgage Supplement was filed and (ii) all filing
                  and recording taxes, if any, and fees have been paid or will
                  be paid upon recordation or filing of the Mortgage
                  Supplements; and

                           (B) pro forma modification endorsements that the
                  Title Companies have agreed to issue to the Collateral Trustee
                  that, when issued by the Title Companies, will provide the
                  Collateral Trustee (for benefit of the Secured Parties in
                  accordance with the Collateral Trust Agreement) with
                  mortgagee's title insurance through the Closing Date under the
                  Existing Title Policies insuring that the Existing Mortgages
                  (not including the Existing Florida Mortgages), as
                  supplemented by the Mortgage Supplements, create a first
                  priority Lien (subject to Permitted Encumbrances) on the
                  Closing Date Mortgaged Properties (not including the Florida
                  Mortgaged Properties) securing the Parity Secured Obligations;
                  provided that the coverage effectuated by the Title Companies'
                  issuance of the modification endorsements shall be the
                  substantially the same as or better than the coverage under
                  the Existing Title Policies prior to the date of issuance of
                  the modification endorsements, except for the addition of
                  Liens (as defined in and permitted under the Existing Credit
                  Agreement) arising between the date the Existing Title
                  Policies were last modified by the Title Companies and the
                  Closing Date;

                  (iii) a duly executed and acknowledged Florida Mortgage
         Supplement with respect to each Existing Florida Mortgage, delivered
         into escrow on terms and conditions reasonably satisfactory to the
         Agents and the Borrower (which terms and conditions shall include
         provision for the release from escrow and appropriate recording of each
         such Florida Mortgage Supplement in accordance with and in the
         circumstances contemplated by Section 6.14);

                  (iv) such tax and Uniform Commercial Code lien searches as the
         Administrative Agent may reasonably request and demonstrating that no
         other filings, encumbrances or transfers (other than in connection with
         Permitted Liens and Permitted Encumbrances) with regard to any
         Collateral are of record in any jurisdiction in which it shall be
         reasonably necessary or desirable for the Collateral Agent or
         Collateral Trustee,

                                      -86-
<PAGE>

         as applicable, to make a Uniform Commercial Code filing in order to
         provide the Collateral Agent or Collateral Trustee, as applicable, (for
         the benefit of the Secured Parties) with a perfected security interest
         in the Collateral and if applicable, evidence reasonably satisfactory
         to the Administrative Agent that any Liens indicated by such financing
         statements (or similar documents) that are not permitted under this
         Agreement, have been or will be released on or prior to the Closing
         Date; and

                  (v) such other assurances, certificates, documents, consents
         or opinions as the Administrative Agent reasonably may require.

         (c) The Borrower shall have received Net Financing Proceeds from the
issuance of New Senior Notes (i) that, together with the aggregate principal
amount of Term Loans made on the Closing Date, is sufficient to refinance and
replace the obligations under the Existing Credit Agreement, but in any event
not to exceed, when aggregated with the Net Financing Proceeds from the
incurrence of additional Permitted PEDFA Bond Indebtedness for the Seward Series
2004A Bonds, $2,500,000,000 and (ii) on terms and conditions and pursuant to
documentation reasonably satisfactory to the Agents and the Borrower.

         (d) Any fees required to be paid on or before the Closing Date shall
have been paid.

         (e) Any accrued interest, fees and other costs and expenses required to
be paid under the Existing Credit Agreement on or before the Closing Date shall
have been paid.

         (f) Unless waived by the Administrative Agent, the Borrower shall have
paid all fees, charges and disbursements of counsel to the Administrative Agent
to the extent invoiced prior to or on the Closing Date.

         (g) The Closing Date shall have occurred on or before December 31,
2004.

         (h) All governmental authorizations and all third party consents and
approvals necessary in connection with the Loan Documents shall have been
obtained (without the imposition of any conditions that are not acceptable to
the Lenders) and shall remain in effect.

         (i) Since December 31, 2003, there shall not have occurred any event,
development, condition or circumstance not disclosed in the Borrower's 2003
report filed on SEC Form 10-K, first-, second-, or third-quarter 2004 reports
filed on SEC Form 10-Q, or any report filed on SEC form 8-K at least five
Business Days before the Closing Date, that shall have had a Material Adverse
Effect.

         (j) The OPMW Credit Facility shall have been amended and restated in
its entirety, and the aggregate outstanding principal amount of the OPMW Credit
Facility shall have been refinanced in full, by the OPMW Refinancing Note, and
each Orion Note shall have been executed and delivered, in each case on terms
and conditions (including with respect to collateral securing the obligations
thereunder) and pursuant to documentation reasonably satisfactory to the Agents
and the Borrower. It is acknowledged and agreed that the collateral for the OPMW
Refinancing Note will include real property only if the lenders under the OPMW
Credit Facility assign the existing mortgages securing such facility to the
Collateral Agent for the benefit of the Lenders. All hedging obligations of OPMW
arising under or in connection with the OPMW

                                      -87-
<PAGE>

Credit Facility owing to lenders of OPMW shall have been terminated and
arrangements satisfactory to the counterparties thereunder to pay such
obligations in full shall have been made. The Orion Guaranty and the Orion
Security Agreement shall each have been executed and delivered, in each case on
terms and conditions reasonably satisfactory to the Agents and the Borrower.

         Without limiting the generality of the provisions of Section 11.4, for
purposes of determining compliance with the conditions specified in this
Section, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

         4.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender
to honor any Request for Credit Extension (including the initial Credit
Extensions hereunder, but excluding any Borrowing Notice requesting only a
conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loan
and other than a Revolving Credit Loan to reimburse a drawing under a Letter of
Credit as provided herein) is subject to the following conditions precedent:

         (a) The representations and warranties of the Borrower and each other
Loan Party contained in Article V or any other Loan Document, or which are
contained in any document furnished at any time under or in connection herewith
or therewith, shall be true and correct in all material respects on and as of
the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date (provided, that representations and warranties which have Material Adverse
Effect qualifiers shall be true and correct in all respects to the extent such
Material Adverse Effect qualifier is applicable thereto), and except that for
purposes of this Section, the representations and warranties contained in
clauses (a) and (b) of Section 5.5 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section
6.1.

         (b) No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.

         (c) The Administrative Agent and, if applicable, each L/C Issuer shall
have received a Request for Credit Extension in accordance with the requirements
hereof.

         Each Request for Credit Extension (other than a Borrowing Notice
requesting only a conversion of Loans to the other Type or a continuation of
Eurodollar Rate Loans and other than a Revolving Credit Loan to reimburse a
drawing under a Letter of Credit as provided herein) submitted by the Borrower
shall be deemed to be a representation and warranty that the conditions
specified in Sections 4.2(a) and (b) have been satisfied on and as of the date
of the applicable Credit Extension.

                                      -88-
<PAGE>

                                   ARTICLE V.
                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Administrative Agent and
the Lenders that:

         5.1 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan
Party and each Subsidiary thereof (a) is duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to (i)
own its assets and carry on its business and (ii) execute, deliver and perform
its obligations under the Loan Documents to which it is a party, (c) is duly
qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws; except in each case referred to in clause (b)(i), (c)
or (d), to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.

         5.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any
payment to be made under (i) any Contractual Obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Subsidiaries, where such Contractual Obligation (x) evidences Indebtedness of
the Borrower or any of its Subsidiaries or (y) is identified in the exhibit list
from time to time in filings made by the Borrower with the SEC as material to
the Borrower, or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject
that could reasonably be expected to have a Material Adverse Effect; (c) violate
any Law that could reasonably be expected to have a Material Adverse Effect; or
(d) result in the creation of any Lien other than a Permitted Lien. Each Loan
Party and each Subsidiary thereof is in compliance with all Contractual
Obligations referred to in clause (b)(i), except to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect.

         5.3 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (i) the execution, delivery or performance by any Loan Party of
this Agreement or any other Loan Document, (ii) the grant by any Loan Party of
the Liens granted by it pursuant to the Loan Documents, or (iii) the perfection
or maintenance of the Liens created under the Loan Documents (including the
first priority nature thereof) (other than the filing of UCC-1 Financing
Statements, the Mortgages, and the Assignments of Leases and Rents), all of
which have been duly obtained, taken, given or made and are in full force and
effect.

         5.4 BINDING EFFECT. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered

                                      -89-
<PAGE>

will constitute, a legal, valid and binding obligation of such Loan Party,
enforceable against each Loan Party that is party thereto in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and by general principles of equity, whether such enforceability is considered
in a proceeding at law or in equity.

         5.5 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.

         (a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein and (ii) fairly present in all material
respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as of the date thereof and their results of operations
and cash flows for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein.

         (b) The unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries dated September 30, 2004, and the related consolidated
statements of income and cash flows and the related notes and supplemental
information for the Fiscal Quarter ended on that date (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, and (ii) fairly present in all
material respects the financial condition of the Borrower and its Subsidiaries
as of the date thereof and their results of operations and cash flows for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.

         (c) Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, except as
disclosed in the Borrower's Exchange Act filings made on or before the five
Business Days before the Closing Date, that has had or could reasonably be
expected to have a Material Adverse Effect.

         5.6 LITIGATION. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of its Subsidiaries or against any
of their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) except as disclosed in the Borrower's Exchange Act filings made
on or before the five Business Days before the Closing Date, either individually
or in the aggregate, if determined adversely, could reasonably be expected to
have a Material Adverse Effect.

         5.7 NO DEFAULT. No Default has occurred and is continuing or would
result from the consummation of the transactions contemplated by this Agreement
or any other Loan Document.

         5.8 OWNERSHIP OF PROPERTY; LIENS.

         (a) Each of the Borrower and each Subsidiary has good and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for Permitted
Liens and Permitted Encumbrances and such

                                      -90-
<PAGE>

defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

         (b) The property of the Borrower and its Restricted Subsidiaries is
subject to no Liens, other than Permitted Liens and Permitted Encumbrances.

         (c) Set forth on Schedule 5.8(c) hereto is a complete and accurate list
of all real property interests owned as of the Closing Date by the Borrower and
its Subsidiaries which are material to their business and are reflected on the
financial statements referred to in Section 5.5 (other than such properties or
assets disposed of since the date of such financial statements), showing as of
the date hereof the street address, county or other relevant jurisdiction,
state, and record owner thereof. Except as set forth on Schedule 5.8(c), the
Borrower and each Subsidiary has good, marketable and insurable fee simple title
to such real property, free and clear of all Liens, other than Permitted Liens
and Permitted Encumbrances.

         5.9 ENVIRONMENTAL MATTERS.

         (a) Borrower and its Subsidiaries have been and are in compliance with
all Environmental Laws, including obtaining and complying with all required
environmental permits, other than non-compliances that could not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.

         (b) Neither the Borrower nor any of its Subsidiaries nor any property
currently or, to the knowledge of Borrower or any of its Subsidiaries,
previously owned, operated or leased by or for Borrower or any of its
Subsidiaries is subject to any pending or, to the knowledge of Borrower or any
of its Subsidiaries, threatened, claim, order, agreement, notice of violation,
notice of potential liability or is the subject of any pending or threatened
proceeding or governmental investigation under or pursuant to Environmental Laws
other than those that could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

         (c) Except as set forth on Schedule 5.9(c), as of the Closing Date
neither the Borrower nor any of its Subsidiaries has a treatment, storage or
disposal facility requiring a permit under the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., the regulations thereunder or any
state analog.

         (d) There are no facts, circumstances or conditions known to Borrower
or any of its Subsidiaries arising out of or relating to the operations or
ownership of Borrower or any of its Subsidiaries or of the property owned,
operated or leased by Borrower or any of its Subsidiaries that are not
specifically included in the financial information furnished to the Lenders that
could be reasonably expected to result in any Environmental Liabilities that
could reasonably be expected to have a Material Adverse Effect, unless such
liabilities are (i) covered by environmental liability insurance, (ii) subject
to an indemnity from any Governmental Authority, or (iii) subject to an
indemnity satisfactory to the Borrower from a Person that is not an Affiliate of
the Borrower that the Borrower has determined in good faith is appropriately
credit worthy in relation to the potential amount of such liabilities.

                                      -91-
<PAGE>

         (e) As of the Closing Date, no environmental Lien has attached to any
property of Borrower or its Subsidiaries and, to the knowledge of Borrower or
its Subsidiaries, no facts, circumstance or conditions exist that could,
individually or in the aggregate, reasonably be expected to result in an
environmental Lien that would have a Material Adverse Effect.

         (f) Neither Borrower nor any of its Subsidiaries is undertaking, and
has not completed, either individually or together with other potentially
responsible parties, any investigation or assessment or Remedial Action relating
to any actual or threatened release of Hazardous Materials at any site, location
or operation, either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law that could reasonably be
expected to have a Material Adverse Effect; and all Hazardous Materials
generated, used, treated, handled or stored at, or transported to or from, any
property currently or formerly owned or operated by Borrower or any of its
Subsidiaries have been disposed of in a manner that could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.

         5.10 INSURANCE. The properties of the Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Borrower, in such amounts (after giving effect to any self-insurance
compatible with the following standards), with such deductibles and covering
such risks as are customarily carried by companies of same or similar size
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates.

         5.11 TAXES. The Borrower and its Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed after
giving effect to applicable extensions, except for tax returns or reports the
failure of which to timely file could not reasonably be expected to have a
Material Adverse Effect, and have paid all Federal, state and other material
taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets otherwise due and payable, except
those which are being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Borrower
or any Subsidiary that would, if made, have a Material Adverse Effect. Except
for (y) the Tax Sharing Agreement referred to in clause (13) of Permitted
Investments and (z) the Tax Allocation Agreement dated as of December 31, 2000,
by and among Reliant Energy, Inc. (now known as Centerpoint Energy, Inc.) and
its affiliates parties thereto and Reliant Resources, Inc. and its affiliates
parties thereto, on the Closing Date, neither any Loan Party nor any Subsidiary
thereof is party to any tax sharing agreement.

         5.12 ERISA COMPLIANCE.

         (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions (both quarterly and annually) to each Plan subject to
Section 412 of the Code, and

                                      -92-
<PAGE>

no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

         (b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

         (c) (i) No ERISA Event has occurred or is reasonably expected to occur
that could reasonably be expected to have a Material Adverse Effect; (ii) no
Pension Plan has any Unfunded Pension Liability, whether or not waived, that
could reasonably be expected to have a Material Adverse Effect, and no
application for a waiver of the minimum funding standard has been filed with
respect to any Pension Plan; (iii) neither any Loan Party nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA) that could reasonably be expected to
have a Material Adverse Effect; (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan that could reasonably be expected to have a
Material Adverse Effect; and (v) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be subject to Sections 4069 or 4212(c)
of ERISA.

         5.13 SUBSIDIARIES; EQUITY INTERESTS. On the Closing Date, the Borrower
has no Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries
have been validly issued, are fully paid and nonassessable and are owned in the
amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens
except those created under the Loan Documents and the Permitted Liens. On the
Closing Date, the Borrower and its Subsidiaries have no equity investments in
any other Person other than those specifically disclosed in Part (b) of Schedule
5.13. All of the outstanding Equity Interests in the Borrower have been validly
issued and are fully paid and nonassessable. Set forth on Part (c) of Schedule
5.13 is a complete and accurate list of all Loan Parties, showing as of the
Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the
address of its principal place of business and its U.S. taxpayer identification
number.

         5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT.

         (a) The Borrower is not engaged and will not engage, principally or as
one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock and no
proceeds of any Borrowings or drawings under any Letter of Credit will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock.

                                      -93-
<PAGE>

         (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary (i) is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act or any foreign, federal or local statute or
any other Law of the United States of America or any other jurisdiction, in each
case limiting its ability to incur indebtedness for money borrowed as
contemplated hereby or by any other Loan Document or (ii) is or is required to
be registered as an "investment company" under the Investment Company Act of
1940. Neither the making of any Loan, nor the issuance of any Letters of Credit,
nor the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated by the Loan Documents,
will violate any provision of any such Act or any rule, regulation or order of
the SEC thereunder.

         5.15 DISCLOSURE. The Borrower has disclosed to the Administrative Agent
and the Lenders all agreements, instruments and corporate or other restrictions
to which it or any of its Subsidiaries is subject, and all other matters known
to it (other than general industry, political, and economic conditions), that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan
Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished), at the time furnished or
delivered, contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, taken as a whole, in the
light of the circumstances under which they were made, not misleading; provided,
that with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time made.

         5.16 COMPLIANCE WITH LAWS. Each Loan Party and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

         5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. The Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, "IP Rights") that are
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, unless the failure to so own or possess the
right to use could not reasonably be expected to have a Material Adverse Effect.
To the best knowledge of the Borrower, except as set forth on Schedule 5.17, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Borrower
or any Subsidiary infringes upon any rights held by any other Person in a manner
that could reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 5.17, no claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrower, threatened,
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

                                      -94-
<PAGE>

         5.18 SOLVENCY. The Borrower is, together with its Subsidiaries on a
consolidated basis, Solvent.

         5.19 PERFECTION, ETC.

         (a) The Security Documents (other than the Mortgages and the
Assignments of Leases and Rents), create and grant to the Collateral Trustee for
the benefit of the applicable Secured Parties or the Collateral Agent (for the
benefit of the Credit Agreement Secured Parties), together with (i) the filing
of appropriate UCC-1 and, if applicable, UCC-3, financing statements with the
filing offices required under the Security Agreement, and (ii) the possession of
certificated Pledged Securities (together with blank executed stock powers with
respect thereto), a valid, first priority, perfected security interest in the
Collateral, subject (other than in the case of investment property) only to
Permitted Encumbrances and, as to perfection, subject to the terms and
provisions of the Security Agreement.

         (b) The Mortgages and the Assignments of Leases and Rents, when the
Mortgage Supplements are executed and delivered, will create in favor of the
Collateral Trustee, for the benefit of the applicable Secured Parties, a legal,
valid and enforceable Lien on all of the Loan Parties' respective right, title
and interest in and to the real property assets (except personalty that does not
constitute fixtures) covered thereby and the proceeds thereof. When each of the
Mortgage Supplements are filed in the appropriate offices specified by a Loan
Party and the proper amount of mortgage recording or similar taxes (if any) are
paid, each of the Mortgages and the Assignments of Leases and Rents together
with the UCC-1 financing statements relating to fixtures previously filed in
connection with the Mortgages, shall constitute fully perfected Liens on, and
fully perfected security interest in, all right, title and interest of the
applicable Loan Parties in the real property assets (except personalty that does
not constitute fixtures) covered thereby and the proceeds thereof, subject only
to Permitted Encumbrances and, as to perfection, subject to the terms and
provisions of the Mortgages and the Assignments of Leases and Rents.

                                  ARTICLE VI.
                              AFFIRMATIVE COVENANTS

         So long as any Lender shall have any Commitment hereunder, any Loan or
other Credit Agreement Obligation hereunder shall remain unpaid or unsatisfied,
or any Letter of Credit shall remain outstanding (if neither (x) Cash
Collateralized in an amount equal to the then-applicable Required Cash
Collateral Amount nor (y) supported with a back-to-back letter of credit
reasonably acceptable to the L/C Issuers), the Borrower shall, and shall (except
in the case of the covenants set forth in Sections 6.1, 6.2, and 6.3) cause each
Subsidiary to:

         6.1 FINANCIAL STATEMENTS. Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent:

         (a) as soon as available, but in any event within 90 days after the end
of each Fiscal Year of the Borrower, an audited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such Fiscal
Year, and the related consolidated statements of income or operations,
stockholders' equity, comprehensive income (loss) and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures as of the end
of, and for, the

                                      -95-
<PAGE>

previous Fiscal Year, all in reasonable detail and prepared in accordance with
GAAP, such consolidated statements to be audited and accompanied by a report and
opinion of an independent registered public accounting firm of nationally
recognized standing, which report and opinion shall be prepared in accordance
with the standards of the Public Company Accounting Oversight Board or its
successor and shall not be subject to any "going concern" or like qualification
or exception;

         (b) as soon as available, but in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower,
an unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such Fiscal Quarter, and the related unaudited
consolidated statements of income or operations for such Fiscal Quarter and for
the portion of the Borrower's Fiscal Year then ended and cash flows for the
portion of the Borrower's Fiscal Year then ended, setting forth in each case in
comparative form the figures for the corresponding Fiscal Quarter of the
previous Fiscal Year and the corresponding portion of the previous Fiscal Year,
all in reasonable detail, certified by a Responsible Officer of the Borrower as
fairly presenting in all material respects the financial condition, results of
operations and cash flows of the Borrower and its consolidated Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the
absence of footnotes;

         (c) as soon as available, but in any event within thirty (30) days
after the end of the first and second calendar months of each Fiscal Quarter, a
copy of the Borrower's (i) internal monthly consolidated corporate reporting
package (i.e., flash reports) and (ii) monthly historical collateral postings
(liquidity) reports; and

         (d) within 15 days after approval thereof by the Borrower's Board of
Directors for each Fiscal Year, a consolidated plan and financial forecast for
such Fiscal Year and the two immediately succeeding Fiscal Years (or portion
thereof) through the Term Loan Maturity Date (a "Financial Plan"), including (i)
a forecasted consolidated balance sheet and forecasted consolidated statements
of income or operations and cash flows of the Borrower and its Subsidiaries for
each such Fiscal Year, (ii) forecasted consolidated statements of income or
operations and cash flows of the Borrower and its Subsidiaries for each month of
such Fiscal Year (but not subsequent Fiscal Years) and (iii) forecasts of
calculations under Section 7.11 for each Fiscal Quarter of such Fiscal Year, and
for each Fiscal Year in the case of subsequent Fiscal Years.

As to any information contained in materials furnished pursuant to Section
6.2(c), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.

         6.2 CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative
Agent and each Lender, in form and detail satisfactory to the Administrative
Agent:

         (a) concurrently with the delivery of the financial statements referred
to in Sections 6.1(a) and (b), a duly completed Compliance Certificate signed by
a Responsible Officer of the Borrower;

                                      -96-
<PAGE>

         (b) promptly after any request by the Administrative Agent or any
Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of the Borrower by independent accountants in connection
with the accounts or books of the Borrower or any Subsidiary, or any audit of
any of them;

         (c) promptly after the same are available, copies of all quarterly and
annual reports filed by the Borrower with the SEC on Forms 10-Q and 10-K, and
all current reports filed by the Borrower with the SEC on Form 8-K;

         (d) promptly after the furnishing thereof, copies of any notice of
default furnished to any holder of debt securities of any Loan Party or any
Subsidiary thereof pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lenders
pursuant to Section 6.1 or any other clause of this Section;

         (e) promptly, and in any event within five Business Days after receipt
thereof by any Loan Party or any Subsidiary thereof, copies of each material,
non-routine, written notice or other material, non-routine, written
correspondence received from the SEC concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other
operational results of any Loan Party or any Subsidiary thereof; and

         (f) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as the Administrative Agent or any Lender
may from time to time reasonably request.

         Documents required to be delivered pursuant to Section 6.1(a) or (b) or
Section 6.2(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower's
website on the Internet at the website address listed on Schedule 11.2; or (ii)
on which such documents are posted on the Borrower's behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided, that: (i) the Borrower shall deliver paper
copies of such documents to the Administrative Agent or any Lender that requests
the Borrower to deliver such paper copies and (ii) the Borrower shall notify the
Administrative Agent and each Lender (by telecopier or electronic mail) of the
posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrower shall
be required to provide paper copies of the Compliance Certificates required by
Section 6.2(a) to the Administrative Agent. Except for such Compliance
Certificates, the Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrower with
any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

                                      -97-
<PAGE>

         The Borrower hereby acknowledges that (a) the Administrative Agent will
make available to the Lenders and each L/C Issuer materials and/or information
provided by or on behalf of the Borrower hereunder (collectively, "Borrower
Materials") by posting the Borrower Materials on IntraLinks or another similar
electronic system (the "Platform") and (b) certain of the Lenders may be
"public-side" Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
"Public Lender"). The Borrower hereby agrees that (w) all Borrower Materials
that are to be made available to Public Lenders shall be clearly and
conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word
"PUBLIC" shall appear prominently on the first page thereof; (x) by marking
Borrower Materials "PUBLIC," the Borrower shall be deemed to have authorized the
Administrative Agent and each L/C Issuer and the Lenders to treat such Borrower
Materials as either publicly available information or not material information
(although it may be sensitive and proprietary) with respect to the Borrower or
its securities for purposes of United States Federal and state securities laws;
(y) all Borrower Materials marked "PUBLIC" are permitted to be made available
through a portion of the Platform designated "Public Investor;" and (z) the
Administrative Agent shall be entitled to treat any Borrower Materials that are
not marked "PUBLIC" as being suitable only for posting on a portion of the
Platform not designated "Public Investor."

         6.3 NOTICES. Promptly notify the Administrative Agent and each Lender:

         (a) after any Responsible Officer's obtaining knowledge of the
occurrence of any Default;

         (b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect (including as a result of (i) breach or
non-performance of, or any default under, a Contractual Obligation of the
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Borrower or any
Subsidiary, including pursuant to any applicable Environmental Laws);

         (c) after any Responsible Officer's obtaining knowledge of the
occurrence of any ERISA Event or of any contribution failure under Code Section
412, or ERISA Section 302 with respect to any Pension Plan, and

         (d) of the (i) occurrence of any Asset Sale for which the Borrower is
required to make a mandatory repayment pursuant to Section 2.4(b)(i), and (ii)
incurrence or issuance of any Indebtedness for which the Borrower is required to
make a mandatory repayment pursuant to Section 2.4(b)(ii), (iii) or (iv).

         Each notice pursuant to this Section (other than subsection (d)) shall
be accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto. Each notice
pursuant to Section 6.3(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

                                      -98-
<PAGE>

         6.4 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become
due and payable (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or such
Subsidiary; and (b) all lawful claims which, if unpaid, would by law become a
Lien upon its property that is not a Permitted Lien.

         6.5 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.4 or 7.5; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

         6.6 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements thereof;
and (c) use the standard of care typical in the industry in the operation and
maintenance of its facilities, in each of cases (a), (b) and (c), except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.

         6.7 MAINTENANCE OF INSURANCE. Maintain with financially sound and
reputable insurance companies, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons of same or similar size engaged in the same or similar business, of such
types and in such amounts (after giving effect to any self-insurance compatible
with the following standards) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days' (or
such other period as required by law) prior notice to the Collateral Trustee of
termination, lapse or cancellation of such insurance.

         6.8 COMPLIANCE WITH LAWS. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted; or (b)
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.

         6.9 BOOKS AND RECORDS. (a) Maintain proper books of record and account,
in which entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be; and (b) maintain such books of
record and account in material conformity with all applicable requirements of
any Governmental Authority having regulatory jurisdiction over the Borrower or
such Subsidiary, as the case may be.

                                      -99-
<PAGE>

         6.10 INSPECTION RIGHTS. Permit representatives and independent
contractors of the Administrative Agent to visit and inspect any of its
properties (subject in the case of access to its properties and assets, to any
applicable restrictions contained in the leases for the Mortgaged Real Property
Assets and the applicable Loan Party's site safety and security requirements),
to examine its corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its officers, and independent public accountants, all at the
expense of the Borrower and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Borrower; provided, that when an Event of Default exists the
Administrative Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and without advance notice.

         6.11 USE OF PROCEEDS. Use the proceeds of (a) the Revolving Credit
Facility for general corporate purposes, including (i) permitted investments,
(ii) replacing loans and letters of credit under the Existing Credit Agreement,
(iii) funding scheduled payments of principal of and interest on (but excluding
the voluntary repayment or prepayment, or voluntary repurchase, retirement,
redemption or defeasance of the principal of or interest on) any Term Loans or
other Senior Debt, including other Parity Secured Debt, and (iv) acquisitions of
Permitted ERCOT Assets to the extent permitted hereunder and (b) of the Term
Loan Facility to (i) replace tranche A loans and term loans outstanding under
the Existing Credit Agreement and (ii) refinance the OPMW Credit Agreement.

         6.12 ADDITIONAL LOAN PARTIES; SECURITY INTERESTS.

         (a) Subject to the provisions of clause (b) below, promptly and in any
event within thirty (30) Business Days (i) after the formation or acquisition
after the Closing Date of any new Subsidiary (other than a Subsidiary that is
prohibited from becoming a Loan Party pursuant to an agreement for Indebtedness
in existence on the Closing Date which is permitted under Section 7.3, or an
agreement for any refinancing or renewal of any such Indebtedness pursuant to,
and in accordance with, Section 7.3) that has satisfied the Threshold Amount,
(ii) with respect to any Subsidiary (other than a Subsidiary that is prohibited
from becoming a Loan Party pursuant to an agreement for Indebtedness in
existence on the Closing Date which is permitted under Section 7.3, or an
agreement for any refinancing or renewal of any such Indebtedness pursuant to,
and in accordance with, Section 7.3) which was formed or acquired after the
Closing Date and which did not initially satisfy the Threshold Amount, after
such Subsidiary does satisfy the Threshold Amount, (iii) after any Subsidiary
ceases to be an Excluded Entity or (iv) after any Subsidiary Guarantees any
Indebtedness of the Borrower other than the Obligations (as the case may be),
deliver to the Collateral Trustee (with copies to the Administrative Agent) the
following: (x) in the case of the Domestic Subsidiaries, (A) an Instrument of
Assumption and Joinder executed by such Subsidiary pursuant to which, among
other things, such Subsidiary shall become a Loan Party hereunder; and a Joinder
Agreement (in substantially the form of Exhibit A to the Collateral Trust
Agreement) pursuant to which, among other things, such Subsidiary shall become a
party to the Collateral Trust Agreement and the Security Agreement, (B)
appropriate UCC-1 financing statements with respect to the collateral under the
Security Agreement and under the Separate Security Agreement, (C) all applicable
Lien searches with respect to such Subsidiary, (D) Organizational Documents
described in Section 4.1(a)(iii) and (iv) with respect

                                     -100-
<PAGE>

to such Subsidiary, (E) a written opinion of counsel covering those matters
addressed in the opinion delivered on the Closing Date but limited to such
Subsidiary, (F) Mortgages for any of such Subsidiary's real property assets
having a book value in excess of $20,0000,000, (G) such other security documents
as may be reasonably requested by the Administrative Agent or its counsel and
all of the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and its counsel, and (H) if applicable, certificates or
other instruments (if any) representing 100% of the Equity Interests in such
Subsidiary owned by a Loan Party together with an undated stock power (or other
appropriate document) executed in blank for each such certificate or other
instrument; and (y) in the case of Foreign Subsidiaries, such security documents
as may be reasonably requested by, and in form and substance reasonably
satisfactory to, the Administrative Agent or its counsel, in order to cause the
pledge by the applicable Loan Parties of the Equity Interests of such Subsidiary
owned by such Loan Parties if such Foreign Subsidiary is a direct Subsidiary of
a Loan Party; provided, that no more than 65% of the total outstanding Equity
Interests of such Foreign Subsidiary shall be required to be pledged by the Loan
Parties pursuant to this Section. Neither the Collateral Agent nor the
Collateral Trustee nor any other Person shall be required to release any
Subsidiary from the Guaranty nor release any Lien on the Equity Interests or
assets of any Subsidiary solely for the reason that such Subsidiary ceases to
satisfy the Threshold Amount at any time.

         (b) If at any time after the Closing Date, any one or more Domestic
Subsidiaries (other than Domestic Subsidiaries that are prohibited from becoming
a Loan Party pursuant to an agreement for Indebtedness in existence on the
Closing Date which is permitted under Section 7.3, or an agreement for any
refinancing or renewal of any such Indebtedness pursuant to, and in accordance
with, Section 7.3) have been formed or acquired which Subsidiaries are not Loan
Parties hereunder and have individually or in the aggregate satisfied the
Threshold Amount, promptly following its determination that the Threshold Amount
has been satisfied, cause one or more of such Subsidiaries to become Loan
Parties hereunder and to provide the documents required by Section 6.12(a)
above, so that (i) the aggregate book value of the assets of all Domestic
Subsidiaries that have been formed or acquired after the Closing Date and are
not Loan Parties hereunder is, at all times, less than $50,000,000 and (ii) the
aggregate Consolidated EBITDAR during the four-Fiscal Quarter period most
recently ended attributable to all such Subsidiaries formed or acquired after
the Closing Date that are not Loan Parties does not exceed $25,000,000.

         (c) At any time and from time to time, promptly execute and deliver any
and all further instruments and documents and take all such other action as the
Administrative Agent and the Collateral Agent may reasonably deem necessary or
desirable in obtaining the full benefits of, or in perfecting and preserving the
Liens of, such Guaranties, Instruments of Assumption and Joinder, and Security
Documents.

         Notwithstanding anything to the contrary contained herein, none of the
foregoing actions shall be required to be taken by, or with respect to, REMA or
any of its Subsidiaries.

         6.13 FURTHER ASSURANCES. Promptly upon request by the Administrative
Agent, or any Lender through the Administrative Agent, (a) correct any material
defect or error that may be discovered in any Loan Document or in the execution,
acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-

                                     -101-
<PAGE>

register any and all such further acts, deeds, certificates, assurances and
other instruments as the Administrative Agent, or any Lender through the
Administrative Agent, may reasonably require from time to time in order to (i)
carry out more effectively the purposes of the Loan Documents, (ii) to the
fullest extent permitted by applicable law, subject any Loan Party's or any of
its Subsidiaries' properties, assets, rights or interests to the Liens now or
hereafter intended to be covered by any of the Loan Documents, (iii) perfect and
maintain the validity, effectiveness and priority of any of the Loan Documents
and any of the Liens intended to be created thereunder and (iv) assure, convey,
grant, assign, transfer, preserve, protect and confirm more effectively unto the
Secured Parties the rights granted or now or hereafter intended to be granted to
the Secured Parties under any Loan Document or under any other instrument
executed in connection with any Loan Document to which any Loan Party or any of
its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to
do so.

         6.14 FLORIDA MORTGAGED PROPERTIES. Upon the occurrence and during the
continuation of any Event of Default, at the request of the Required Lenders,
the Borrower shall cause each of the Florida Mortgage Supplements to be filed in
the appropriate offices and the proper amount of mortgage recording or similar
taxes (if any) to be paid in connection therewith, in order to grant a fully
perfected Lien on, and fully perfected security interest in, all right, title
and interest of the applicable Loan Parties in the real property assets (except
personalty that does not constitute fixtures) covered thereby and the proceeds
thereof, subject only to Permitted Encumbrances and, as to perfection, subject
to the terms and provisions of the Existing Florida Mortgages and the
Assignments of Leases and Rents.

                                  ARTICLE VII.
                               NEGATIVE COVENANTS

         So long as any Lender shall have any Commitment hereunder, any Loan or
other Credit Agreement Obligation hereunder shall remain unpaid or unsatisfied,
or any Letter of Credit shall remain outstanding (if neither (x) Cash
Collateralized in an amount equal to the then-applicable Required Cash
Collateral Amount nor (y) supported with a back-to-back letter of credit
reasonably acceptable to the L/C Issuers), the Borrower shall not, nor shall it
permit any Restricted Subsidiary to, directly or indirectly:

         7.1 LIENS. Create, incur, assume or otherwise cause or suffer to exist
or become effective any Lien of any kind on any asset now owned or hereafter
acquired, except Permitted Liens.

         7.2 INVESTMENTS. Subject to Sections 7.18 and 7.19, make or hold any
Investments, except for Permitted Investments.

         7.3 INDEBTEDNESS. Create, incur, issue, assume, suffer to exist,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to any Indebtedness (including Acquired Debt and
Disqualified Stock), and the Borrower shall not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock, in each case, other than
the following (collectively, "Permitted Debt"):

         (a) the Credit Agreement Obligations;

                                     -102-
<PAGE>

         (b) Indebtedness of Securitization Entities under Qualified
Securitization Transactions in an aggregate principal amount at any one time
outstanding under this clause not to exceed $450,000,000;

         (c) Indebtedness of REMA and its Subsidiaries in an aggregate principal
amount at any one time outstanding under this clause (with letters of credit
being deemed to have a principal amount equal to the maximum potential liability
of REMA and its Subsidiaries thereunder) not to exceed $60,000,000;

         (d) the following Indebtedness of the Borrower and the Guarantors: (i)
Permitted PEDFA Bond Indebtedness and/or the guarantee thereof by the Borrower
or the Guarantors or (ii) Indebtedness evidenced by or in support of the Seward
Tax-Exempt Bonds, in an aggregate principal amount at any one time outstanding
under this clause, not to exceed $500,000,000 less the aggregate amount of all
repayments, optional or mandatory, of the principal of any Indebtedness incurred
pursuant to this clause that have been made by the Borrower and/or the
Guarantors since the Closing Date; (e) Indebtedness of the Borrower, including
Parity Secured Debt, pursuant to a letter of credit or synthetic letter of
credit facility not to exceed the sum of (i) the difference of (x) $500,000,000
minus (y) the aggregate principal amount of the Seward Tax-Exempt Bonds
refinanced as fixed-rate Permitted PEDFA Bond Indebtedness on or after the
Closing Date in accordance with clause (d) above plus (ii) the aggregate amount
by which the Revolving Credit Commitments have been permanently reduced since
the Closing Date;

         (f) Indebtedness of the Borrower, including Parity Secured Debt, in an
aggregate principal amount at any one time outstanding under this clause, not to
exceed $500,000,000, the proceeds of which are used to purchase (or which
Indebtedness is assumed in connection with the purchase of) Permitted ERCOT
Assets (provided, that such ERCOT Assets become Collateral securing the Credit
Agreement Obligations on (or promptly following) such purchase);

         (g) Specified Junior Securities issued by the Borrower; provided, that
if there is any change in the terms of such Specified Junior Securities that
results in such securities no longer meeting all of the requirements of the
definition of "Specified Junior Securities," then such change will be deemed to
constitute an incurrence of Indebtedness by the Borrower that was not permitted
by this clause;

         (h) Existing Indebtedness of the Borrower and its Restricted
Subsidiaries;

         (i) Senior Debt of the Borrower that is not secured by any Lien;

         (j) Permitted Refinancing Indebtedness of the Borrower or any of its
Restricted Subsidiaries in exchange for, or the net proceeds of which are used
to refund, refinance or replace Indebtedness (other than intercompany
Indebtedness) that was permitted to be incurred under clauses (a), (b), (c),
(d), (f), (g), (h), (i), (j) or (s) of this Section;

         (k) intercompany Indebtedness between or among the Borrower and any of
its Restricted Subsidiaries; provided, that:

                                     -103-
<PAGE>

                  (i) such Indebtedness (except Permitted PEDFA Bond
         Indebtedness, Indebtedness restricted from being subordinated pursuant
         to agreements identified on Schedule 7.3(k) and the Orion Notes) must
         be subordinated to the prior payment in full in cash of the Credit
         Agreement Obligations; and

                  (ii) (A) any subsequent issuance or transfer of Equity
         Interests that results in any such Indebtedness being held by a Person
         other than the Borrower or any Restricted Subsidiary, and (B) any sale
         or other transfer of any such Indebtedness to a Person that is not the
         Borrower or any Restricted Subsidiary (except transfers to the
         Collateral Trustee to secure Parity Secured Obligations) shall be
         deemed, in each case, to constitute an incurrence of such Indebtedness
         by the Borrower or such Restricted Subsidiary, as the case may be, that
         was not permitted by this clause;

         (l) shares of preferred stock issued by any Restricted Subsidiary to
the Borrower or to any Restricted Subsidiary; provided, that:

                  (i) any subsequent issuance or transfer of Equity Interests
         that results in any such preferred stock being held by a Person other
         than the Borrower or any Restricted Subsidiary; and

                  (ii) any sale or other transfer of any such preferred stock to
         a Person that is not either the Borrower or any Restricted Subsidiary,

shall be deemed, in each case, to constitute an issuance of such preferred stock
by the Borrower or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause;

         (m) Hedging Obligations incurred by the Borrower or any of its
Restricted Subsidiaries in the ordinary course of business and not for
speculative purposes;

         (n) Indebtedness of the Borrower or any of its Restricted Subsidiaries
in respect of workers' compensation claims, self-insurance obligations, bankers'
acceptances, performance and surety bonds provided by the Borrower or a
Restricted Subsidiary in the ordinary course of business;

         (o) Indebtedness of the Borrower or any of its Restricted Subsidiaries
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently drawn against insufficient funds, so
long as such Indebtedness is covered within five business days;

         (p) Indebtedness arising from agreements of the Borrower or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or Equity Interests of a
Subsidiary; provided, that the maximum aggregate liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds (including non-cash
proceeds) actually received by the Borrower and/or such Restricted Subsidiary in
connection with such disposition;

         (q) the Guarantee by the Borrower or any Guarantor of Indebtedness of
the Borrower or any Guarantor that is permitted by clause (d) (e), (f), (g),
(i), (j) or (s) of this Section;

                                     -104-
<PAGE>

         (r) the Guarantee by OPC and its Subsidiaries of the Orion Notes; and

         (s) additional Indebtedness of the Borrower or any of its Restricted
Subsidiaries, including Parity Secured Debt, Indebtedness represented by Capital
Lease Obligations, mortgage financings or purchase money obligations, and
Disqualified Stock of the Borrower, in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, not to exceed
$300,000,000, the proceeds of which are used for, or assumed in connection with,
general corporate purposes of the Borrower or any of its Restricted
Subsidiaries.

Notwithstanding any of the foregoing, neither OPH nor any of its Subsidiaries
shall create, incur, issue, assume, suffer to exist, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
any Indebtedness (including Acquired Debt and Disqualified Stock), or issue any
shares of preferred stock, in each case, except to the extent permitted under
clauses (h) (but not any Permitted Refinancing Indebtedness thereunder), (k),
(l), (m), (n), (o), (p) and (r) of this Section.

         7.4 CONSOLIDATION AND MERGERS.

         (a) Consolidate or merge with or into another Person, or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Borrower and its Restricted Subsidiaries taken as a
whole, in one or more related transactions, to another Person, except that:

                  (i) so long as no Default exists or would result therefrom,
         any Subsidiary may merge with or dissolve into (i) the Borrower;
         provided, that the Borrower shall be the continuing or surviving Person
         or (ii) any one or more other Subsidiaries; provided, that when any
         Guarantor is merging with or dissolving into another Subsidiary, the
         Guarantor shall be the continuing or surviving Person or such other
         Subsidiary shall become a Guarantor upon the consummation of such
         merger or dissolution in compliance with Section 6.12;

                  (ii) in connection with any Asset Sale permitted under Section
         7.5, any Subsidiary of the Borrower may dissolve, liquidate,
         consolidate or merge with any other Person or permit any other Person
         to consolidate or merge with or into it; and

                  (iii) so long as no Default exists or would result therefrom,
         in connection with any Investment permitted under Section 7.2, any
         Subsidiary of the Borrower may dissolve, liquidate, consolidate or
         merge with or into any other Person or permit any other Person to merge
         or consolidate with it; provided, that the Person surviving such
         merger, dissolution or consolidation shall be a Guarantor in compliance
         with Section 6.12.

         (b) In addition, the Borrower shall not, nor shall it permit any of its
Restricted Subsidiaries to, directly or indirectly, lease all or substantially
all of the properties or assets of the Borrower and its Restricted Subsidiaries,
in one or more related transactions, to any other Person.

         (c) This Section shall not apply to (i) any sale, transfer, assignment,
conveyance, lease or other disposition of assets between or among the Borrower
and the Restricted

                                     -105-
<PAGE>

Subsidiaries, or (ii) the merger of the Borrower with an Affiliate solely for
the purpose of reincorporating or re-forming the Borrower in another
jurisdiction.

         7.5 ASSET SALES.

         (a) Consummate an Asset Sale unless:

                  (i) the Borrower (or the Restricted Subsidiary, as the case
         may be) receives consideration at the time of such Asset Sale at least
         equal to the Fair Market Value of the assets or Equity Interests issued
         or sold or otherwise disposed of (as reasonably determined by the
         Borrower or such Restricted Subsidiary); and

                  (ii) at least 90% of the consideration therefor received in
         the Asset Sale by the Borrower or such Restricted Subsidiary is in the
         form of cash or Cash Equivalents. For purposes of this provision, each
         of the following shall be deemed to be cash:

                           (A) any liabilities, as shown on the Borrower's most
                  recent consolidated balance sheet, of the Borrower or any
                  Restricted Subsidiary (other than contingent liabilities and
                  liabilities that are by their terms subordinated to the Loans
                  or any Guaranty thereof) that are assumed by the transferee of
                  any such assets pursuant to a customary novation agreement
                  that releases the Borrower or such Restricted Subsidiary from
                  further liability;

                           (B) any securities, notes or other Obligations
                  received by the Borrower or any such Restricted Subsidiary
                  from such transferee that are converted (by sale or other
                  disposition) by the Borrower or such Restricted Subsidiary
                  into cash, to the extent of the cash received in that
                  conversion within 60 days; and

                           (C) reasonable reserves for indemnity obligations and
                  purchase price adjustments funded in cash or held back by the
                  purchaser.

         (b) In addition, without having obtained the Core Asset Consent in
writing, the Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate (i) an Asset Sale of (x) any Equity Interest in RERH
or (y) any "price-to-beat" small commercial or residential retail customers of
RERH or any of its Subsidiaries that are located in the "greater Houston area"
or (ii) an Asset Sale of any Equity Interest in REMA or OPH, or any assets of
RERH (other than any asset to which clause (b)(i)(y) applies), REMA or OPH (and,
in each case, their respective Subsidiaries), where the gross proceeds of the
portion of the Equity Interest or asset being sold, together with the gross
proceeds of any other such Equity Interest or assets sold in an Asset Sale on or
after the Closing Date, would exceed $2,500,000,000. For purposes of calculating
the amount under the foregoing clause (b)(ii), upon the first closing of any in
a series of transactions, all of the Equity Interests or assets whose sale is
contemplated by such series shall be deemed to have then been sold for their
gross proceeds as at the time of such first closing.

         (c) If any Net Asset Sale Proceeds from any sale of Shared Collateral
or from any issuance of Equity Securities that constitute an Asset Sale are
required pursuant to the terms of any of the Secured Debt Documents to be
deposited into a cash collateral or similar account, then

                                     -106-
<PAGE>

such Net Proceeds shall be deposited into a Cash Collateral Account as part of
the Shared Collateral. As to any other Net Asset Sale Proceeds, pending final
application of such Net Asset Sale Proceeds in accordance with Section 2.4, the
Borrower shall apply such Net Asset Sale Proceeds in accordance with Section
2.4.

         7.6 RESTRICTED PAYMENTS. Make any Restricted Payment by way of the
payment of any dividend or distribution in cash or Cash Equivalents on any
Equity Interests of the Borrower prior to the Release Date; otherwise, make any
Restricted Payment except for the following:

         (a) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the dividend would
have complied with the provisions of this Agreement (and, in the case of any
dividends to be paid by the Borrower, no Default had occurred and was continuing
on the date of such declaration);

         (b) so long as no Default has occurred and is continuing or would be
caused thereby, the making of any Restricted Payment in exchange for, or
(subject to Section 2.4(b)(v)) out of the net cash proceeds of, the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Borrower) of, Equity Interests of the Borrower (other than Disqualified Stock)
or of the substantially concurrent contribution of common equity capital or
surplus to the Borrower;

         (c) the defeasance, redemption, repurchase or other acquisition of
Subordinated Indebtedness of the Borrower or any Guarantor with the net cash
proceeds from a substantially concurrent incurrence of Permitted Refinancing
Indebtedness;

         (d) the payment of any dividend (or, in the case of any partnership or
limited liability company, any similar distribution) by a Restricted Subsidiary
of the Borrower to the holders of its Equity Interests on a pro rata basis;

         (e) so long as no Default has occurred and is continuing or would be
caused thereby, (i) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Borrower or any Restricted
Subsidiary of the Borrower in connection with any management equity subscription
agreement, stock option agreement, shareholders' agreement, severance agreement,
employee benefit plan or agreement or similar agreement, in each case, as in
existence and as in effect on the Closing Date, (ii) the repurchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
Borrower or any Restricted Subsidiary of the Borrower in connection with any
management equity subscription agreement, stock option agreement, shareholders'
agreement, severance agreement, employee benefit plan or agreement or similar
agreement other than any such agreement or plan described in clause (i) above,
or (ii) the repurchase for value of any Equity Interests of the Borrower in the
open market to satisfy stock options issued by the Borrower that are
outstanding; provided, that with respect to clauses (ii) and (iii) above, the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests after the Closing Date may not exceed $25,000,000 in any
calendar year (or the pro rata portion thereof for the calendar year 2004);

         (f) the repurchase of Equity Interests deemed to occur upon the
exercise of stock options to the extent such Equity Interests represent a
portion of the exercise price of those stock options;

                                     -107-
<PAGE>

         (g) the purchase by the Borrower of fractional shares upon conversion
of any securities of the Borrower into Equity Interests of the Borrower;

         (h) so long as no Default has occurred and is continuing or would be
caused thereby, the declaration and payment of dividends to holders of any class
or series of Disqualified Stock of the Borrower or any Restricted Subsidiary of
the Borrower issued on or after the Closing Date in accordance with Section
7.3(s) hereof;

         (i) the transactions with any Person (including any Affiliate of the
Borrower) set forth in clauses (b)(i) and (b)(iv) of Section 7.8(b) hereof and
the funding of any obligations in connection therewith;

         (j) the issuance of Equity Interests of the Borrower (other than
Disqualified Stock) for other Equity Interests of the Borrower in connection
with any rights offering and payments for the redemption of fractional shares in
connection with any rights offering; and

         (k) so long as no Default has occurred and is continuing or would be
caused thereby, additional Restricted Payments, other than the payment by the
Borrower of any cash dividends or other cash distributions in respect of the
Borrower's Equity Interests, in an aggregate amount not to exceed, together with
the aggregate amount of Investments made pursuant to clause (4) of the
definition of "Permitted Investments," $75,000,000 since the Closing Date.

         Notwithstanding the foregoing terms of this Section, the aggregate
amount of Restricted Payments made pursuant to clauses (a) and (h), from the
Release Date but prior to the Investment Grade Rating Date shall not exceed
$50,000,000 in any twelve-month period. The amount of all Restricted Payments
(other than cash) shall be the Fair Market Value on the date of the Restricted
Payment of the asset(s) or securities proposed to be transferred or issued by
the Borrower or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment.

         7.7 LINE OF BUSINESS. Not, nor permit any of its Restricted
Subsidiaries to, engage in any business other than the Permitted Business,
except to such extent as would not be material to the Borrower and its
Subsidiaries taken as a whole.

         7.8 TRANSACTIONS WITH AFFILIATES.

         (a) Not, and not permit any of its Restricted Subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of the Borrower
(each, an "Affiliate Transaction"), unless such Affiliate Transaction is on
terms that are no less favorable (as reasonably determined by the Borrower) to
the Borrower or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Borrower or such Restricted
Subsidiary with an unrelated Person.

         (b) The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of Section
7.8(a) hereof:

                                     -108-
<PAGE>

                  (i) any employment agreement or director's engagement
         agreement, employee benefit plan, officer and director indemnification
         agreement or any similar arrangement entered into by the Borrower or
         any of its Restricted Subsidiaries in the ordinary course of business
         or approved by the Board of Directors;

                  (ii) transactions between or among the Borrower and/or its
         Restricted Subsidiaries (other than Foreign Subsidiaries);

                  (iii) transactions with a Person that is an Affiliate of the
         Borrower solely because the Borrower owns, directly or through a
         Restricted Subsidiary, an Equity Interest in, or controls, such Person;

                  (iv) payment of reasonable directors' fees to Persons who are
         not otherwise Affiliates of the Borrower;

                  (v) any issuance of Equity Interests (other than Disqualified
         Stock) of the Borrower to Affiliates of the Borrower;

                  (vi) Restricted Payments that do not violate the provisions of
         Section 7.6 hereof;

                  (vii) transactions effected as part of a Qualified
         Securitization Transaction;

                  (viii) loans or advances to employees in the ordinary course
         of business not to exceed $10,000,000 in the aggregate outstanding at
         any one time;

                  (ix) any agreement, instrument or arrangement as in effect as
         of the Closing Date, or any amendment thereto or any transaction
         contemplated thereby (including pursuant to any amendment thereto) in
         any replacement agreement thereto so long as any such amendment or
         replacement agreement is not more disadvantageous to the Lenders in any
         material respect than the original agreement as in effect on the
         Closing Date as determined by the Borrower; and

                  (x) any pro rata distribution (including a rights offering) to
         all holders of a class of Equity Interests or Indebtedness of the
         Borrower or any of its Restricted Subsidiaries, including Persons who
         are Affiliates of the Borrower or any of its Restricted Subsidiaries.

         7.9 RESTRICTIVE AGREEMENTS. Enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of the Borrower or any Restricted Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Restricted Subsidiary to pay dividends or make any other
distributions with respect to any shares of its capital stock or any other
Equity Interest or participation in its profits owned by a Restricted
Subsidiary, or (c) the ability of any Restricted Subsidiary to make or repay
loans or advances to the Borrower or any other Restricted Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Restricted Subsidiary or to
transfer any of its properties or assets to the Borrower or any other Restricted
Subsidiary; provided, that the foregoing shall not apply to (i) restrictions and
conditions imposed by Laws, or

                                     -109-
<PAGE>

by any Loan Document, (ii) restrictions and conditions in any agreement or
contract existing on the Closing Date and any amendments, modifications,
restatements, renewals or replacements thereof that are not more restrictive,
taken as a whole, than the restrictions existing on the Closing Date, (iii)
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary or asset pending such sale; provided, that such
restrictions and conditions apply only to the Subsidiary or asset that is to be
sold and such sale is permitted hereunder, (iv) restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness, (v) customary non-assignment provisions in
any contract, easement or lease, and other customary encumbrances and
restrictions entered into in the ordinary course of business that are not more
restrictive, taken as a whole, than the encumbrances existing on the Closing
Date, (vi) restrictions or conditions contained in any trading, netting,
operating, construction, service, supply, purchase, sale or similar agreement to
which any Restricted Subsidiary is a party and which is entered into in the
ordinary course of business; provided, that such agreement prohibits the
encumbrance of solely the property or assets of such Restricted Subsidiary that
are the subject of such agreement, the payment rights arising thereunder and/or
the proceeds thereof and not to any other asset or property of such Restricted
Subsidiary or the assets or property of any other Restricted Subsidiary and
(vii) restrictions contained in documents evidencing Indebtedness existing at
the time at which any such Person first becomes a Restricted Subsidiary, so long
as such restriction was not agreed to or entered into solely in contemplation of
such change in status, and any amendments, modifications, restatements, renewals
or replacements thereof that are not more restrictive, taken as a whole, than
the restrictions existing at the time such Person first becomes a Restricted
Subsidiary.

         7.10 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the FRB)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund indebtedness originally incurred for such purpose.

         7.11 FINANCIAL COVENANTS.

         (a) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio (i) as of the end of any Fiscal Quarter of the Borrower
ending after the Release Date to be less than 2:75:1 and (ii) as of the end of
any Fiscal Quarter of the Borrower ending prior to the Release Date to be less
than the ratio set forth below opposite such Fiscal Quarter:

<TABLE>
<CAPTION>
                                                       Minimum Consolidated
           Four Fiscal Quarters Ending               Interest Coverage Ratio
----------------------------------------------------------------------------
<S>                                                  <C>
Closing Date through September 30, 2007                      1.8:1.0

December 31, 2007 and each Fiscal Quarter                    2.0:1.0
thereafter
</TABLE>

                                     -110-
<PAGE>

         (b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio
(i) as of the end of any Fiscal Quarter of the Borrower ending after the Release
Date to be greater than 3:25:1 and (ii) as of the end of any Fiscal Quarter of
the Borrower ending prior to the Release Date set forth below to be greater than
the ratio set forth below opposite such period:

<TABLE>
<CAPTION>
                                                     Maximum Consolidated
           Four Fiscal Quarters Ending                  Leverage Ratio
-------------------------------------------------------------------------
<S>                                                  <C>
Closing Date through September 30, 2006                    6.0:1.0

December 31, 2006 through September 30, 2007               5.5:1.0

December 31, 2007 and each Fiscal Quarter                  5.0:1.0
thereafter
</TABLE>

         7.12 CAPITAL EXPENDITURES. Make or become legally obligated to make any
Capital Expenditure, except

         (a) for Capital Expenditures other than in connection with an
Acquisition, in an amount not exceeding $250,000,000 in the aggregate for the
Borrower and its Restricted Subsidiaries during each Fiscal Year; provided, that
(i) any portion of the $250,000,000 amount permitted in any Fiscal Year that is
not used during such Fiscal Year (the "Carry Amount") may be carried forward for
a period of one Fiscal Year and added to the amount of permitted Capital
Expenditures in the immediately succeeding Fiscal Year (but no portion of any
Carry Amount shall be used (or deemed to be used) in the applicable Fiscal Year
until the entire amount of the Capital Expenditures permitted to be made in such
Fiscal Year (i.e., without giving effect to any Carry Amount) as provided in
this Section shall first have been used in full) and (ii) any portion of the
$250,000,000 amount permitted in any Fiscal Year may be subtracted from the
total amount permitted in such Fiscal Year and added to the permitted amount in
the immediately preceding Fiscal Year; and

         (b) in the case of Capital Expenditures in connection with an
Acquisition, an amount that, together with the aggregate amount of Acquisition
Consideration paid by the Borrower or its Subsidiaries on or after the Closing
Date but prior to the Release Date, in the aggregate does not exceed the
Permitted Acquisition Limit;

provided, that in the case of both clauses (a) and (b), regulatory and
environmental capital expenditures necessary to operate assets or to comply with
law or permits and emergency capital expenditures, shall not be limited and
shall not be included in calculating compliance with such limitations.

         7.13 MODIFICATION OF CERTAIN AGREEMENTS. Consent to any amendment,
supplement, waiver or other modification of, or enter into any forbearance from
exercising any rights with respect to the terms or provisions contained in,

                                     -111-
<PAGE>

         (a) documents relating to Subordinated Indebtedness (other than
intercompany Indebtedness) of the Borrower or any Restricted Subsidiary in any
way that:

                  (i) increases the rate of or shortens the time for payment of
         interest on any Subordinated Indebtedness;

                  (ii) increases the principal of, shortens the final maturity
         date of or shortens the Weighted Average Life to Maturity of any
         Subordinated Indebtedness;

                  (iii) alters in a manner adverse to the Borrower the
         redemption provisions or the price or terms at which the Borrower or
         such Restricted Subsidiary is required to offer to purchase any
         Subordinated Indebtedness; or

                  (iv) amends the subordination provisions of the agreements
         governing any Subordinated Indebtedness;

         (b) the Organization Documents of the Borrower or any of its
Subsidiaries, if the result could reasonably expected to have a Material Adverse
Effect; or

         (c) any Orion Note Document in any way that (i) reduces the rate of
interest or extends in a material manner the date scheduled for payment of
principal of or interest on, or reduces the principal amount (other than as a
result of a Dollar for Dollar repayment) of, any of the Orion Notes, (ii)
modifies, waives or deletes the terms of the Orion Note Documents which provide
for a cross-default to Indebtedness of OPH under the OPH Note Indenture or the
OPH Notes, or (iii) releases collateral securing the Orion Note Documents,
except in connection with any asset disposition that is not prohibited hereunder
and the Net Asset Sale Proceeds of which are applied in accordance herewith.

         7.14 FISCAL YEAR. Not, nor permit any of its Restricted Subsidiaries
to, directly or indirectly, change its Fiscal Year from a Fiscal Year ending
December 31.

         7.15 COMMODITY HEDGING. Not, nor permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or assume any Commodity
Hedging Obligations except in the ordinary course of business and not for
speculative purposes.

         7.16 SUSPENSION OF CERTAIN COVENANTS UPON RELEASE DATE. Following the
Release Date (provided, that there shall not have occurred or been continuing
any Default as of the Release Date), (i) the provisions of clause (ii) of the
proviso to clause (5) of the definition of Permitted Liens and the provisions of
Sections 7.2, 7.5, 7.12, 7.18 and 7.19 hereof shall be suspended; provided, that
the Core Asset Consent shall continue to be required for the entire term of this
Agreement in connection with any Asset Sale contemplated by Section 7.5(b), (ii)
the provisions of Section 7.6 shall be suspended; provided, that following the
Release Date but prior to the Investment Grade Rating Date, dividends or
distributions of cash or Cash Equivalents on any Equity Interests of the
Borrower shall not exceed $50,000,000 in any twelve-month period, and other
Restricted Payments (as defined in the Secured Note Agreements, but excluding
Investments) shall be permitted only (x) to the extent permitted under the
Secured Note Agreements and (y) so long as no Default shall have occurred and be
continuing, and (iii) the Administrative Agent shall (and each Lender hereby
authorizes and directs the

                                     -112-
<PAGE>

Administrative Agent to) promptly cause the release of all Liens securing the
Credit Agreement Obligations; provided, that immediately following such release,
the Borrower and its Subsidiaries shall not have any other secured Indebtedness
(other than the Permitted Exceptions). Notwithstanding the foregoing, if the
ratings assigned by both Moody's and S&P to the Secured Notes should
subsequently decline to below an Investment Grade Rating, the provisions of
clause (ii) of the proviso to clause (5) of the definition of Permitted Liens
and the provisions of Sections 7.2, 7.5, 7.6, 7.12, 7.18 and 7.19 hereof shall
be reinstituted as of and from the date of such rating decline, and the
provisions of Section 7.6 hereof shall be interpreted as if they had been in
effect since the Release Date, except that no Default will be deemed to have
occurred solely by reason of a Restricted Payment made or declared (and later
made) in accordance with the provisions of Section 7.6, a breach of Section 7.2,
7.5, 7.12, 7.18 or 7.19 while the provisions of such Sections were suspended, or
a breach of Section 7.1 while the provisions of clause (ii) of the proviso to
clause (5) of the definition of Permitted Liens were suspended.

         7.17 ORION SUBSIDIARIES.

         (a) The Borrower shall not permit OPH or any of OPH's Subsidiaries to
distribute any cash (except Net Asset Sale Proceeds) to the Borrower or any of
its Subsidiaries, except as follows: first, to pay principal of and interest on
the OPH Revolving Notes; second, to the extent permitted under the OPH Note
Indenture, as a dividend paid by OPH to the Borrower; and third, to pay
principal of and interest on the OPMW Term Notes and OPNY Term Note.

         (b) The Borrower shall not take or permit any action that would cause a
"Change of Control" (as defined in the OPH Note Indenture) to occur, without the
consent of the Required Lenders.

         (c) The Borrower shall cause OPH and its Subsidiaries to apply any OPH
Asset Sale Proceeds to the prepayment of the OPMW Term Notes and OPNY Term
Notes, in each case until repaid in full.

         7.18 DESIGNATED ENTITIES. Notwithstanding anything to the contrary
contained herein (including this Article):

         (a) neither the Borrower nor any Restricted Subsidiary shall make any
Investment in or otherwise transfer any asset to any Designated Entity other
than (i) pursuant to cash loans evidenced by promissory notes that are pledged
as Collateral under the Security Documents (but released upon the Release Date);
provided, that to the extent any Designated Entity has Contractual Obligations
existing on the Closing Date which prohibit the incurrence by such Designated
Entity of Indebtedness (including pursuant to such promissory notes), the
Borrower and the Restricted Subsidiaries may, to the extent of such
prohibitions, make cash equity contributions to such Designated Entity, (ii)
credit support provided in the ordinary course of business to support
obligations other than Debt of such Designated Entity (such as and including
posting of cash and/or letters of credit, delivery of performance guarantees or
similar agreements and arrangements to guaranty the timely and complete
performance of such Designated Entity) and (iii) Investments and transfers of
assets (other than cash, Cash Equivalents, or any power generation facility) and
payments for goods and services in the ordinary course of business; and

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         (b) no Designated Entity shall incur or permit to exist any
Indebtedness other than (i) pursuant to clause (a)(i) above, (ii) Existing
Indebtedness in respect of which it is obligated and (iii) Permitted Refinancing
Indebtedness with respect to any such Existing Indebtedness.

         7.19 FOREIGN INVESTMENTS. Notwithstanding anything to the contrary
contained herein (including this Article), neither the Borrower nor any
Restricted Subsidiary (other than a Foreign Subsidiary) shall make any
Investment in any Foreign Subsidiary unless the Borrower shall have taken all
actions required by Section 6.12 with respect thereto; provided, that the
aggregate amount of Investments made by the Borrower and/or Restricted
Subsidiaries (other than a Foreign Subsidiary) in Foreign Subsidiaries after the
Closing Date shall not exceed $50,000,000.

                                  ARTICLE VIII.
                                    GUARANTY

         8.1 GUARANTY; LIMITATION OF LIABILITY.

         (a) Each Guarantor, jointly and severally, hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment when due,
whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Credit Agreement Obligations of the
Borrower now or hereafter existing (including any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing Credit
Agreement Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Credit Agreement Obligations being
the "Guaranteed Obligations"), and agrees to pay any and all expenses (including
reasonable fees and expenses of counsel) incurred by any Agent or any other
Secured Party in enforcing any rights under this Guaranty or any other Loan
Document. Without limiting the generality of the foregoing, each Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to any Secured Party under
or in respect of the Loan Documents but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such other Loan Party.

         (b) Each Guarantor, and by its acceptance of this Guaranty, the
Administrative Agent and each other Secured Party, hereby confirms that it is
the intention of all such Persons that this Guaranty and the Obligations of each
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Debtor Relief Laws, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to
the extent applicable to this Guaranty and the Obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Administrative Agent, the
other Secured Parties and the Guarantors hereby irrevocably agree that the
Obligations of each Guarantor under this Guaranty at any time shall be limited
to the maximum amount as will result in the Credit Agreement Obligations of such
Guarantor under this Guaranty not constituting a fraudulent transfer or
conveyance.

         (c) Each Guarantor hereby unconditionally and irrevocably agrees that
in the event any payment shall be required to be made to any Secured Party under
this Guaranty or any Instrument of Assumption and Joinder, such Guarantor will
contribute, to the maximum extent permitted by law, such amounts to each other
Guarantor and each other Guarantor so as to

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maximize the aggregate amount paid to the Secured Parties under or in respect of
the Loan Documents.

         8.2 GUARANTY ABSOLUTE. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Secured
Party with respect thereto. The Credit Agreement Obligations of each Guarantor
under or in respect of this Guaranty are independent of the Guaranteed
Obligations or any other Credit Agreement Obligations of any other Loan Party
under or in respect of the Loan Documents, and a separate action or actions may
be brought and prosecuted against each Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Borrower or any other
Loan Party or whether the Borrower or any other Loan Party is joined in any such
action or actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional irrespective of, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

         (a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;

         (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other Credit
Agreement Obligations of any other Loan Party under or in respect of the Loan
Documents, or any other amendment or waiver of or any consent to departure from
any Loan Document, including any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any of
its Subsidiaries or otherwise;

         (c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of, or
consent to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

         (d) any manner of application of Collateral or any other collateral, or
proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral or any other collateral for all or
any of the Guaranteed Obligations or any other Credit Agreement Obligations of
any Loan Party under the Loan Documents or any other assets of any Loan Party or
any of its Subsidiaries;

         (e) any change, restructuring or termination of the corporate structure
or existence of any Loan Party or any of its Subsidiaries;

         (f) any failure of any Secured Party to disclose to any Loan Party any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party now or
hereafter known to such Secured Party (each Guarantor waiving any duty on the
part of the Secured Parties to disclose such information);

         (g) the failure of any other Person to execute or deliver this
Guaranty, any Instrument of Assumption and Joinder or any other guaranty or
agreement or the release or reduction of

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liability of any Guarantor or other guarantor or surety with respect to the
Guaranteed Obligations; or

         (h) any other circumstance (including any statute of limitations) or
any existence of or reliance on any representation by any Secured Party that
might otherwise constitute a defense available to, or a discharge of, any Loan
Party or any other guarantor or surety.

         This Guaranty shall survive termination of this Agreement and shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or must otherwise
be returned by any Secured Party or any other Person upon the insolvency,
bankruptcy or reorganization of the Borrower or any other Loan Party or
otherwise, all as though such payment had not been made.

         8.3 WAIVERS AND ACKNOWLEDGMENTS.

         (a) Each Guarantor hereby unconditionally and irrevocably waives
promptness, diligence, notice of acceptance, presentment, demand for
performance, notice of nonperformance, default, acceleration, protest or
dishonor and any other notice with respect to any of the Guaranteed Obligations
and this Guaranty and any requirement that any Secured Party protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any Loan Party or any other Person or any Collateral.

         (b) Each Guarantor hereby unconditionally and irrevocably waives any
right to revoke this Guaranty and acknowledges that this Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.

         (c) Each Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by any Secured Party that in any manner impairs, reduces, releases or
otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights of such
Guarantor to proceed against any of the other Loan Parties, any other guarantor
or any other Person or any Collateral and (ii) any defense based on any right of
set-off or counterclaim against or in respect of the Credit Agreement
Obligations of such Guarantor hereunder.

         (d) Each Guarantor acknowledges that the Collateral Agent may, without
notice to or demand upon such Guarantor and without affecting the liability of
such Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial
sale, and each Guarantor hereby waives any defense to the recovery by the
Collateral Agent and the other Secured Parties against such Guarantor of any
deficiency after such nonjudicial sale and any defense or benefits that may be
afforded by applicable law.

         (e) Each Guarantor hereby unconditionally and irrevocably waives any
duty on the part of any Secured Party to disclose to such Guarantor any matter,
fact or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Loan Party or any
of its Subsidiaries now or hereafter known by such Secured Party.

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<PAGE>

         (f) Each Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in Section 8.2 and this Section are
knowingly made in contemplation of such benefits.

         8.4 SUBROGATION. Each Guarantor hereby unconditionally and irrevocably
agrees not to exercise any rights that it may now have or hereafter acquire
against the Borrower, any other Loan Party or any other insider guarantor that
arise from the existence, payment, performance or enforcement of such
Guarantor's Guaranteed Obligations under or in respect of this Guaranty or any
other Loan Document, including any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Secured Party against the Borrower, any other Loan Party
or any other insider guarantor or any Collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including the right to take or receive from the Borrower, any other Loan Party
or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been paid in full
in cash, all Letters of Credit shall have expired or been terminated and the
Commitments shall have expired or been terminated. If any amount shall be paid
to any Guarantor in violation of the immediately preceding sentence at any time
prior to the latest of (a) the payment in full in cash of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (b) the latest
maturity date in respect of the Facilities outstanding from time to time and (c)
the latest date of expiration or termination of all Letters of Credit, such
amount shall be received and held in trust for the benefit of the Secured
Parties, shall be segregated from other property and funds of such Guarantor and
shall forthwith be paid or delivered to the Administrative Agent in the same
form as so received (with any necessary endorsement or assignment) to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) any Guarantor shall make payment to any Secured Party of all or any part of
the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Guaranty shall have been paid in full in cash, (iii)
the latest maturity date in respect of the Facilities outstanding from time to
time shall have occurred and (iv) all Letters of Credit shall have expired or
been terminated, the Secured Parties will, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by such Guarantor pursuant to this
Guaranty.

         8.5 ASSUMPTION AND JOINDER. Upon the execution and delivery by any
Additional Guarantor of an Instrument of Assumption and Joinder as required
under Section 6.12(a), (a) such Person shall become and be a Guarantor
hereunder, and each reference in this Guaranty to a "Guarantor" shall also mean
and be a reference to such Additional Guarantor, and each reference in any other
Loan Document to a "Guarantor" shall also mean and be a reference to such
Additional Guarantor, and (b) each reference herein to "this Guaranty,"
"hereunder," "hereof" or words of like import referring to this Guaranty, and
each reference in any other Loan Document to the "Guaranty," "thereunder,"
"thereof" or words of like import referring to this

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<PAGE>

Guaranty, shall mean and be a reference to this Guaranty as supplemented by such
Instrument of Assumption and Joinder.

         8.6 SUBORDINATION. Each Guarantor hereby subordinates any and all
debts, liabilities and other Obligations owed to such Guarantor by each other
Loan Party (the "Subordinated Obligations") to the Guaranteed Obligations to the
extent and in the manner hereinafter set forth in this Section:

         (a) Prohibited Payments, Etc. Except during the continuance of a
Default (including the commencement and continuation of any proceeding under any
Debtor Relief Law relating to any other Loan Party), each Guarantor may receive
regularly scheduled payments from any other Loan Party on account of the
Subordinated Obligations. After the occurrence and during the continuance of any
Default (including the commencement and continuation of any proceeding under any
Debtor Relief Law relating to any other Loan Party), however, unless the
Required Lenders otherwise agree, no Guarantor shall demand, accept or take any
action to collect any payment on account of the Subordinated Obligations.

         (b) Prior Payment of Guaranteed Obligations. In any proceeding under
any Debtor Relief Law relating to any other Loan Party, each Guarantor agrees
that the Secured Parties shall be entitled to receive payment in full in cash of
all Guaranteed Obligations (including all Post-Petition Interest) before such
Guarantor receives payment of any Subordinated Obligations.

         (c) Turn-Over. After the occurrence and during the continuance of any
Default (including the commencement and continuation of any proceeding under any
Debtor Relief Law relating to any other Loan Party), each Guarantor shall, if
the Administrative Agent so request, collect, enforce and receive payments on
account of the Subordinated Obligations as trustee for the Secured Parties and
deliver such payments to the Administrative Agent on account of the Guaranteed
Obligations (including all Post-Petition Interest), together with any necessary
endorsements or other instruments of transfer, but without reducing or affecting
in any manner the liability of such Guarantor under the other provisions of this
Guaranty.

         8.7 CONTINUING GUARANTY; ASSIGNMENTS. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the latest of (i)
the payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty, (ii) the latest maturity date in respect of the
Facilities outstanding from time to time, (iii) the latest date of expiration or
termination of all Letters of Credit, or Cash Collateralization thereof or
issuance of a back-to-back letter of credit reasonably satisfactory to the
applicable L/C Issuer with respect thereto, and (iv) the release thereof in
accordance with Section 10.10, (b) be binding upon the Guarantor, its successors
and assigns and (c) inure to the benefit of and be enforceable by the Secured
Parties and their successors, transferees and assigns. Upon the occurrence of
the latest date specified in clause (a) above, the Guarantors shall be released
from other Credit Agreement Obligations under the Loan Documents. Without
limiting the generality of clause (c) of the immediately preceding sentence, any
Secured Party may assign or otherwise transfer all or any portion of its rights
and Obligations under this Agreement (including all or any portion of its
Commitments, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in

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<PAGE>

this Section. No Guarantor shall have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Secured Parties.

                                   ARTICLE IX.
                         EVENTS OF DEFAULT AND REMEDIES

         9.1 EVENTS OF DEFAULT. Any of the following shall constitute an Event
of Default:

         (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan or
any L/C Obligation, or (ii) within three Business Days after the same becomes
due, any interest on any Loan or on any L/C Obligation, or any fee or other
amount payable hereunder or under any other Loan Document; or

         (b) Specific Covenants. The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.3, 6.5 (only with
respect to the existence of the Borrower), 6.11 or 6.12 or Article VII; or

         (c) Other Defaults. Any Loan Party fails to perform or observe any
other covenant or agreement (not specified in clause (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days after the earlier to occur of (i) a Loan Party receiving
notice thereof from the Administrative Agent (which notice shall be given at the
request of any Lender) or any other Person, or (ii) a Responsible Officer or
other executive officer of a Loan Party obtains knowledge of such occurrence; or

         (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed made; or

         (e) Cross-Default. (i) Any Loan Party, any Person required to become a
Loan Party pursuant to Section 6.12, REMA, OPH or any Subsidiary of REMA or OPH
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
under or Guarantee in respect of the REMA Lease or any other Indebtedness or
Guarantee (other than Indebtedness hereunder and Indebtedness under Hedging
Agreements) having an aggregate principal amount (including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$50,000,000, or (B) fails to observe or perform any other agreement or condition
relating to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is (x) in the case of all such
Indebtedness or Guarantees (including under or in respect of the REMA Lease), to
cause, or (y) in the case of all such Indebtedness or Guarantees (other than
under or in respect of the REMA Lease), to permit the holder or holders of such
Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to be demanded
or to become due or to be repurchased, prepaid, defeased or

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<PAGE>

redeemed (automatically or otherwise), or an offer to repurchase, prepay,
defease or redeem such Indebtedness to be made, prior to its Stated Maturity, or
such Guarantee to become payable or cash collateral in respect thereof to be
demanded; or (ii) there occurs under any Hedging Agreement an Early Termination
Date (as defined in such Hedging Agreement) resulting from (A) any event of
default under such Hedging Agreement as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Hedging Agreement) or (B) any
Termination Event (as so defined) under such Hedging Agreement as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Hedge Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than $50,000,000 and not paid when due; or

         (f) Insolvency Proceedings, Etc. The Borrower or any Loan Party (or
Person that is required to become a Loan Party pursuant to Section 6.12) that is
a Material Subsidiary or REMA, OPH or any Subsidiary of REMA or OPH institutes
or consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of their
respective property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of their respective
property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

         (g) Inability to Pay Debts; Attachment. The Borrower or any Loan Party
(or Person that is required to become a Loan Party pursuant to Section 6.12)
that is a Material Subsidiary or REMA, OPH or any Subsidiary of REMA or OPH
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due; or

         (h) Judgments. There is entered against the Borrower, any Loan Party,
any Person that is required to become a Loan Party pursuant to Section 6.12,
OPH, REMA or any Subsidiary of OPH or REMA a final judgment or order for the
payment of money in an aggregate amount exceeding $50,000,000 (to the extent not
covered by independent third-party insurance or that has not been paid), and (A)
enforcement proceedings are commenced by any creditor upon such judgment or
order, or (B) within thirty (30) days from the later of (X) the entry of any
such judgment or the date of any such order (as applicable) and (Y) the date any
payment is required to be made on or with respect to any such judgment or order
pursuant to the terms thereof, the same shall not have been paid, discharged or
vacated or, in the case of a judgment, stayed pending appeal, or shall not have
been discharged or vacated within thirty (30) days from the entry of a final
order of affirmance on appeal; or

         (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $50,000,000,
or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan

                                     -120-
<PAGE>

in an aggregate amount in excess of $50,000,000; or the Borrower fails to make a
contribution under Code Section 412 or ERISA Section 302 with respect to a
Pension Plan, within 30 days after the date on which the Borrower obtains
knowledge that such contribution is due, in an aggregate amount in excess of
$50,000,000; or

         (j) Change of Control. There occurs any Change of Control; or

         (k) Invalidity of Documents. (i) Any Security Agreement, Mortgage or
other Security Document after delivery thereof pursuant to Section 4.1 or 6.12
shall for any reason (other than pursuant to the terms thereof or as expressly
permitted thereby) cease to create a valid and perfected first priority Lien
(subject to Permitted Encumbrances and Permitted Liens) on and security interest
in the Collateral purported to be covered thereby; provided, that no such
defects pursuant to this clause with respect to a Lien granted or purported to
be granted by any of the Loan Documents shall give rise to an Event of Default
under this clause unless such defects shall adversely affect the aggregate value
of the Collateral by an aggregate amount of $50,000,000 or more; or (ii) any
Loan Party shall so assert such invalidity or lack of perfection or priority; or
(iii) any other Loan Document, at any time after its execution and delivery and
for any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Credit Agreement Obligations thereunder, ceases
to be in full force and effect; or any Loan Party or any other Person contests
in any manner the validity or enforceability of any provision of any other Loan
Document; or any Loan Party denies that it has any or further liability or
obligation under any other Loan Document, or purports to revoke, terminate or
rescind any provision of any other Loan Document; or

         (l) Failure of Subordination. Unless otherwise waived or consented to
by the Administrative Agent and the Required Lenders in writing, the
subordination provisions relating to any Subordinated Indebtedness (the
"Subordination Provisions") shall fail to be enforceable by the Administrative
Agent, the Lenders and the L/C Issuers in accordance with the terms thereof, or
the monetary Credit Agreement Obligations shall fail to constitute "Senior
Indebtedness" or "Senior Debt" (or similar term) referring to the Credit
Agreement Obligations; or the Borrower or any of its Restricted Subsidiaries
shall, directly or indirectly, disavow or contest in any manner (i) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (ii) that the Subordination Provisions exist for the benefit of the
Secured Parties or (iii) that all payments of principal of or premium and
interest on the Subordinated Debt, or realized from the liquidation of any
property of any Loan Party, shall be subject to any of such Subordination
Provisions.

         9.2 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and
is continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following actions:

         (a) declare by written notice to the Borrower the Commitment of each
Lender to make Loans and any obligation of an L/C Issuer to make L/C Credit
Extensions to be terminated, whereupon such Commitments and obligation shall be
terminated;

         (b) declare by written notice to the Borrower the unpaid principal
amount of all outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or

                                     -121-
<PAGE>

payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrower;

         (c) require by written notice to the Borrower that the Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

         (d) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents;

provided, that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United
States, the obligation of each Lender to make Loans and any obligation of an L/C
Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable, and the obligation of the
Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the
Administrative Agent or any Lender.

         9.3 APPLICATION OF FUNDS. After the exercise of remedies provided for
in Section 9.2 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 9.2), any amounts received
on account of the Credit Agreement Obligations shall be applied by the
Administrative Agent in the following order:

                  (a) to payment of that portion of the Credit Agreement
         Obligations constituting fees, indemnities, expenses and other amounts
         (including fees, charges and disbursements of counsel to the
         Administrative Agent and amounts payable under Article III) payable to
         the Administrative Agent in its capacity as such;

                  (b) to payment of that portion of the Credit Agreement
         Obligations constituting fees, indemnities and other amounts (other
         than principal and interest) payable to the Lenders and each L/C Issuer
         (including reasonable fees, charges and disbursements of counsel to the
         respective Lenders and the respective L/C Issuer (including fees and
         time charges for attorneys who may be employees of any Lender or any
         L/C Issuer) and amounts payable under Article III), ratably among them
         in proportion to the amounts described in this clause payable to them;

                  (c) to payment of Hedging Obligations and that portion of the
         Credit Agreement Obligations constituting accrued and unpaid interest
         on the Loans, L/C Borrowings and other Credit Agreement Obligations,
         ratably among the Lenders and each applicable L/C Issuer in proportion
         to the respective amounts described in this clause payable to them;

                  (d) to payment of that portion of the Credit Agreement
         Obligations constituting unpaid principal of the Loans and L/C
         Borrowings, ratably among the Lenders and each L/C Issuer in proportion
         to the respective amounts described in this clause held by them;

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

                  (f) to the payment of all other Credit Agreement Obligations
         of the Loan Parties owing under or in respect of the Loan Documents
         that are due and payable to the Secured Parties on such date, ratably
         based upon the respective aggregate amounts of all such Credit
         Agreement Obligations owing to the Secured Parties on such date; and

                  (g) the balance, if any, after all of the Credit Agreement
         Obligations have been indefeasibly paid in full, to the Borrower or as
         otherwise required by Law.

Subject to Section 2.3(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause (e) above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Credit Agreement Obligations, if any, in the order set forth above.

                                   ARTICLE X.
                        THE AGENTS AND THE ISSUING BANKS

         10.1 APPOINTMENT AND AUTHORITY. Each of the Lenders and each L/C Issuer
hereby irrevocably appoints Bank of America to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent and the Collateral Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
and the Collateral Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. The provisions of this
Article are solely for the benefit of the Administrative Agent and the
Collateral Agent, the Lenders and each L/C Issuer, and neither the Borrower nor
any other Loan Party shall have rights as a third party beneficiary of any of
such provisions.

         10.2 RIGHTS AS A LENDER. The Person serving as the Administrative Agent
or the Collateral Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent or the Collateral Agent and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent or
the Collateral Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial advisor
or in any other advisory capacity for and generally engage in any kind of
business with the Borrower or any Subsidiary or other Affiliate thereof as if
such Person were not the Administrative Agent or the Collateral Agent hereunder
and without any duty to account therefor to the Lenders.

         10.3 EXCULPATORY PROVISIONS. The Administrative Agent and the
Collateral Agent shall not have any duties or obligations except those expressly
set forth herein and in the other Loan Documents. Without limiting the
generality of the foregoing, the Administrative Agent and the Collateral Agent:

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         (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;

         (b) shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent and the Collateral Agent are required to exercise as
directed in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be expressly provided for herein or in the other Loan
Documents); provided, that the Administrative Agent and the Collateral Agent
shall not be required to take any action that, in their opinion or the opinion
of their counsel, may expose the Administrative Agent or the Collateral Agent,
as applicable, to liability or that is contrary to any Loan Document or
applicable law; and

         (c) shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or the Collateral Agent or any of their respective
Affiliates in any capacity.

         The Administrative Agent and the Collateral Agent shall not be liable
for any action taken or not taken by it, WHETHER OR NOT RELATED TO ANY SINGULAR,
JOINT OR CONCURRENT NEGLIGENCE OF SUCH AGENTS, (i) with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent or the Collateral
Agent, as applicable, shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 11.1 and 9.2) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent and the
Collateral Agent shall be deemed not to have knowledge of any Default unless and
until notice describing such Default is given to the Administrative Agent or the
Collateral Agent, as applicable, by the Borrower, a Lender or an L/C Issuer.

         The Administrative Agent and the Collateral Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent or the Collateral Agent, as
applicable.

         10.4 RELIANCE BY THE AGENTS. The Agents shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by them to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Administrative Agent also may
rely upon any statement made to it orally or by telephone and believed by it to
have been made by the

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proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan, or
the issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume
that such condition is satisfactory to such Lender or such L/C Issuer unless the
Administrative Agent shall have received notice to the contrary from such Lender
or such L/C Issuer prior to the making of such Loan or the issuance of such
Letter of Credit. The Agents may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by them,
and shall not be liable for any action taken or not taken by them in accordance
with the advice of any such counsel, accountants or experts.

         10.5 DELEGATION OF DUTIES. The Agents may perform any and all of their
respective duties and exercise their respective rights and powers hereunder or
under any other Loan Document by or through any one or more sub-agents appointed
by the Agents, respectively. The Agents and any such sub-agent may perform any
and all of their respective duties and exercise their respective rights and
powers by or through their respective Related Parties. The exculpatory
provisions of this Article shall apply to any such sub-agent and to the Related
Parties of the Agents and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agents.

         10.6 RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may
at any time give notice of its resignation to the Lenders, each L/C Issuer and
the Borrower. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and each L/C Issuer, appoint a successor Administrative
Agent meeting the qualifications set forth above; provided, that if the
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders or
each L/C Issuer under any of the Loan Documents, the retiring Administrative
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and each L/C
Issuer directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section. Upon the acceptance
of a successor's appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged therefrom
as provided above in this Section). The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the retiring Administrative Agent's resignation hereunder and under the
other Loan Documents, the provisions of this Article and

                                     -125-
<PAGE>

Section 11.4 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent.

         Any resignation by Bank of America as Administrative Agent pursuant to
this Section shall also constitute its resignation as an L/C Issuer. Upon the
acceptance of a successor's appointment as Administrative Agent hereunder, (a)
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C
Issuer shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents, and (c) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit issued by the
retiring L/C Issuer, if any, outstanding at the time of such succession or make
other arrangement satisfactory to the retiring L/C Issuer to effectively assume
the obligations of the retiring L/C Issuer with respect to such Letters of
Credit.

         10.7 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender and each L/C Issuer acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and each L/C Issuer also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

         10.8 NO OTHER DUTIES, ETC. Anything herein to the contrary
notwithstanding, none of the Bookrunners, Arrangers or other Agents listed on
the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.

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

         (a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all other
Credit Agreement Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of the
Lenders, each applicable L/C Issuer and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Lenders, such L/C Issuer and the Administrative Agent and their respective
agents and

                                     -126-
<PAGE>

counsel and all other amounts due the Lenders, each applicable L/C Issuer and
the Administrative Agent under Sections 2.3(i) and (j), 2.8 and 11.4) allowed in
such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and each applicable L/C Issuer to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders and each
applicable L/C Issuer, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.8 and 11.4.

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

         10.10 COLLATERAL AND GUARANTY MATTERS.

         (a) The Administrative Agent and the Collateral Agent are irrevocably
authorized, at the discretion of the Administrative Agent or the Collateral
Agent from time to time, to take any of the following actions or to direct the
Collateral Trustee or other applicable Persons to take any of the following
actions, in each case as the Administrative Agent or the Collateral Agent shall
determine to be in the interest of the Lenders:

                  (i) accept, release, subordinate or otherwise modify any Lien
         on any real or personal property, including any security issued by or
         other ownership interest in any Person, (A) with respect to
         acceptances, at any time, (B) with respect to releases, upon the
         Release Date or upon termination of the Aggregate Commitments and
         payment in full of all Credit Agreement Obligations (other than
         contingent indemnification obligations) and the expiration or
         termination of all Letters of Credit, (C) with respect to releases, to
         the extent of property that is or will be sold, monetized, securitized,
         leased or otherwise transferred or disposed of as part of or in
         connection with any transaction required or permitted under any Loan
         Document or otherwise to the extent contemplated by any transaction
         required or permitted under any Loan Document (and without limiting any
         other applicable releases, to the extent any Subsidiary ceases to be a
         Subsidiary of the Borrower, or all or substantially all of its assets
         is sold or otherwise transferred or disposed of, then regardless of the
         form of such transaction such release may extend to all of the
         ownership interests in such Subsidiary and the assets of such
         Subsidiary), (D) with respect to subordinations, to the extent the Lien
         which benefits from the subordination is permitted by Section 7.1, or
         (E) under other circumstances, to the extent such actions under such
         other circumstances are approved, authorized or ratified in writing by
         the Required Lenders or such greater percentage of Lenders required
         under Section 11.1(i) or

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<PAGE>

         (j); provided that in any circumstances when any release is authorized,
         any lesser modification such as a partial release or subordination is
         also authorized;

                  (ii) accept, release, subordinate or otherwise modify the
         Guaranty, any other Guarantee of any Credit Agreement Obligations or as
         applicable any Person obligated under the Guaranty or any such
         Guarantee, (A) with respect to acceptances, at any time, (B) with
         respect to releases, if the applicable guarantor ceases to be a
         Subsidiary as a result of a transaction permitted hereunder or
         otherwise to the extent contemplated by any transaction required or
         permitted under any Loan Document (and without limiting any other
         applicable releases, to the extent any Subsidiary that is an issuer of
         "Excluded Securities" as defined in the Collateral Trust Agreement is
         released from the Guaranty or any such Guarantee, then such release may
         extend to a release of Liens in the Excluded Securities issued by such
         Subsidiary) or (C) under other circumstances, to the extent such other
         actions under such circumstances are approved, authorized or ratified
         in writing by the Required Lenders or such greater percentage of
         Lenders required under Section 11.1(i) or (j); provided that in any
         circumstances when any release is authorized, any lesser modification
         such as a partial release or subordination is also authorized;

                  (iii) take or direct the taking of any action to which clause
         (i) above applies (other than the release of, or the subordination of
         the Secured Parties' Lien on, all or substantially all of the
         Collateral in any transaction or series of related transactions) if and
         to the extent determined by the Administrative Agent or the Collateral
         Agent that the cost to the Credit Parties of not taking such action,
         including administrative costs, is disproportionate to the benefit to
         be maintained by the Secured Parties by not taking such action;

                  (iv) enter into any Texas Genco Intercreditor Agreement and
         other intercreditor agreements, subordination agreements and other
         agreements related to the Security Documents or the Guaranty or any
         other Guarantee of any Credit Agreement Obligations determined by the
         Administrative Agent or the Collateral Trustee to be in the interest of
         the Lenders, (A) with Persons who have been granted Liens permitted by
         Section 7.1, (B) to the extent contemplated by any transaction required
         or permitted under any Loan Document or (C) under other circumstances
         to the extent such other circumstances are approved, authorized or
         ratified in writing by the Required Lenders or such greater percentage
         of Lenders required under Section 11.1(i) or (j); and

                  (v) exercise rights (other than enforcement rights unless
         authorized by the Required Lenders) and perform obligations under the
         Collateral Trust Agreement and the other Security Documents, the
         Guaranty and any other Guarantee of any Credit Agreement Obligations,
         the documents and agreements referred to in clause (iv) above and
         related documents and agreements, in each case as required or as deemed
         appropriate in the discretion of the Administrative Agent or the
         Collateral Trustee, including amending, supplementing, waiving,
         providing consent under or otherwise modifying any of the foregoing
         documents or agreements, directing or providing notices or other
         communications to the Collateral Trustee and becoming or appointing any
         agent, co-agent, sub-agent, trustee, co-trustee, sub-trustee or the
         like for the Collateral Trustee or for other Persons.

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         (b) The Administrative Agent and the Collateral Agent hereby agree to
take or direct the Collateral Trustee or other applicable Person to take, to the
extent not otherwise prohibited by this Agreement, (1) any of the actions
authorized under clause (a)(i)(A)-(D), (a)(ii)(A) or (B), or (iv)(A) or (B)
above upon the occurrence of any of the applicable circumstances set forth in
such clauses and the receipt of the Borrower's written request that such action
be taken. The manner of taking such actions shall be determined by the
Administrative Agent and the Collateral Agent in their reasonable discretion
after consultation with the Borrower following the occurrence of any of such
applicable circumstances. In connection therewith, the Administrative Agent and
the Collateral Agent shall timely execute and deliver, provide, return or
otherwise make available or direct the execution and delivery, provision, return
or otherwise making available of all filings, recordings, notices, and other
documents and agreements, including financing statements, recordable real
property documents and general releases and notices, directions and other
communications to the Collateral Trustee, required by the terms of this
Agreement or reasonably requested by the Borrower.

         (c) Upon request by the Administrative Agent or the Collateral Agent at
any time, the Required Lenders will confirm in writing any authority to take or
direct the taking of any of the actions in accordance with this Section.

         (d) Any actions taken or directed to be taken by the Administrative
Agent or the Collateral Agent under the authority granted under this Section
shall be deemed for all purposes to be authorized by and shall be binding on and
may be made on behalf of the Lenders and the other Secured Parties under this
Agreement. In addition, whether or not so authorized, the Collateral Trustee,
any agent, co-agent, sub-agent, trustee, co-trustee, sub-trustee or the like for
the Collateral Trustee and any other Person to whom these provisions may relate
are directed to follow, and shall be entitled to rely upon as so authorized by
the Lenders and the other Secured Parties under this Agreement, any document or
agreement, notice, direction or other communication signed by or received from
the Administrative Agent or the Collateral Agent purporting to be authorized by
or to be on behalf of the Lenders or any other Secured Parties under this
Agreement or any subset thereof under this Section or otherwise.

         (e) Contemporaneously with the execution hereof, in addition to all
other authorizations provided in this Section, the Administrative Agent and the
Collateral Agent are irrevocably authorized to, and direct the Collateral
Trustee and any agent, co-agent, sub-agent, trustee, co-trustee, sub-trustee or
the like to, and hereby so direct all of them to, execute and deliver, provide,
return or otherwise make available all filings, recordings, notices and
documents and agreements (i) necessary or desirable to satisfy the conditions
set forth in Section 4.1, (ii) necessary or desirable to cause the return and
release of the OPH Guaranty, (iii) necessary or desirable to complete the
releases and other actions set forth on Schedule 10.10(e), and (iv) otherwise
deemed necessary or desirable by the Administrative Agent or the Collateral
Agent to effect the transactions contemplated in connection with the execution
and delivery of this Agreement.

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                                   ARTICLE XI.
                                  MISCELLANEOUS

         11.1 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than Fee Letters), and no consent to
any departure by the Borrower or any other Loan Party therefrom, shall be
effective unless in writing signed by the Required Lenders (or the
Administrative Agent or Collateral Agent, with the authorization of the Required
Lenders) and the Borrower or the applicable Loan Party, as the case may be, and,
if not signed by the Administrative Agent, acknowledged by the Administrative
Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, that no such
amendment, waiver or consent shall:

         (a) waive any condition set forth in Section 4.1(a), or, in the case of
the initial Credit Extension, Section 4.2, without the written consent of each
Lender;

         (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 9.2) without the written consent of
such Lender;

         (c) postpone any date fixed by this Agreement or any other Loan
Document for any payment or mandatory prepayment of principal, interest, fees or
other amounts due to the Lenders (or any of them) or any scheduled or mandatory
reduction of the Aggregate Commitments hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;

         (d) reduce the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso
to this Section) any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby; provided, that only the consent of the Required Lenders shall be
necessary to amend the definition of "Default Rate" or to waive any Obligation
of the Borrower to pay interest or Letter of Credit Fees at the Default Rate;

         (e) change Section 2.12 or Section 9.3 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender;

         (f) change any provision of this Section, the definition of "Required
Lenders" or the definition of "Core Asset Consent" or any other provision hereof
specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Lender;

         (g) change any provision of Section 11.6 the effect of which would
impose additional restrictions on assignments and participations by Lenders
without the written consent of each Lender;

         (h) change any provision of Sections 2.4(b)(vii), (viii), (ix) and (x)
without the written consent of each Lender;

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<PAGE>

         (i) except as otherwise permitted, authorized or required by any Loan
Document, release any Guarantor from the Guaranty without the written consent of
each Lender;

         (j) except as otherwise permitted, authorized or required by any Loan
Document, release all or substantially all of the Collateral in any transaction
or series of related transactions, without the written consent of each Lender;

         (k) change any provision of Section 7.11(a)(i) or 7.11(b)(i) or Section
7.5(b) or (in each case) any defined term referred to or applicable therein,
without the written consent of Lenders having more than 66--2/3% of the
Revolving Credit Exposure; or

         (l) except to add any additional, or increase, any L/C Issuer Amount
for Letters of Credit with the consent of the Borrower and the affected L/C
Issuer, change any provision of Schedule 2.1 insofar as it relates to any L/C
Issuer Amount for Letters of Credit, without the written consent of each L/C
Issuer and (unless an Event of Default has occurred and is continuing) the
Borrower;

and, provided, further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by each L/C Issuer in addition to the Lenders required
above, affect the rights or duties of any L/C Issuer under this Agreement or any
Issuer Document relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iii) Section 11.6(h) may not be amended, waived or otherwise
modified without the consent of each Granting Lender all or any part of whose
Loans are being funded by an SPC at the time of such amendment, waiver or other
modification; and (iv) the Fee Letters may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.

         11.2 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION.

         (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in clause (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:

                  (i) if to the Borrower, the Administrative Agent or an L/C
         Issuer, to the address, telecopier number, electronic mail address or
         telephone number specified for such Person on Schedule 11.2; and

                  (ii) if to any other Lender, to the address, telecopier
         number, electronic mail address or telephone number specified in its
         Administrative Questionnaire.

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<PAGE>

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in clause (b) below, shall be effective as provided in such clause (b).

         (b) Electronic Communications. Notices and other communications to the
Lenders and each L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided, that the
foregoing shall not apply to notices to any Lender or any L/C Issuer pursuant to
Article II if such Lender or such L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided, that approval of such procedures may be limited to particular notices
or communications.

         Unless the Administrative Agent otherwise prescribes, (i) notices and
other communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement); provided, that if such notice or other communication
is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

         (c) Change of Address, Etc. Each of the Borrower, the Administrative
Agent and each L/C Issuer may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to the other parties
hereto. Each other Lender may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to the Borrower, the
Administrative Agent and each L/C Issuer.

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

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         11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, any L/C
Issuer or the Administrative Agent to exercise, and no delay by any such Person
in exercising, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

         11.4 EXPENSES; INDEMNITY; DAMAGE WAIVER.

         (a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including the reasonable fees, charges and disbursements of one principal
counsel and reasonably required local counsel for the Administrative Agent), in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by an L/C Issuer in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred
by the Administrative Agent, any Lender or any L/C Issuer (including the
reasonable fees, charges and disbursements of any counsel for the Administrative
Agent, any Lender or any L/C Issuer), and shall pay all fees and time charges
for attorneys who may be employees of the Administrative Agent, any Lender or
any L/C Issuer, in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents, including
its rights under this Section, or (B) in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.

         (b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and each L/C
Issuer, and each Related Party of any of the foregoing Persons (each such Person
being called an "Indemnitee") against, WHETHER OR NOT RELATED TO ANY NEGLIGENCE
OF THE INDEMNIFIED PARTIES, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee),
and shall indemnify and hold harmless each Indemnitee from all fees and time
charges and disbursements for attorneys who may be employees of any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any third party
or by the Borrower or any other Loan Party arising out of, in connection with,
or as a result of (i) the execution or delivery of this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by an L/C Issuer to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by the Borrower or

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<PAGE>

any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto, in all cases, whether or not caused by or
arising, in whole or in part, out of the comparative, contributory or sole
negligence of the Indemnitee; provided, that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee, (y) result from a claim
brought by the Borrower or any other Loan Party against an Indemnitee for breach
in bad faith of such Indemnitee's obligations hereunder or under any other Loan
Document, if the Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction or (z) result from any dispute arising solely between or
among any Lenders, Agents or L/C Issuers, which dispute is not a result of any
act or omission of any Loan Party.

         (c) Reimbursement by Lenders. To the extent that the Borrower for any
reason fails to indefeasibly pay any amount required under clause (a) or (b) of
this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), an L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), such L/C Issuer or such Related Party, as the case may be, such
Lender's Pro Rata Share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided, that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent (or any such sub-agent) or such L/C Issuer in
its capacity as such, or against any Related Party of any of the foregoing
acting for the Administrative Agent (or any such sub-agent) or such L/C Issuer
in connection with such capacity. The obligations of the Lenders under this
clause (c) are subject to the provisions of Section 2.11(d).

         (d) Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in clause (b) above shall
be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby.

         (e) Payments. All amounts due under this Section shall be payable not
later than ten Business Days after the Borrower's receipt of a written demand
therefor.

         (f) Survival. The agreements in this Section shall survive the
resignation of the Administrative Agent and any L/C Issuer, the replacement of
any Lender, the termination of the

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<PAGE>

Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Credit Agreement Obligations.

         11.5 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf
of the Borrower is made to the Administrative Agent, any L/C Issuer or any
Lender, or the Administrative Agent, any L/C Issuer or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Administrative Agent, such L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the Credit Agreement Obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred, and (b)
each Lender and each L/C Issuer severally agrees to pay to the Administrative
Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The Obligations of
the Lenders and each L/C Issuer under clause (b) of the preceding sentence shall
survive the payment in full of the Credit Agreement Obligations and the
termination of this Agreement.

         11.6 SUCCESSORS AND ASSIGNS.

         (a) Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither the
Borrower nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of clause (b) of this Section, (ii)
by way of participation in accordance with the provisions of clause (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject
to the restrictions of clause (f) of this Section, or (iv) to an SPC in
accordance with the provisions of clause (h) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in clause (d) of
this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, each L/C Issuer and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

         (b) Assignments by Lenders. Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans
(including for purposes of this clause (b), participations in L/C Obligations)
at the time owing to it); provided, that:

                  (i) except in the case of an assignment of the entire
         remaining amount of the assigning Lender's Commitment and the Loans at
         the time owing to it or in the case of an

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<PAGE>

         assignment to a Lender or an Affiliate of a Lender or an Approved Fund
         with respect to a Lender, the aggregate amount of the Commitment (which
         for this purpose includes Loans outstanding thereunder) or, if the
         Commitment is not then in effect, the principal outstanding balance of
         the Loans of the assigning Lender subject to each such assignment,
         determined as of the date the Assignment and Assumption with respect to
         such assignment is delivered to the Administrative Agent or, if "Trade
         Date" is specified in the Assignment and Assumption, as of the Trade
         Date, shall not be less than $1,000,000 with respect to Term Loans and
         $10,000,000 with respect to Revolving Credit Commitments, unless each
         of the Administrative Agent and, so long as no Event of Default has
         occurred and is continuing, the Borrower otherwise consents (each such
         consent not to be unreasonably withheld or delayed);

                  (ii) each partial assignment shall be made as an assignment of
         a proportionate part of all the assigning Lender's rights and
         obligations under this Agreement with respect to the Loans or the
         Commitment assigned (including, with respect to any portion of any
         Revolving Loan Commitment assigned, the corresponding obligation to
         purchase participations in L/C Obligations pursuant to Section 2.3(b));

                  (iii) (x) any assignment of a Commitment must be approved by
         the Administrative Agent and each L/C Issuer, and (y) any reduction in
         any L/C Issuer Amount for Letters of Credit must be approved by each
         L/C Issuer and (unless an Event of Default has occurred and is
         continuing) the Borrower, in each case, such approval not to be
         unreasonably withheld or delayed; and

                  (iv) the parties to each assignment shall execute and deliver
         to the Administrative Agent an Assignment and Assumption, together with
         a processing and recordation fee of $3,500, and the Eligible Assignee,
         if it shall not be a Lender, shall deliver to the Administrative Agent
         an Administrative Questionnaire; provided that only one such fee shall
         be required in connection with a concurrent assignment by a Lender to
         one or more Approved Funds.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to clause (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.1, 3.4, 3.5, and 11.4 with respect
to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this clause
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with clause (d) of
this Section.

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<PAGE>

         (c) Register. The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain at the Administrative Agent's Office
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by each of the Borrower and each L/C Issuer at any
reasonable time and from time to time upon reasonable prior notice. In addition,
at any time that a request for a consent for a material or substantive change to
the Loan Documents is pending, any Lender wishing to consult with other Lenders
in connection therewith may request and receive from the Administrative Agent a
copy of the Register.

         (d) Participations. Any Lender may at any time, without the consent of,
or notice to, the Borrower or the Administrative Agent, sell participations to
any Person (other than a natural person or the Borrower or any of the Borrower's
Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such
Lender's rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender's
participations in L/C Obligations) owing to it); provided, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
Agent, the Lenders and each L/C Issuer shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.

         Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided, that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 11.1 that affects such Participant. Subject to clause (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.1, 3.4 and 3.5 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to clause (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 11.8 as though it were a Lender, provided, that such
Participant agrees to be subject to Section 2.11 as though it were a Lender.

         (e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Section 3.1 or 3.4 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.1 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.1(e) as though it were a
Lender.

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<PAGE>

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

         (g) Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Assumption
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

         (h) Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower (an "SPC")
the option to provide all or any part of any Loan that such Granting Lender
would otherwise be obligated to make pursuant to this Agreement; provided, that
(i) nothing herein shall constitute a commitment by any SPC to fund any Loan,
and (ii) if an SPC elects not to exercise such option or otherwise fails to make
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof or, if it fails to do so, to make such
payment to the Administrative Agent as is required under Section 2.11(b)(ii).
Each party hereto hereby agrees that (i) neither the grant to any SPC nor the
exercise by any SPC of such option shall increase the costs or expenses or
otherwise increase or change the obligations of the Borrower under this
Agreement (including its obligations under Section 3.4), (ii) no SPC shall be
liable for any indemnity or similar payment obligation under this Agreement for
which a Lender would be liable, and (iii) the Granting Lender shall for all
purposes, including the approval of any amendment, waiver or other modification
of any provision of any Loan Document, remain the lender of record hereunder.
The making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender. In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior debt of any SPC, it will not
institute against, or join any other Person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding
under the laws of the United States or any State thereof. Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to, but
without prior consent of the Borrower and the Administrative Agent and without
paying any processing fee therefor, assign all or any portion of its right to
receive payment with respect to any Loan to the Granting Lender and (ii)
disclose on a confidential basis any non-public information relating to its
funding of Loans to any rating agency, commercial paper dealer or provider of
any surety or Guarantee or credit or liquidity enhancement to such SPC.

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<PAGE>

         (i) Resignation as an L/C Issuer after Assignment. Notwithstanding
anything to the contrary contained herein, if at any time an L/C Issuer assigns
all of its Commitment and Loans pursuant to clause (b) above, such L/C Issuer
may, upon 30 days' notice to the Borrower and the Lenders, resign as an L/C
Issuer. In the event of any such resignation as an L/C Issuer, the Borrower
shall be entitled to appoint from among the Lenders a successor L/C Issuer
hereunder; provided, that (i) each outstanding Letter of Credit issued by such
L/C Issuer shall remain in full force and effect until such Letter of Credit has
terminated or expired (without giving effect to any renewals thereof) and (ii)
no failure by the Borrower to appoint any such successor shall affect the
resignation of such L/C Issuer as an L/C Issuer. Each resigning L/C Issuer shall
retain all the rights and obligations of an L/C Issuer hereunder with respect to
all Letters of Credit outstanding as of the effective date of its resignation as
an L/C Issuer and all L/C Obligations with respect thereto.

         11.7 CONFIDENTIALITY. Each of the Agents, the Collateral Agent, each
L/C Issuer and the Lenders understands that some of the information furnished to
it pursuant to this Agreement and the other Loan Documents may be received by it
prior to the time that such information shall have been made public, and each of
the Administrative Agent, the other Agents the Collateral Agent, each L/C Issuer
and the Lenders hereby agrees that it will keep all the Information (as defined
below) received by it confidential except that such Person shall be permitted to
disclose Information (i) only to such of its officers, directors, employees,
agents, representatives, auditors, consultants, advisors, trustees, investment
advisors, lawyers and affiliates as need to know such Information in connection
with this Agreement or any other Loan Document and who will be advised of the
confidential nature of such Information; (ii) to any other party to this
Agreement; (iii) to a proposed assignee or participant in accordance with
Section 11.6 hereof; provided that prior to any such disclosure each such
proposed assignee or participant shall agree in writing to be bound by the
provisions of this Section 11.7; (iv) to the extent required by Law and
regulations or by any subpoena or other legal process; (v) to the extent
requested by any bank regulatory authority or other regulatory authority; (vi)
to the extent such information (A) becomes publicly available other than as a
result of a breach of this Agreement or (B) becomes available to such Lender on
a nonconfidential basis from a source other than a Loan Party or any of its
Affiliates; (vii) to the extent the Borrower shall have consented to such
disclosure; (viii) in connection with the servicing of the Loans hereunder, in
protecting, exercising or enforcing any rights and/or remedies in connection
with any Loan Document or in any proceeding in connection with any Loan Document
or any of the transactions contemplated thereby or (ix) to the Collateral
Trustee. For the purposes of this Section, "Information" means all information
received from the Borrower, any other Loan Party or their respective officers,
directors, employees, agents, representatives, auditors, consultants, advisors,
trustees, investment advisors, lawyers and affiliates (collectively, "Credit
Party Agents") relating to the Borrower, any Loan Party, any Subsidiary of a
Loan Party or any of their respective businesses, other than any such
information that is available to the Administrative Agent, any other Agent, the
Collateral Agent, any L/C Issuer or any Lender on a nonconfidential basis prior
to disclosure by the Borrower, any Loan Party or any Subsidiary of a Loan Party.
Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information. In the event of any required disclosure of
Information, any Person required to maintain the confidentiality of such
Information as provided in this Section agrees to

                                     -139-
<PAGE>

use reasonable efforts to inform the Borrower as promptly as practicable of the
circumstances and the Information required to be disclosed to the extent not
prohibited by Law.

         11.8 RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing, each Lender, each L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, such L/C Issuer or any such Affiliate to or for the credit or the
account of the Borrower or any other Loan Party against any and all of the
Credit Agreement Obligations of the Borrower or such Loan Party now or hereafter
existing under this Agreement or any other Loan Document to such Lender or such
L/C Issuer, irrespective of whether or not such Lender or such L/C Issuer shall
have made any demand under this Agreement or any other Loan Document and
although such Credit Agreement Obligations of the Borrower or such Loan Party
may be contingent or unmatured or are owed to a branch or office of such Lender
or such L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness. The rights of each Lender, each L/C Issuer and
their respective Affiliates under this Section are in addition to other rights
and remedies (including other rights of setoff) that such Lender, such L/C
Issuer or their respective Affiliates may have. Each Lender and each L/C Issuer
agrees to notify the Borrower and the Administrative Agent promptly after any
such setoff and application; provided, that the failure to give such notice
shall not affect the validity of such setoff and application.

         11.9 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Credit Agreement Obligations hereunder.

         11.10 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.1, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

                                     -140-
<PAGE>

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

         11.12 SEVERABILITY. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         11.13 REPLACEMENT OF LENDERS. If any Lender requests compensation under
Section 3.4, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.1, if any Lender is a Defaulting Lender or if any other circumstance
exists hereunder that gives the Borrower the right to replace a Lender as a
party hereto, then the Borrower may, at its sole expense and effort, upon notice
to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 11.6), all of its interests,
rights and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided, that:

         (a) the Borrower shall have paid to the Administrative Agent the
assignment fee specified in Section 11.6(b);

         (b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.5) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);

         (c) in the case of any such assignment resulting from a claim for
compensation under Section 3.4 or payments required to be made pursuant to
Section 3.1, such assignment will result in a reduction in such compensation or
payments thereafter; and

         (d) such assignment does not conflict with applicable Laws.

                                     -141-
<PAGE>

         A Lender shall not be required to make any such assignment or
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.

         11.14 GOVERNING LAW; JURISDICTION; ETC.

         (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

         (b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK CITY AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT COURT OF THE STATE
OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT
THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

         (c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN CLAUSE (B) OF THIS SECTION. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

         (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.2. NOTHING
IN THIS AGREEMENT WILL AFFECT THE

                                     -142-
<PAGE>

RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

         11.15 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

         11.16 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act
(as hereinafter defined) and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Act.

         11.17 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

         11.18 CITIBANK INTERCREDITOR AGREEMENT. Those Lenders parties to this
Credit Agreement that were "Tranche A Lenders" (as defined in the Existing
Credit Agreement) under the Existing Credit Agreement hereby acknowledge and
agree that the Intercreditor Agreement dated as of March 28, 2003 between Bank
of America, N.A., as Administrative Agent and Collateral Agent and Citicorp USA,
Inc., as Tranche A Agent and Citibank, N.A., as Tranche A Collateral Agent, as
assigned to the Collateral Trustee, shall no longer be in effect.

         11.19 ORION BANK GUARANTORS. Pursuant to the Existing Credit Agreement,
the Orion Bank Guarantors (as defined in the Existing Credit Agreement) provided
a limited guaranty of the obligations thereunder. The Lenders hereby acknowledge
and agree that such Orion Bank Guarantors are released from all obligations with
respect to such limited guaranty, and that such limited guaranty is no longer in
effect.

                                     -143-
<PAGE>

         11.20 AMENDED AND RESTATED CREDIT AGREEMENT. This Agreement is intended
to amend the Existing Credit Agreement in its entirety. It is intended to
evidence a continuation and reaffirmation of the obligations under the Existing
Credit Agreement and not a termination or extinguishment thereof.

                                     -144-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                 RELIANT ENERGY, INC.

                                 By: ______________________________________
                                 Name: ____________________________________
                                 Title: ___________________________________

                                 Reliant Energy Asset Management, LLC
                                 Reliant Energy Aurora Development, LLC
                                 Reliant Energy Aurora Holding, LLC
                                 Reliant Energy Aurora I, LP
                                 Reliant Energy Aurora II, LP
                                 Reliant Energy Aurora, LP
                                 Reliant Energy Broadband, Inc.
                                 Reliant Energy California Holdings, LLC
                                 Reliant Energy Capital (Europe), Inc.
                                 Reliant Energy Communications, Inc.
                                 Reliant Energy Coolwater, Inc.
                                 Reliant Energy Corporate Services, LLC
                                 Reliant Energy Deer Park, Inc.
                                 Energy Ellwood, Inc.
                                 Reliant Energy Etiwanda, Inc.
                                 Reliant Energy Europe, Inc.
                                 Reliant Energy Florida, LLC
                                 Reliant Energy Florida Holdings, LLC
                                 Reliant Energy Key/Con Fuels, LLC
                                 Reliant Energy Mandalay, Inc.
                                 Reliant Energy Net Ventures, Inc.
                                 Reliant Energy Northeast Generation, Inc.
                                 Reliant Energy Northeast Holdings, Inc.
                                 Reliant Energy Ormond Beach, Inc.
                                 Reliant Energy Power Generation, Inc.
                                 Reliant Energy Power Operations I, Inc.
                                 Reliant Energy Power Operations II, Inc.
                                 Reliant Energy Renewables, Inc.
                                 Reliant Energy Retail Holdings, LLC
                                 Reliant Energy Retail Services, LLC
                                 Energy Sabine (Texas), Inc.
                                 Reliant Energy Services Desert Basin, LLC
                                 Reliant Energy Services International, Inc.
                                 Reliant Energy Services Mid-Stream, LLC
                                 Reliant Energy Services, Inc.
                                 Reliant Energy Seward, LLC

<PAGE>

                                 Reliant Energy Shelby County II, LP
                                 Reliant Energy Shelby County, LP
                                 Reliant Energy Shelby Development Corp.
                                 Reliant Energy Shelby Holding Corp.
                                 Reliant Energy Shelby I, LP
                                 Reliant Energy Shelby II, LP
                                 Reliant Energy Solutions, LLC
                                 Reliant Energy Solutions Holdings, LLC
                                 Reliant Energy Texas Renewables GP, LLC
                                 Reliant Energy Texas Renewables, LP
                                 Reliant Energy Trading Exchange, Inc.
                                 Reliant Energy Ventures, Inc.
                                 Reliant Energy Wholesale Generation, LLC
                                 Reliant Energy Wholesale Service Company
                                 Reliant Resources International Services, Inc.
                                 StarEn Power, LLC
                                 Texas Star Energy Company

                                 By:_______________________________________
                                 Name: Andrew Johannesen
                                 Title: Assistant Treasurer of the corporations
                                 and limited liability companies, and of the
                                 general partners of the limited partnerships,
                                 listed above

                                 Reliant Energy CapTrades Holding Corp.
                                 Reliant Energy Electric Solutions, LLC
                                 Reliant Energy Renewables Holdings II, LLC
                                 Reliant Energy Sabine (Delaware), Inc.
                                 Reliant Energy Solutions East, LLC

                                 By:_______________________________________
                                 Name: Andrew Johannesen
                                 Title: Attorney-in-fact

<PAGE>

                                 BANK OF AMERICA, N.A., AS ADMINISTRATIVE
                                 Agent, an L/C Issuer and a Lender

                                 By: ______________________________________
                                  Name: ____________________________________
                                  Title: ___________________________________

<PAGE>

                                 BARCLAYS BANK PLC, as a Syndication Agent, an
                                 L/C Issuer and a Lender

                                 By: ______________________________________
                                  Name: ____________________________________
                                  Title: ___________________________________

<PAGE>

                                 DEUTSCHE bank ag, NEW YORK
                                 BRANCH, as an L/C Issuer and a Lender

                                 By: ______________________________________
                                  Name: ____________________________________
                                  Title: ___________________________________

<PAGE>

                                 DEUTSCHE bank SECURITIES INC., as a
                                 Syndication Agent

                                 By: ______________________________________
                                  Name: ____________________________________
                                  Title: ___________________________________

<PAGE>

                                 GOLDMAN SACHS CREDIT PARTNERS
                                 L.P., as a Documentation Agent and a Lender

                                 By: ______________________________________
                                  Name: ____________________________________
                                  Title: ___________________________________

<PAGE>

                                 MERRILL LYNCH CAPITAL CORPORATION,
                                 as a Documentation Agent and a Lender

                                 By: ______________________________________
                                  Name: ____________________________________
                                  Title: ___________________________________

<PAGE>

                                 [INSERT NAME OF LENDER]

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