Document:

<PAGE>
                                                                  EXHIBIT 4.3

                                                                  EXECUTION COPY

                                U.S. $550,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                           Dated as of March 31, 2006

                                      Among

                       CENTERPOINT ENERGY RESOURCES CORP.

                                  as Borrower,

                                       and

                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders,

                                       and

          CITIGROUP GLOBAL MARKETS INC., DEUTSCHE BANK SECURITIES INC.
                       and BANC OF AMERICA SECURITIES LLC

                               as Lead Arrangers,

                                       and

                                 CITIBANK, N.A.

                            as Administrative Agent,

                                       and

     DEUTSCHE BANK SECURITIES INC. and BANK OF AMERICA, NATIONAL ASSOCIATION

                            as Co-Syndication Agents,

                                       and

            CITIBANK, N.A. and BANK OF AMERICA, NATIONAL ASSOCIATION

                                as Issuing Banks

                                       and

              THE ROYAL BANK OF SCOTLAND PLC and ABN AMRO BANK N.V.

                           as Co-Documentation Agents

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
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<S>                                                                         <C>
                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01 Certain Defined Terms.......................................     1
SECTION 1.02 Computation of Time Periods.................................    18
SECTION 1.03 Accounting Terms............................................    18

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01 The Revolving Advances and Letters of Credit................    18
SECTION 2.02 Making the Revolving Advances...............................    19
SECTION 2.03 Issuance of and Drawings and Reimbursement Under Letters of
             Credit......................................................    20
SECTION 2.04 The CAF Advances............................................    21
SECTION 2.05 Competitive Bid Procedure...................................    21
SECTION 2.06 Fees........................................................    23
SECTION 2.07 Termination or Reduction of the Revolving Commitments.......    24
SECTION 2.08 Repayment...................................................    24
SECTION 2.09 Interest....................................................    25
SECTION 2.10 Interest Rate Determination.................................    26
SECTION 2.11 Optional Conversion of Revolving Advances...................    26
SECTION 2.12 Optional Prepayments of Revolving Advances..................    26
SECTION 2.13 Increased Costs.............................................    27
SECTION 2.14 Illegality..................................................    27
SECTION 2.15 Payments and Computations...................................    28
SECTION 2.16 Taxes.......................................................    28
SECTION 2.17 Sharing of Payments, Etc....................................    30
SECTION 2.18 Use of Proceeds.............................................    31
SECTION 2.19 Extension Option............................................    31
SECTION 2.20 Increase in the Aggregate Revolving Commitments.............    31
SECTION 2.21 Evidence of Debt............................................    32

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01 Conditions Precedent to Effectiveness of Sections 2.01
             and 2.04....................................................    33
SECTION 3.02 Conditions Precedent to Each Revolving Borrowing, Issuance
             and Commitment Increase.....................................    34
SECTION 3.03 Conditions Precedent to Each CAF Borrowing..................    34
SECTION 3.04 Determinations Under Section 3.01...........................    35

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01 Representations and Warranties of the Borrower..............    35
</TABLE>

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                       ii

<TABLE>
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                                    ARTICLE V

                            COVENANTS OF THE BORROWER

SECTION 5.01 Affirmative Covenants.......................................    36
SECTION 5.02 Negative Covenants..........................................    38
SECTION 5.03 Total Debt to Capitalization Ratio..........................    42

                                   ARTICLE VI

                                EVENTS OF DEFAULT

SECTION 6.01 Events of Default...........................................    42
SECTION 6.02 Actions in Respect of the Letters of Credit upon Default....    44

                                   ARTICLE VII

                            THE ADMINISTRATIVE AGENT

SECTION 7.01 Authorization and Action....................................    44
SECTION 7.02 Administrative Agent's Reliance, Etc........................    45
SECTION 7.03 Citibank and Affiliates.....................................    45
SECTION 7.04 Lender Credit Decision......................................    45
SECTION 7.05 Indemnification.............................................    45
SECTION 7.06 Successor Administrative Agents.............................    46
SECTION 7.07 Agents; Lead Arrangers; Global Coordinators.................    46

                                  ARTICLE VIII

                                  MISCELLANEOUS

SECTION 8.01 Amendments, Etc.............................................    47
SECTION 8.02 Notices, Etc................................................    47
SECTION 8.03 No Waiver; Remedies.........................................    48
SECTION 8.04 Costs and Expenses..........................................    48
SECTION 8.05 Right of Set off............................................    49
SECTION 8.06 Binding Effect..............................................    50
SECTION 8.07 Assignments and Participations..............................    50
SECTION 8.08 Patriot Act Notification....................................    52
SECTION 8.09 Confidentiality.............................................    52
SECTION 8.10 Governing Law...............................................    52
SECTION 8.11 Counterparts................................................    52
SECTION 8.12 Removal of Lender...........................................    53
SECTION 8.13 Jurisdiction, Etc...........................................    53
</TABLE>

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                       iii

Schedules

Schedule I     List of Applicable Lending Offices
Schedule II    Global Coordinators Addresses
Schedule III   Commitment Percentages

Exhibits
Exhibit A      Form of Promissory Note
Exhibit B      Form of Notice of Borrowing
Exhibit C      Form of Assignment and Acceptance
Exhibit D      Form of CAF Note
Exhibit E      Form of Competitive Bid Request
Exhibit F      Form of Competitive Bid
Exhibit G      Form of Competitive Bid Confirmation
Exhibit H      Form of Notice of Letter of Credit Issuance
Exhibit I      Form of Assumption Agreement

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                CREDIT AGREEMENT

                           Dated as of March 31, 2006

          AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), among
CENTERPOINT ENERGY RESOURCES CORP., a Delaware corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders (the "Initial
Lenders") listed on the signature pages hereof, CITIGROUP GLOBAL MARKETS INC.
("CGMI"), DEUTSCHE BANK SECURITIES INC. ("Deutsche Bank") and BANC OF AMERICA
SECURITIES LLC, as joint lead arrangers and co-bookrunners (in such capacities,
the "Lead Arrangers"), and DEUTSCHE BANK and BANK OF AMERICA, NATIONAL
ASSOCIATION, as co-syndication agents (the "Co-Syndication Agents"), CITIBANK,
N.A. ("Citibank"), and BANK OF AMERICA, NATIONAL ASSOCIATION, as Issuing Banks,
and THE ROYAL BANK OF SCOTLAND PLC and ABN AMRO BANK N.V. as co-documentation
agents (the "Co-Documentation Agents") and CITIBANK, as administrative agent
(the "Administrative Agent") for the Lenders (as hereinafter defined).

                                   WITNESSETH

          WHEREAS, the Borrower entered into that certain Existing 5-Year
Revolving Credit Facility (as defined below); and

          WHEREAS, the Borrower has requested that the Existing 5-Year Revolving
Credit Facility be amended and restated in its entirety;

          NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto agree that on the Effective Date, the
Existing 5-Year Revolving Credit Facility shall be, and hereby is, amended and
restated in its entirety as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

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

          "Advance" means a Revolving Advance, a Letter of Credit Advance or a
     CAF Advance, as the case may be, by a Lender to the Borrower pursuant to
     Article II, and refers to a Base Rate Advance or a Eurodollar Rate Advance
     (each of which shall be a "Type" of Advance).

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

          "Administrative Agent's Account" means the account of the
     Administrative Agent maintained by the Administrative Agent at Citibank,
     N.A. with its office at Two Penns Way, Suite 200, New Castle, Delaware,
     19720, Account No. 36852248, Attention: Global Loans/Agency.

          "Aggregate Outstanding Extensions of Credit" means, as to any Lender
     at any time, an amount equal to the aggregate principal amount of all
     Revolving Advances, Letters of Credit, Letter of Credit Advances and CAF
     Advances made by such Lender then outstanding.

          "Applicable Lending Office" means, with respect to each Lender, such
     Lender's Domestic Lending Office in the case of a Base Rate Advance and
     such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
     Advance or CAF Eurodollar Rate Advance.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                        2

          "Applicable Margin" means, as of any date, a percentage per annum
     determined by reference to the Public Debt Rating in effect on such date as
     set forth below:

<TABLE>
<CAPTION>
   Public Debt Rating     Applicable Margin for     Applicable Margin for
   S&P/Moody's/Fitch        Base Rate Advances    Eurodollar Rate Advances
   ------------------     ---------------------   ------------------------
<S>                       <C>                     <C>
Level 1
Higher than Level 2                0.0%                     0.30%
Level 2
BBB+/Baal/BBB+                     0.0%                     0.35%
Level 3
BBB/Baa2/BBB                       0.0%                     0.45%
Level 4
BBB-/Baa3/BBB-                     0.0%                     0.60%
Level 5
BB+/Ba1/BB+                        0.0%                     1.00%
Level 6
Lower than Level 5 or
unrated by S&P, Moody's
and Fitch                         0.25%                     1.25%
</TABLE>

          "Applicable Percentage" means, as of any date, a percentage per annum
     determined by reference to the Public Debt Rating in effect on such date as
     set forth below:

<TABLE>
<CAPTION>
   Public Debt Rating     Applicable
   S&P/Moody's/Fitch      Percentage
   ------------------     ----------
<S>                       <C>
Level 1
Higher than Level 2          0.07%
Level 2
BBB+/Baal/BBB+               0.09%
Level 3
BBB/Baa2/BBB                 0.11%
Level 4
BBB-/Baa3/BBB-               0.15%
Level 5
BB+/Ba1/BB+                  0.20%
Level 6
Lower than Level 5 or
unrated by S&P, Moody's
and Fitch                    0.25%
</TABLE>

          "Applicable Utilization Fee" means, as of any date on which the
     aggregate principal amount of the Advances plus the Letters of Credit
     exceeds 50% of the aggregate amount of the Lenders' Revolving Commitments,
     a percentage per annum determined by reference to the Public Debt Rating in
     effect on such date as set forth below:

<TABLE>
<CAPTION>
   Public Debt Rating     Applicable Utilization
   S&P/Moody's/Fitch                Fee
   ------------------     ----------------------
<S>                       <C>
Level 1
Higher than Level 2                0.05%
Level 2
BBB+/Baal/BBB+                     0.05%
Level 3
BBB/Baa2/BBB                       0.10%
</TABLE>

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                        3

<TABLE>
<S>                       <C>
Level 4
BBB-/Baa3/BBB-                     0.10%
Level 5
BB+/Ba1/BB+                        0.10%
Level 6
Lower than Level 5 or
unrated by S&P, Moody's
and Fitch                          0.10%
</TABLE>

          "Assignment and Acceptance" means an assignment and acceptance entered
     into by a Lender and an Eligible Assignee, and accepted by the
     Administrative Agent, in substantially the form of Exhibit C hereto.

          "Available Amount" of any Letter of Credit means, at any time, the
     maximum amount available to be drawn under such Letter of Credit assuming
     compliance at such time with all conditions to drawing.

          "Base Rate" means a fluctuating interest rate per annum in effect from
     time to time, which rate per annum shall at all times be equal to the
     higher of:

               (a) the rate of interest announced publicly by Citibank in New
          York, New York, from time to time, as its base rate; and

               (b) 1/2 of one percent per annum above the Federal Funds Rate.

          "Base Rate Advance" means a Revolving Advance that bears interest as
     provided in Section 2.08(a)(i).

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

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

          "Borrowing" means either a Revolving Borrowing or a CAF Borrowing.

          "Borrowing Date" means any Business Day specified by the Borrower as a
     date on which the Borrower requests the relevant Lenders to make Advances
     hereunder.

          "Business Day" means a day of the year on which banks are not required
     or authorized by law to close in New York City and, if the applicable
     Business Day relates to any Eurodollar Rate Advances, on which dealings are
     carried on in the London interbank market.

          "CAF Advance" means an Advance made to the Borrower pursuant to
     Section 2.05 by a Lender in response to a Competitive Bid Request.

                     CERC 5-Year Revolving Credit Agreement

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                                        4

          "CAF Borrowing" means a borrowing consisting of CAF Advances under
     Section 2.05 consisting of CAF Advances of the same Type made on the same
     day by the Lender or Lenders whose Competitive Bid or Bids have been
     accepted pursuant to Section 2.05(d).

          "CAF Eurodollar Rate Advance" means any CAF Advance that bears
     interest at the Eurodollar Rate.

          "CAF Facility" has the meaning as set forth in Section 2.04(a).

          "CAF Margin" means, as to any Competitive Bid relating to a CAF
     Eurodollar Rate Advance, the margin (expressed as a percentage rate per
     annum in the form of a decimal to no more than four decimal places) to be
     added to or subtracted from the Eurodollar Rate in order to determine the
     interest rate acceptable to such Lender with respect to such CAF Eurodollar
     Rate Advance.

          "CAF Note" means a promissory note of the Borrower payable to the
     order of any Lender that has requested a CAF Note pursuant to Section
     2.21(a), in substantially the form of Exhibit D hereto, evidencing the
     aggregate indebtedness of the Borrower to such Lender resulting from the
     CAF Advances made by such Lender.

          "CAF Rate" means, as to any Competitive Bid made by a Lender pursuant
     to Section 2.05(b), (i) in the case of a CAF Eurodollar Rate Advance, the
     CAF Margin added to or subtracted from, as the case may be, the Eurodollar
     Rate, and (ii) in the case of a Fixed Rate Advance, the fixed rate of
     interest, in each case, offered by such Lender.

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

          "Capital Stock" means any and all shares, interests, participations or
     other equivalents (however designated) of capital stock of a corporation,
     and any and all equivalent ownership interests in a Person (other than a
     corporation), including without limitation, partnership interests in
     partnerships and member interests in limited liability companies, and any
     and all warrants or options to purchase any of the foregoing or securities
     convertible into any of the foregoing.

          "Commitment" means the Revolving Commitment and the Letter of Credit
     Commitment.

          "Commitment Increase" has the meaning as set forth in Section 2.20
     (a).

          "Commitment Percentage" means, for each Lender, the percentage
     identified as its Commitment Percentage opposite such Lender's name on
     Schedule III attached hereto, as such percentage may be modified by
     assignment in accordance with the terms of this Agreement or by reductions
     or increases in the Revolving Commitment pursuant to Section 2.07 and
     Section 2.20.

          "Communications" has the meaning specified in Section 8.02(b).

          "Competitive Bid" has the meaning as set forth in Section 2.05(b).

          "Competitive Bid Confirmation" has the meaning as set forth in Section
     2.05(d).

          "Competitive Bid Request" has the meaning as set forth in Section
     2.05(a).

          "Confidential Information" means information that the Borrower or any
     of its Subsidiaries furnishes to the Administrative Agent or any Lender in
     a writing designated as confidential or which in the Borrower's or its
     Subsidiaries' course of dealing with the Administrative Agent or such
     Lender has been designated as confidential, but does not include any such
     information that is or becomes generally available

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                        5

     to the public or that is or becomes available to the Administrative Agent
     or such Lender from a source other than the Borrower or its Subsidiaries.

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

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

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

          "Contractual Obligation" means, as to any Person, any provision of any
     security issued by such Person or of any written agreement, instrument or
     other written undertaking to which such Person is a party or by which it or
     any of its property is bound.

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

          "Convert", "Conversion" and "Converted" each refers to a conversion of
     Revolving Advances of one Type into Revolving Advances of the other Type
     pursuant to Section 2.10 or 2.11.

          "Declining Lender" has the meaning specified in Section 2.19.

          "Default" means any Event of Default or any event that would
     constitute an Event of Default but for the requirement that notice be given
     or time elapse or both.

          "Domestic Lending Office" means, with respect to any Lender, the
     office of such Lender specified as its "Domestic Lending Office" opposite
     its name on Schedule I hereto or in the Assignment and Acceptance pursuant
     to which it became a Lender, or such other office of such Lender as such
     Lender may from time to time specify to the Borrower and the Administrative
     Agent.

          "Effective Date" has the meaning specified in Section 3.01.

          "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
     and (iii) any other Person approved by the Administrative Agent, the
     Issuing Banks and, unless an Event of Default has occurred and is
     continuing at the time any assignment is effected in accordance with
     Section 8.07, the Borrower, such approval not to be unreasonably withheld
     or delayed; provided, however, that neither the Borrower nor an Affiliate
     of the Borrower shall qualify as an Eligible Assignee.

          "Environmental Action" means any action, suit, demand, demand letter,
     claim, notice of non compliance or violation, notice of liability or
     potential liability, investigation, proceeding, consent order or consent
     agreement relating in any way to any Environmental Law, Environmental
     Permit or Hazardous Materials or arising from alleged injury or threat of
     injury to health, safety or the environment, including, without limitation,
     (a) by any governmental or regulatory authority for enforcement, cleanup,
     removal,

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                        6

     response, remedial or other actions or damages and (b) by any governmental
     or regulatory authority or any third party for damages, contribution,
     indemnification, cost recovery, compensation or injunctive relief.

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

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

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

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

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

          "ERISA Event" means (a) (i) the occurrence of a reportable event,
     within the meaning of Section 4043 of ERISA, with respect to any Plan
     unless the 30 day notice requirement with respect to such event has been
     waived by the PBGC, or (ii) the requirements of subsection (1) of Section
     4043(b) of ERISA (without regard to subsection (2) of such Section) are met
     with respect to a contributing sponsor, as defined in Section 4001(a)(13)
     of ERISA, of a Plan, and an event described in paragraph (9), (10), (11),
     (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
     with respect to such Plan within the following 30 days; (b) the application
     for a minimum funding waiver with respect to a Plan; (c) the provision by
     the administrator of any Plan of a notice of intent to terminate such Plan
     pursuant to Section 4041(a)(2) of ERISA (including any such notice with
     respect to a plan amendment referred to in Section 4041(e) of ERISA); (d)
     the cessation of operations at a facility of the Borrower or any ERISA
     Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
     the withdrawal by the Borrower or any ERISA Affiliate from a Multiple
     Employer Plan during a plan year for which it was a substantial employer,
     as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the
     imposition of a lien under Section 302(f) of ERISA shall have been met with
     respect to any Plan; (g) the adoption of an amendment to a Plan requiring
     the provision of security to such Plan pursuant to Section 307 of ERISA; or
     (h) the institution by the PBGC of proceedings to terminate a Plan pursuant
     to Section 4042 of ERISA, or the occurrence of any event or condition
     described in Section 4042 of ERISA that constitutes grounds for the
     termination of, or the appointment of a trustee to administer, a Plan.

          "Eurocurrency Liabilities" has the meaning assigned to that term in
     Regulation D of the Board of Governors of the Federal Reserve System, as in
     effect from time to time.

          "Eurodollar Lending Office" means, with respect to any Lender, the
     office of such Lender specified as its "Eurodollar Lending Office" opposite
     its name on Schedule I hereto or in the Assignment and Acceptance pursuant
     to which it became a Lender (or, if no such office is specified, its
     Domestic Lending Office), or such other office of such Lender as such
     Lender may from time to time specify to the Borrower and the Administrative
     Agent.

          "Eurodollar Rate" means, for any Interest Period for each Eurodollar
     Rate Advance comprising part of the same Borrowing, an interest rate per
     annum equal to the rate per annum obtained by dividing (a) the rate
     (rounded upward to the nearest whole multiple of 1/100 of 1% per annum, if
     such rate per annum is not such a multiple) for deposits in U.S. dollars
     appearing on Page 3750 of the Telerate screen as of 11:00

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                        7

     A.M., London time, two Business Days before the first day of such Interest
     Period in an amount substantially equal to the Administrative Agent's
     Eurodollar Rate Advance comprising part of such Borrowing to be outstanding
     during such Interest Period and for a period equal to such Interest Period
     by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve
     Percentage for such Interest Period. In the event that such rate does not
     appear on Page 3750 of the Telerate screen (or otherwise on such screen),
     the "Eurodollar Rate" shall be determined by reference to such other
     comparable publicly available service for displaying eurodollar rates as
     may be selected by the Administrative Agent or, in the absence of such
     availability, by reference to the rate at which the Administrative Agent is
     offered Dollar deposits at or about 11:00 A.M., New York City time, two
     Business Days before the first day of such Interest Period in the interbank
     eurodollar market where its eurodollar and foreign currency and exchange
     operations are then being conducted for delivery on the first day of such
     Interest Period for the number of days comprised therein.

          "Eurodollar Rate Advance" means a Revolving Advance that bears
     interest as provided in Section 2.09(a)(ii).

          "Eurodollar Rate Reserve Percentage" for any Interest Period for all
     Eurodollar Rate Advances or CAF Eurodollar Rate Advances comprising part of
     the same Borrowing means the reserve percentage applicable two Business
     Days before the first day of such Interest Period under regulations issued
     from time to time by the Board of Governors of the Federal Reserve System
     (or any successor) for determining the maximum reserve requirement
     (including, without limitation, any emergency, supplemental or other
     marginal reserve requirement) for a member bank of the Federal Reserve
     System in New York City with respect to liabilities or assets consisting of
     or including Eurocurrency Liabilities (or with respect to any other
     category of liabilities that includes deposits by reference to which the
     interest rate on Eurodollar Rate Advances or CAF Eurodollar Rate Advances
     is determined) having a term equal to such Interest Period.

          "Events of Default" has the meaning specified in Section 6.01.

          "Exchange Act" means the Securities Exchange Act of 1933, as amended.

          "Existing 5-Year Revolving Credit Facility" means the $400,000,000
     5-Year Revolving Credit Agreement, dated as of June 30, 2005, among the
     Borrower, the lenders party thereto, and Citigroup Global Markets Inc.,
     Barclays Capital, the investment banking division of Barclays Bank PLC and
     Banc of America Securities LLC, as lead arrangers, and Barclays Bank PLC
     and Bank of America, National Association, as syndication agents, Citibank,
     N.A., Barclays Bank PLC and Bank of America, National Association as
     issuing banks, and Citibank, N.A., as administrative agent.

          "Extending Lender" has the meaning specified in Section 2.19.

          "Extended Termination Date" has the meaning specified in Section 2.19.

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

          "Fee Letter" means the Senior Credit Facility Fee Letter dated as of
     March 3, 2006 among Citibank, CGMI, and J.P. Morgan Securities Inc. and
     JPMorgan Chase Bank, N.A. and the Borrower.

          "Financial Officer" means, with respect to the Borrower, its chief
     financial officer, chief accounting officer, treasurer, assistant
     treasurer, comptroller or any other officer acceptable to the
     Administrative Agent.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                        8

          "Fitch" means Fitch Ratings, and any successors thereto.

          "Fixed Rate Advance" means any CAF Advance made by a Lender pursuant
     to Section 2.05(b) based upon a fixed percentage rate per annum offered by
     such Lender, expressed as a decimal (to no more than four decimal places),
     and accepted by the Borrower.

          "Fully Hedged" means, with respect to any Indexed Debt Securities,
     that the Borrower or any Consolidated Subsidiary of the Borrower either (i)
     owns or has in effect rights providing substantially the economic effect,
     in such context, of owning, a sufficient amount of the Indexed Asset
     relating thereto to satisfy completely its obligations at maturity of the
     Indexed Debt Securities or (ii) has in effect a hedging arrangement
     sufficient to enable it to satisfy completely its obligations at maturity
     of the Indexed Debt Securities.

          "GAAP" has the meaning specified in Section 1.03.

          "Global Coordinators" means J.P. Morgan Securities Inc. and Citigroup
     Global Markets Inc., in their capacities as global coordinators.

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

          "Guarantee" means, as to any Person (the "guaranteeing person"), any
     obligation of (a) the guaranteeing Person or (b) another Person (including,
     without limitation, any bank under any letter of credit) to induce the
     creation of which the guaranteeing person has issued a reimbursement,
     counterindemnity or similar obligation, in either case guaranteeing or in
     effect guaranteeing any principal of any Indebtedness for Borrowed Money
     (the "primary obligation") of any other third Person in any manner, whether
     directly or indirectly, including, without limitation, any obligation of
     the guaranteeing Person, whether or not contingent, (i) to purchase any
     such primary obligation or any property constituting direct or indirect
     security therefor, (ii) to advance or supply funds for the purchase or
     payment of any such primary obligation or (iii) otherwise to assure or hold
     harmless the owner of any such primary obligation against loss in respect
     thereof. The amount of any Guarantee of any guaranteeing person shall be
     deemed to be the lower of (a) an amount equal to the stated or determinable
     amount of the primary obligation in respect of which such Guarantee is made
     and (b) the maximum amount for which such guaranteeing person may be liable
     pursuant to the terms of the instrument embodying such Guarantee, unless
     such primary obligation and the maximum amount for which such guaranteeing
     person may be liable are not stated or determinable, in which case the
     amount of such Guarantee shall be such guaranteeing person's maximum
     reasonably anticipated liability in respect thereof as determined by the
     Borrower in good faith (and "guaranteed" and "guarantor" shall be construed
     accordingly).

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

          "Hybrid Preferred Securities" means preferred securities issued by any
     Hybrid Preferred Securities Subsidiary.

          "Hybrid Preferred Securities Subsidiary" means any Delaware business
     trust (or similar entity) (i) all of the common equity interest of which is
     owned (either directly or indirectly through one or more Wholly-Owned
     Subsidiaries) at all times by the Borrower, (ii) that has been formed for
     the purpose of issuing Hybrid Preferred Securities and (iii) substantially
     all of the assets of which consist at all times solely of the Junior
     Subordinated Debt and payments made from time to time on the Junior
     Subordinated Debt.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       9

          "Increase Date" has the meaning as set forth in Section 2.20(a).

          "Increasing Lender" has the meaning as set forth in Section 2.20(b).

          "Indebtedness" of any Person means the sum of (a) all items (other
     than Capital Stock, capital surplus, retained earnings, other comprehensive
     income, treasury stock and any other items that would properly be included
     in shareholder equity) that, in accordance with GAAP consistently applied,
     would be included in determining total liabilities as shown on the
     liability side of a balance sheet of such Person as at the date on which
     the Indebtedness is to be determined, (b) all obligations of such Person,
     contingent or otherwise, as account party or applicant (or equivalent
     status) in respect of any standby letters of credit or equivalent
     instruments, and (c) without duplication, the amount of Guarantees by such
     Person of items described in clauses (a) and (b); provided, however, that
     Indebtedness of a Person shall not include (i) any Junior Subordinated Debt
     owned by any Hybrid Preferred Securities Subsidiary, (ii) any Guarantee by
     the Borrower or its Subsidiaries of payments with respect to any Hybrid
     Preferred Securities or (iii) any Hybrid Preferred Securities.

          "Indexed Asset" means, with respect to any Indexed Debt Security, (i)
     any security or commodity that is deliverable upon maturity of such Indexed
     Debt Security to satisfy the obligations under such Indexed Debt Security
     at maturity or (ii) any security, commodity or index relating to one or
     more securities or commodities used to determine or measure the obligations
     under such Indexed Debt Security at maturity thereof.

          "Indexed Debt Securities" means any security issued by Borrower or any
     Consolidated Subsidiary of Borrower that (a) in accordance with GAAP, is
     shown on the consolidated balance sheet of Borrower and its Consolidated
     Subsidiaries as Indebtedness or a liability and (b) the obligations at
     maturity of which may be satisfied completely by the delivery of, or the
     amount of such obligations are determined by reference to, (1) an equity
     security issued by an issuer other than Borrower or any such Consolidated
     Subsidiary or (2) an underlying index, commodity or security.

          "Information Memorandum" means the information memorandum dated March
     2006 used by the Lead Arrangers in connection with the syndication of the
     Commitments.

          "Interest Period" means, for each Eurodollar Rate Advance comprising
     part of the same Revolving Borrowing and each CAF Eurodollar Rate Advance
     comprising part of the same CAF Borrowing, the period commencing on the
     date of such Eurodollar Rate Advance or CAF Eurodollar Rate Advance or the
     date of the Conversion of any Base Rate Advance into such Eurodollar Rate
     Advance and ending on the last day of the period selected by the Borrower
     pursuant to the provisions below and, thereafter, with respect to
     Eurodollar Rate Advances, each subsequent period commencing on the last day
     of the immediately preceding Interest Period and ending on the last day of
     the period selected by the Borrower pursuant to the provisions below. The
     duration of each such Interest Period shall be two weeks or one, two, three
     or six months (or such other period as may be approved by the
     Administrative Agent), as the Borrower may, upon notice received by the
     Administrative Agent not later than 11:00 A.M. (New York City time) on the
     third Business Day prior to the first day of such Interest Period, select;
     provided, however, that:

               (i) the Borrower may not select any Interest Period that ends
          after the Termination Date;

               (ii) Interest Periods commencing on the same date for Eurodollar
          Rate Advances comprising part of the same Revolving Borrowing or for
          CAF Eurodollar Rate Advances comprising part of the same CAF Borrowing
          shall be of the same duration;

               (iii) whenever the last day of any Interest Period would
          otherwise occur on a day other than a Business Day, the last day of
          such Interest Period shall be extended to occur on the next succeeding
          Business Day, provided, however, that, if such extension would cause
          the last day

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       10

          of such Interest Period to occur in the next following calendar month,
          the last day of such Interest Period shall occur on the next preceding
          Business Day; and

               (iv) whenever the first day of any Interest Period occurs on a
          day of an initial calendar month for which there is no numerically
          corresponding day in the calendar month that succeeds such initial
          calendar month by the number of months equal to the number of months
          in such Interest Period, such Interest Period shall end on the last
          Business Day of such succeeding calendar month.

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

          "Investment" in any Person means any loan or advance to such Person,
     any purchase or other acquisition of any capital stock, warrants, rights,
     options, other securities or all or substantially all of the assets of such
     Person or any capital contribution to such Person or any other investment
     in such Person.

          "Issuing Banks" means Bank of America, National Association, Citibank,
     N.A. and any other Lender approved as an Issuing Bank by the Administrative
     Agent and any Eligible Assignee to which a Letter of Credit Commitment
     hereunder has been assigned pursuant to Section 8.07 so long as each such
     Lender or Eligible Assignee expressly agrees to perform in accordance with
     their terms all of the obligations that by the terms of this Agreement are
     required to be performed by an Issuing Bank and notifies the Administrative
     Agent of its Applicable Lending Office and the amount of its Letter of
     Credit Commitment (which information shall be recorded by the
     Administrative Agent in the Register), for so long as such Issuing Bank,
     Lender or Eligible Assignee, as the case may be, shall have a Letter of
     Credit Commitment.

          "Junior Subordinated Debt" means subordinated debt of the Borrower or
     any Subsidiary of the Borrower (i) that is issued at par to a Hybrid
     Preferred Securities Subsidiary in connection with the issuance of Hybrid
     Preferred Securities, (ii) the payment of the principal of which and
     interest on which is subordinated (with certain exceptions) to the prior
     payment in full in cash or its equivalent of all senior indebtedness of the
     obligor thereunder and (iii) that has an original tenor no earlier than 30
     years from the issuance thereof.

          "Lead Arrangers" has the meaning specified in the recital of parties
     to this Agreement.

          "L/C Disbursement" means a payment or disbursement made by any Issuing
     Bank pursuant to a Letter of Credit.

          "Lenders" means the Initial Lenders and each Person that shall become
     a party hereto pursuant to Section 8.07.

          "Letter of Credit Advance" means an advance by any Issuing Bank or any
     Lender pursuant to Section 2.03(c).

          "Letter of Credit Commitment" means, with respect to any Issuing Bank
     at any time, the amount set forth opposite such Issuing Bank's name on
     Schedule III hereof under the caption "Letter of Credit Commitment" or, if
     such Issuing Bank has entered into one or more Assignment and Acceptances,
     set forth for such Issuing Bank in the Register maintained by the
     Administrative Agent pursuant to Section 8.07.

          "Letter of Credit Facility" means, at any time, an amount equal to the
     amount of the Issuing Banks' Letter of Credit Commitments at such time, as
     such amount may be reduced at or prior to such time pursuant to Section
     2.07.

          "Letters of Credit" has the meaning specified in Section 2.01(b).

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       11

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

          "Loan Documents" means this Agreement, the Notes or CAF Notes (if
     any), each Letter of Credit, and all other documents executed in connection
     herewith and therewith, including, without limitation, each Notice of
     Borrowing.

          "Mandatory Payment Preferred Stock" means any preference or preferred
     stock of the Borrower or of any Consolidated Subsidiary (in each case other
     than any issued to the Borrower or its Subsidiaries and other than Hybrid
     Preferred Securities or Junior Subordinated Debt) that is subject to
     mandatory redemption, sinking fund or retirement provisions; provided, that
     any amounts subject to any mandatory redemption, sinking fund or retirement
     provisions due and payable prior to the Termination Date or within one year
     following the Termination Date will not be considered Mandatory Payment
     Preferred Stock.

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

          "Material Adverse Change" means any material adverse change in the
     ability of the Borrower to perform its obligations under the Loan Documents
     on a timely basis (it being understood and agreed that a Material Adverse
     Change shall not include the effect of any True-Up Litigation) since
     December 31, 2005.

          "Material Adverse Effect" means any material adverse effect on the
     ability of the Borrower to perform its obligations under this Agreement or
     any other Loan Document on a timely basis (it being understood and agreed
     that a Material Adverse Effect shall not include the effect of any True-Up
     Litigation).

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

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

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

          "Net Tangible Assets" means, with respect to the Borrower, the total
     assets of the Borrower and its Consolidated Subsidiaries and Unrestricted
     Subsidiaries, minus goodwill and other intangible assets as shown on the
     balance sheet of the Borrower, its Consolidated Subsidiaries and the
     Unrestricted Subsidiaries delivered pursuant to Section 5.01(j) in respect
     of the most recently ended fiscal quarter of the Borrower and with respect
     to any other Person, the total assets of such Person and its Consolidated
     Subsidiaries, minus goodwill and other intangible assets as determined
     pursuant to such Person's most recently available financial statements.

          "Non-Recourse Debt" means (i) any Indebtedness for Borrowed Money
     incurred by any Project Finance Subsidiary to finance the acquisition,
     improvement, installation, design, engineering, construction, development,
     completion, maintenance or operation of, or otherwise to pay costs and
     expenses relating to or providing financing for any project, which
     Indebtedness for Borrowed Money does not provide for recourse against the
     Borrower or any Subsidiary of the Borrower (other than a Project Finance
     Subsidiary and such recourse as exists under a Performance Guaranty) or any
     property or asset of the Borrower or any Subsidiary of the Borrower (other
     than Equity Interests in, or the property or assets of, a Project Finance
     Subsidiary and such recourse as exists under a Performance Guaranty) and
     (ii) any refinancing of such

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       12

     Indebtedness for Borrowed Money that does not increase the outstanding
     principal amount thereof (other than to pay costs incurred in connection
     therewith and the capitalization of any interest, fees, premium or
     penalties) at the time of the refinancing or increase the property subject
     to any Lien securing such Indebtedness for Borrowed Money or otherwise add
     additional security or support for such Indebtedness for Borrowed Money.

          "Note" means a promissory note of the Borrower payable to the order of
     any Lender that has requested a Note pursuant to Section 2.21(a), in
     substantially the form of Exhibit A hereto, evidencing the aggregate
     indebtedness of the Borrower to such Lender resulting from the Revolving
     Advances made by such Lender.

          "Notice" has the meaning specified in Section 8.02(c).

          "Notice of Borrowing" has the meaning specified in Section 2.02.

          "Notice of Letter of Credit Issuance" has the meaning specified in
     Section 2.03(a).

          "Noticed Anniversary Date" has the meaning specified in Section 2.19.

          "Obligation" means, with respect to any Person, any payment,
     performance or other obligation of such Person of any kind, including,
     without limitation, any liability of such Person on any claim, whether or
     not the right of any creditor to payment in respect of such claim is
     reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
     disputed, undisputed, legal, equitable, secured or unsecured, and whether
     or not claim is discharged, stayed or otherwise affected by any proceeding
     referred to in Section 6.01(f). Without limiting the generality of the
     foregoing, the Obligations of the Borrower under the Loan Documents include
     (a) the obligation to pay principal, interest, charges, expenses, fees,
     attorneys' fees and disbursements, indemnities and other amounts payable by
     the Borrower under any Loan Document and (b) the obligation of the Borrower
     to reimburse any amount in respect of any of the foregoing that any Lender,
     in its sole discretion, may elect to pay or advance on behalf of the
     Borrower.

          "Parent" means CenterPoint Energy, Inc., a Texas corporation.

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

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

          "Permitted Liens" means with respect to any Person:

          (a) Liens for current taxes, assessments or other governmental charges
     that are not delinquent or remain payable without any penalty, or the
     validity or amount of which is contested in good faith by appropriate
     proceedings, provided, however, that adequate reserves with respect thereto
     are maintained on the books of such Person in accordance with GAAP, and
     provided further that any right to seizure, levy, attachment,
     sequestration, foreclosure or garnishment with respect to Property of such
     Person or any Subsidiary of such Person by reason of such Lien has not
     matured, or has been, and continues to be, effectively enjoined or stayed;

          (b) landlord Liens for rent not yet due and payable and Liens for
     materialmen, mechanics, warehousemen, carriers, employees, workmen,
     repairmen and other similar nonconsensual Liens imposed

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                            13

     by operation of law, for current wages or accounts payable or other sums
     not yet delinquent, in each case arising in the ordinary course of business
     or if overdue, that are being contested in good faith by appropriate
     proceedings, provided, however, that any right to seizure, levy,
     attachment, sequestration, foreclosure or garnishment with respect to
     Property of such Person or any Subsidiary of such Person by reason of such
     Lien has not matured, or has been, and continues to be, effectively
     enjoined or stayed;

          (c) Liens (other than any Lien imposed pursuant to Section 401(a)(29)
     or 412(n) of the Internal Revenue Code, ERISA or any environmental law,
     order, rule or regulation) incurred or deposits made, in each case, in the
     ordinary course of business, (i) in connection with workers compensation,
     unemployment insurance and other types of social security or (ii) to secure
     (or to obtain letters of credit that secure) the performance of tenders,
     statutory obligations, surety and appeals bonds, bids, leases, performance
     or payment bonds, purchase, construction, sales contacts, and other similar
     obligations, in each case not incurred or made in connection with the
     borrowing of money, the obtaining of advances or the payment of the
     deferred purchase price of property;

          (d) Liens arising out of or in connection with any litigation or other
     legal proceeding that is being contested in good faith by appropriate
     proceedings; provided, however, that adequate reserves with respect thereto
     are maintained on the books of such Person in accordance with GAAP; and
     provided further that subject to Section 6.01(f) (so long as such Lien is
     discharged or released within 30 days of attachment thereof), any right to
     seizure, levy, attachment, sequestration, foreclosure or garnishment with
     respect to Property of such Person or any Subsidiary of such Person by
     reason of such Lien has not matured, or has been and continues to be,
     effectively enjoined or stayed;

          (e) precautionary filings under the applicable Uniform Commercial Code
     made by a lessor with respect to personal property leased to such Person or
     any Subsidiary of such Person;

          (f) other non-material Liens or encumbrances none of which secures
     Indebtedness for Borrowed Money of the Borrower or any of its Subsidiaries
     or interferes materially with the use of the Property affected in the
     ordinary conduct of the Borrower's or its Subsidiaries' business and which
     individually or in the aggregate do not have a Material Adverse Effect;

          (g) easements, rights-of-way, restrictions and other similar
     encumbrances and exceptions to title existing or incurred in the ordinary
     course of business that, in the aggregate, do not in any case materially
     detract from the value of the property subject thereto or materially
     interfere with the ordinary conduct of the business of the Borrower and its
     Subsidiaries, taken as a whole;

          (h) Liens created by Capital Leases, provided that the Liens created
     by any such Capital Lease attach only to the Property leased to the
     Borrower or one of its Subsidiaries pursuant thereto, (ii) purchase money
     Liens securing Indebtedness of the Borrower or any of its Subsidiaries
     (including such Liens securing such Indebtedness incurred within twelve
     months of the date on which such Property was acquired), provided that all
     such Liens attach only to the Property purchased with the proceeds of the
     Indebtedness secured thereby and only secure the Indebtedness incurred to
     finance such purchase, (iii) Liens on receivables, customer charges, notes,
     ownership interests, contracts or contract rights which are transferred to
     the purchaser of such receivables, customer charges, notes, ownership
     interests, contracts or contract rights in connection with such sale,
     securitization or monetization, provided that such Liens secure only the
     obligations of the Borrower or any of its Subsidiaries in connection with
     such sale, securitization or monetization and (iv) Liens created by leases
     that do not constitute Capital Leases at the time such leases are entered
     into, provided that the Liens created thereby attach only to the Property
     leased to the Borrower or one of its Subsidiaries pursuant thereto.

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       14

          (j) Liens on (i) Property owned by a Project Financing Subsidiary or
     (ii) equity interests in a Project Financing Subsidiary (including in each
     case a pledge of a partnership interest, common stock or a membership
     interest in a limited liability company) securing Indebtedness of the
     Borrower or any of its Subsidiaries incurred in connection with a Project
     Financing; and

          (k) Liens on equity interests in an Unrestricted Subsidiary (including
     in each case a pledge of a partnership interest, common stock or a
     membership interest in a limited liability company) securing, subject to
     Section 5.02(e), Indebtedness of such Unrestricted Subsidiary.

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

          "Plan" means a Single Employer Plan or a Multiple Employer Plan.

          "Platform" has the meaning specified in Section 8.02(c).

          "Principal Property" means any natural gas distribution property,
     natural gas pipeline or gas processing plant located in the United States,
     except any such property that in the reasonable opinion of the board of
     directors of Borrower is not of material importance to the total business
     conducted by the Borrower and its Consolidated Subsidiaries. "Principal
     Property" shall not include any oil or gas property or the production or
     proceeds of production from an oil or gas producing property or the
     production or any proceeds of production of gas processing plants or oil or
     gas or petroleum products in any pipeline or storage field.

          "Project Finance Subsidiary" and "Project Finance Subsidiaries" means
     any Subsidiary of the Borrower (or any other Person in which the Borrower
     directly or indirectly owns a 50% or less interest) whose principal purpose
     is to incur Project Financing or to become an owner of interests in a
     Person so created to conduct the business activities for which such Project
     Financing was incurred, and substantially all the fixed assets of which
     Subsidiary or Person are those fixed assets being financed (or to be
     financed) in whole or in part by one or more Project Financings.

          "Project Financing" means any Indebtedness or lease obligations that
     do not constitute Capital Leases at the time such leases are entered into,
     in each case that are incurred to finance a project or group of projects
     (including any construction financing to the extent that such Indebtedness
     (or other obligations) expressly are not recourse to the Borrower or any of
     its Subsidiaries (other than a Project Financing Subsidiary) or any of
     their respective Property other than the Property of a Project Financing
     Subsidiary and equity interests in a Project Financing Subsidiary
     (including in each case a pledge of a partnership interest, common stock or
     a membership interest in a limited liability company).

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

          "Pro Rata Share" of any amount means, with respect to any Lender, at
     any time, the product of such amount times a fraction the numerator of
     which is the amount of such Lender's Revolving Commitment at such time (or,
     if the Commitments shall have terminated pursuant to Section 2.07 or 6.01,
     such Lender's Revolving Commitment as in effect immediately prior to such
     termination) and the denominator of which is the Revolving Facility at such
     time (or, if the Commitments shall have been terminated pursuant to Section
     2.07 or 6.01, the Revolving Facility as in effect immediately prior to such
     termination).

          "Public Debt Rating" means, as of any date, (a) at any time the senior
     unsecured long-term debt of the Borrower is rated by S&P, by Moody's and by
     Fitch and such ratings are equivalent, such rating, (b) the middle of such
     ratings in the case where there is a split between all such ratings or (c)
     if such ratings are split and two of the ratings fall in the same level
     (the "Majority Level"), and the third rating is in a different

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       15

     level then such rating shall be the Majority Level. For purposes of the
     foregoing, (x) if only two of such three agencies issue a rating, the
     higher of such ratings shall apply, provided that if the higher rating is
     two or more levels above the lower rating, the rating next above the lower
     of the two shall apply; if only one of such three agencies issues a rating,
     such rating shall apply and (y) if any such rating established by S&P,
     Moody's or Fitch shall be changed, such change shall be effective as of the
     date on which such change is first announced publicly by the rating agency
     making such change and (z) if S&P, Moody's or Fitch shall change the basis
     on which ratings are established or if any of S&P, Moody's or Fitch shall
     cease to be in the business of rating corporate debt obligations, the
     Borrower and the Administrative Agent shall negotiate in good faith if
     necessary to amend this definition to reflect such changed rating system or
     the unavailability of ratings from such rating agencies and, pending the
     effectiveness of any such amendment, the Public Debt Rating shall be
     determined by reference to the rating most recently in effect prior to such
     change or cessation, each reference to the Public Debt Rating announced by
     S&P, Moody's or Fitch, as the case may be, shall refer to the then
     equivalent rating by S&P, Moody's or Fitch, as the case may be.

          "Register" has the meaning specified in Section 8.07(c).

          "Regulation T" and "Regulation U" mean Regulation T and U,
     respectively, of the Board or any other regulation hereafter promulgated by
     the Board to replace the prior Regulation T or U, as the case may be, and
     having substantially the same function.

          "Required Lenders" means, at any time, Lenders owed or holding at
     least 51% of the sum of (a) the then aggregate unpaid principal amount of
     the Advances owing to the Lenders, (b) the aggregate Available Amount of
     all Letters of Credit outstanding at such time and (c) the aggregate Unused
     Revolving Credit Commitments at such time.

          "Requirements of Law" means, as to any Person, any law, statute or
     ordinance, decree, requirement, order, judgment, rule, or regulation of any
     Governmental Authority.

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

          "Restricted Subsidiary" means all Subsidiaries of the Borrower other
     than Unrestricted Subsidiaries.

          "Revolving Advances" has the meaning as set forth in Section 2.01.

          "Revolving Borrowing" means a borrowing consisting of Revolving
     Advances of the same Type, made by the Lenders on the same day under
     Section 2.02.

          "Revolving Commitment" has the meaning set forth in Section 2.01(a).

          "Revolving Extensions of Credit" means, as to any Lender at any time,
     an amount equal to the aggregate principal amount of all Revolving Advances
     held by such Lender then outstanding.

          "Revolving Facility" has the meaning as set forth in Section 2.01.

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

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

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                                       16

          "Second Extended Termination Date" has the meaning specified in
     Section 2.19.

          "Significant Subsidiary" means (i) for the purposes of determining
     what constitutes an "Event of Default" under Sections 6.01(d), (e), and (f)
     a Subsidiary of the Borrower (other than a Project Finance Subsidiary)
     whose total assets, as determined in accordance with GAAP, represent at
     least 10% of the total assets of the Borrower, on a consolidated basis, as
     determined in accordance with GAAP and (ii) for all other purposes the
     "Significant Subsidiaries" shall be those Subsidiaries whose total assets,
     as determined in accordance with GAAP, represent at least 10% of the total
     assets of the Borrower on a consolidated basis, as determined in accordance
     with GAAP for the Borrower's most recently completed fiscal year and
     identified in the certificate most recently delivered pursuant to Section
     5.01(j)(ii).

          "Single Employer Plan" means a single employer plan, as defined in
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
     Borrower or any ERISA Affiliate and no Person other than the Borrower and
     the ERISA Affiliates or (b) was so maintained and in respect of which the
     Borrower or any ERISA Affiliate could have liability under Section 4069 of
     ERISA in the event such plan has been or were to be terminated.

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

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

          "Termination Date" means the earlier of March 31, 2011 and the date of
     termination in whole of the Commitments pursuant to Section 2.07 or 6.01 or
     if extended pursuant to Section 2.19, the Extended Termination Date or
     Second Extended Termination Date, as applicable.

          "Total Aggregate Outstanding Extensions of Credit" means, at any time,
     the aggregate amount of Aggregate Outstanding Extensions of Credit of all
     Lenders outstanding at such time.

          "Total Commitments" means, at any time, the aggregate amount of the
     Commitments of all Lenders then in effect.

          "Total Debt" means, as of any date of determination, the sum of (i)
     the total Indebtedness for Borrowed Money as shown on the consolidated
     balance sheet of Borrower and its Consolidated Subsidiaries, determined
     without duplication of any Guarantee of Indebtedness for Borrowed Money of
     Borrower by any of its Consolidated Subsidiaries or of any Guarantee of
     Indebtedness of any such Consolidated Subsidiary by Borrower or any other
     Consolidated Subsidiary of Borrower, and any Mandatory Payment Preferred
     Stock, less (ii) such amount of Indebtedness for Borrowed Money
     attributable to amounts then outstanding under receivables facilities or
     arrangements to the extent that such amount would not have been shown as
     Indebtedness for Borrowed Money on a balance sheet prepared in

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                                       17

     accordance with GAAP prior to January 1, 1997, less (iii) with respect to
     any Indexed Debt Securities that are Fully Hedged and the liabilities in
     respect of which as shown on the consolidated balance sheet of Borrower and
     its Consolidated Subsidiaries have increased from the amount of liabilities
     in respect thereof at the time of their issuance by reason of an increase
     in the price of the Indexed Asset relating thereto, the excess of (a) the
     aggregate amount of liabilities in respect of such Indexed Debt Securities
     at the time of determination over (b) the initial amount of liabilities in
     respect of such Indexed Debt Securities at the time of their issuance,
     provided that at the time of determination such increase in the price of
     the Indexed Asset relating to such Indexed Debt Securities has not been
     recorded on such consolidated balance sheet, less (iv) Non-Recourse Debt of
     the Borrower and its Subsidiaries.

          "True-Up Litigation" means any litigation or other Proceeding in
     connection with the determination by the Public Utility Commission of Texas
     of the recovery by Parent and its Subsidiaries of stranded costs and other
     amounts to be recovered in the true-up process.

          "Type" has the meaning as set forth in the definition of "Advance".

          "Unused Revolving Credit Commitment" means, with respect to any Lender
     at any time, (a) such Lender's Revolving Commitment at such time minus,
     without duplication, (b) the sum of (i) the aggregate principal amount of
     all Revolving Advances and Letter of Credit Advances made by such Lender
     (in its capacity as a Lender) and outstanding at such time plus (ii) such
     Lender's Pro Rata Share of (A) the aggregate principal amount of all
     Letters of Credit outstanding at such time and (B) the aggregate principal
     amount of all Letters of Credit Advances made by the Issuing Banks pursuant
     to Section 2.03(c) and outstanding at such time.

          "Unrestricted Subsidiary" means any Subsidiary of the Borrower and its
     direct or indirect Subsidiaries that is designated by a Responsible Officer
     of the Borrower as an Unrestricted Subsidiary, but only if (x) the
     aggregate amount of Net Tangible Assets of all Unrestricted Subsidiaries at
     the time of designation does not exceed or would not exceed as a result of
     such designation the lesser of (a) 10% of the Net Tangible Assets of Parent
     and (b) 15% of the Net Tangible Assets of the Borrower, (y) such
     designation and the Investment of Borrower in such Subsidiary complies with
     the limitations in Section 5.02(j) and (z) such Subsidiary: (i) has no
     Indebtedness with recourse to the Borrower and the Restricted Subsidiaries
     except that permitted under Section 5.02(j); (ii) is not party to any
     agreement, contract, arrangement or understanding with the Borrower or any
     Significant Subsidiary of the Borrower unless the terms of any such
     agreement, contract, arrangement or understanding and related transactions
     are substantially no less favorable to the Borrower or such Significant
     Subsidiary than those that might be obtained at the time from Persons who
     are not Affiliates of the Borrower; (iii) is a Person with respect to which
     neither the Borrower nor any of its Significant Subsidiaries has any direct
     or indirect obligation that violates Section 5.02(j:, (a) to subscribe for
     additional Capital Stock of such Person or (b) to maintain or preserve such
     Person's financial condition or to cause such Person to achieve any
     specified levels of operating results; and (iv) does not, either alone or
     in the aggregate, operate, directly or indirectly, all or substantially all
     of the business of the Borrower and its Subsidiaries.

          Any designation of a Subsidiary of the Borrower as an Unrestricted
     Subsidiary shall be evidenced by a certificate of a Responsible Officer of
     the Borrower giving effect to such designation and a certificate executed
     by a Responsible Officer certifying that such designation complied with the
     preceding conditions and was permitted by Section 5.02(j) delivered to the
     Administrative Agent, for delivery to each Lender. 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 Agreement and any Indebtedness of such
     Subsidiary shall be deemed to be incurred by a Significant Subsidiary of
     the Borrower as of such date and, if such Indebtedness is not permitted to
     be incurred as of such date under Section 5.02(j), the Borrower shall be in
     default of such covenant. A Responsible Officer of the Borrower may at any
     time designate any Unrestricted Subsidiary to be a Subsidiary; provided
     that such designation shall be deemed to be an incurrence of Indebtedness
     by a Subsidiary of the Borrower of any outstanding Indebtedness of such
     Unrestricted Subsidiary and such designation shall only be permitted if (1)
     such Indebtedness is permitted under this Agreement calculated on a pro
     forma basis as if such

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                                       18

     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.

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

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

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

          SECTION 1.02 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".

          SECTION 1.03 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles in effect from time to time in the United States of
America ("GAAP").

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

          SECTION 2.01 The Revolving Advances and Letters of Credit. (a) The
Revolving Advances. Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make advances to the Borrower (the "Revolving
Advances") from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate amount not to exceed
at any time outstanding the amount set forth opposite such Lender's name on
Schedule III hereof or, if such Lender has entered into any Assignment and
Acceptance, set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(c), as such amount may be reduced
pursuant to Section 2.07 or increased pursuant to Section 2.20 (such Lender's
"Revolving Commitment", and, in the aggregate, the "Revolving Facility"). Each
Revolving Borrowing, in the case of a Revolving Borrowing consisting of
Eurodollar Rate Advances, shall be in minimum principal aggregate amounts of
$10,000,000 or an integral multiple of $1,000,000 in excess thereof, or in the
case of a Revolving Borrowing consisting of Base Rate Advances, shall be in
minimum principal aggregate amounts of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, and shall consist of Revolving Advances of the
same Type made on the same day by the Lenders ratably according to their
respective Revolving Commitments. Within the limits of each Lender's Revolving
Commitment, the Borrower may borrow under this Section 2.01, prepay pursuant to
Section 2.12 and reborrow under this Section 2.01.

          (b) The Letters of Credit. Each Issuing Bank severally agrees, on the
terms and conditions hereinafter set forth, to issue letters of credit (the
"Letters of Credit") in U.S. Dollars for the account of the Borrower in support
of obligations (including, without limitation, performance, bid and similar
bonding obligations and credit enhancement) of the Borrower and its Affiliates,
from time to time on any Business Day during the period from the Effective Date
until the Business Day before the Termination Date in an aggregate Available
Amount (i) for all Letters of Credit issued by such Issuing Bank not to exceed
at any time the lesser of (x) the Letter of Credit Facility at such time and (y)
such Issuing Bank's Letter of Credit Commitment at such time and (ii) for each
such Letter of

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                                       19

Credit not to exceed the Unused Revolving Credit Commitments of the Lenders at
such time; provided, however, that in no event shall the aggregate Available
Amount for all Letters of Credit exceed $200,000,000. No Letter of Credit shall
have an expiration date (including all rights of the Borrower or the beneficiary
to require renewal) later than the Business Day before the Termination Date.
Within the limits of the Letter of Credit Facility, and subject to the limits
referred to above, the Borrower may request the issuance of Letters of Credit
under this Section 2.01(b), repay any Letter of Credit Advances resulting from
drawings thereunder pursuant to Section 2.03(c) and request the issuance of
additional Letters of Credit under this Section 2.01(b).

          (c) Total Revolving Commitments. Notwithstanding anything else
contained herein, the obligations of the Lenders to make Advances and of the
Issuing Banks to issue Letters of Credit is subject to the condition that the
Total Aggregate Outstanding Extensions of Credit shall not exceed the total of
the Revolving Commitments.

          SECTION 2.02 Making the Revolving Advances. (a) Each Revolving
Borrowing shall be made on notice, given not later than 11:00 A.M. (New York
City time) on the third Business Day prior to the date of the proposed Revolving
Borrowing in the case of a Revolving Borrowing consisting of Eurodollar Rate
Advances, or on the same Business Day as the date of the proposed Revolving
Borrowing in the case of a Revolving Borrowing consisting of Base Rate Advances,
by the Borrower to the Administrative Agent, which shall give to each Lender
prompt notice thereof by telecopier or electronic communication. Each such
notice of a Revolving Borrowing (a "Notice of Borrowing") shall be by telephone,
confirmed immediately in writing, or telecopier or electronic communication,
complying in all material respects with the form of Exhibit B hereto, specifying
therein the requested (i) date of such Revolving Borrowing, (ii) Type of
Revolving Advances comprising such Revolving Borrowing, (iii) aggregate amount
of such Revolving Borrowing, (iv) in the case of a Revolving Borrowing
consisting of Eurodollar Rate Advances, initial Interest Period for each such
Revolving Advance and (v) whether any of such Revolving Borrowing shall be used
by the Borrower to repay commercial paper. Each Lender shall, before 11:00 A.M.
(New York City time) on the date of such Revolving Borrowing, in the case of a
Revolving Borrowing consisting of Eurodollar Rate Advances, or before 3:00 P.M.
(New York City time) in the case of a Revolving Borrowing consisting of Base
Rate Advances, make available for the account of its Applicable Lending Office
to the Administrative Agent at the Administrative Agent's Account, in same day
funds, such Lender's ratable portion of such Revolving Borrowing. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower at the Administrative Agent's address
referred to in Section 8.02 no later than 12:00 P.M. (New York City time) on
such date, in the case of a Revolving Borrowing consisting of Eurodollar Rate
Advances, or 4:00 P.M. (New York City time) on such date, in the case of a
Revolving Borrowing consisting of Base Rate Advances.

          (b) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for any Revolving
Borrowing if the aggregate amount of such Revolving Borrowing is less than
$10,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances
shall then be suspended pursuant to Section 2.10 or 2.14 and (ii) the Eurodollar
Rate Advances may not be outstanding as part of more than twelve separate
Revolving Borrowings.

          (c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Revolving Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such Revolving Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Revolving Advance to be made by
such Lender as part of such Revolving Borrowing when such Revolving Advance, as
a result of such failure, is not made on such date.

          (d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Revolving Borrowing that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
Revolving Borrowing, the Administrative Agent may assume that such Lender has
made such portion available to the Administrative Agent on the date of such
Revolving Borrowing in accordance with subsection (a) of this Section 2.02 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have

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                                       20

so made such ratable portion available to the Administrative Agent, such Lender
and the Borrower severally agree to repay to the Administrative Agent forthwith
on demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to Revolving Advances
comprising such Revolving Borrowing and (ii) in the case of 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. 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 shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
Revolving Advance as part of such Revolving Borrowing for purposes of this
Agreement.

          (e) The failure of any Lender to make the Revolving Advance to be made
by it as part of any Revolving Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Revolving Advance on the date of
such Revolving Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Revolving Advance to be made by such other Lender
on the date of any Revolving Borrowing.

          SECTION 2.03 Issuance of and Drawings and Reimbursement Under Letters
of Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M. (New York City time) on the second
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent for delivery to each Lender prompt notice thereof by
telecopier or electronic communication. Each such notice of issuance of a Letter
of Credit shall be substantially in the form of Exhibit H attached hereto, or as
agreed between the Borrower and each Issuing Bank (a "Notice of Letter of Credit
Issuance"), shall be by telephone (conveying the information contained on
Exhibit H attached hereto), confirmed immediately in writing, or by telecopier
or electronic communication. If the requested form of such Letter of Credit is
acceptable to such Issuing Bank in its reasonable discretion, such Issuing Bank
will, upon fulfillment of the applicable conditions set forth in Article III,
make such Letter of Credit available to the Borrower at its office referred to
in Section 8.02 or as otherwise agreed with the Borrower in connection with such
issuance.

          (b) Letter of Credit Reports. Each Issuing Bank shall furnish to the
Administrative Agent (A) on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued by such
Issuing Bank during the previous week and drawings during such week under all
Letters of Credit issued by such Issuing Bank, (B) for delivery to each Lender
on the first Business Day of each month a written report summarizing issuance
and expiration dates of Letters of Credit issued by such Issuing Bank during the
preceding month and drawings during such month under all Letters of Credit
issued by such Issuing Bank and (C) to the Administrative Agent and each Lender
on the first Business Day of each calendar quarter a written report setting
forth the average daily aggregate Available Amount during the preceding calendar
quarter of all Letters of Credit issued by such Issuing Bank.

          (c) Participations in Letters of Credit. Upon the issuance of a Letter
of Credit by any Issuing Bank under Section 2.03(a), such Issuing Bank shall be
deemed, without further action by any party hereto, to have sold to each Lender,
and each Lender shall be deemed, without further action by any party hereto, to
have purchased from such Issuing Bank, a participation in such Letter of Credit
in an amount for each Lender equal to such Lender's Pro Rata Share of the
Available Amount of such Letter of Credit, effective upon the issuance of such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay such Lender's Pro
Rata Share of each L/C Disbursement made by such Issuing Bank and not reimbursed
by the Borrower forthwith on the date due as provided in Section 2.08(b) by
making available for the account of its Applicable Lending Office to the
Administrative Agent for the account of such Issuing Bank by deposit to the
Administrative Agent's Account, in same day funds, an amount equal to such
Lender's Pro Rata Share of such L/C Disbursement. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this Section
2.03(c) in respect of Letters of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default or the termination of the
Commitments, and that each such payment shall be made without any off-set,
abatement, withholding or reduction whatsoever. If and to the extent that any
Lender shall not have so made the amount of such L/C Disbursement available to
the Administrative Agent, such Lender agrees to pay to the Administrative

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<PAGE>

                                       21

Agent forthwith on demand such amount together with interest thereon, for each
day from the date such L/C Disbursement is due pursuant to Section 2.08(b) until
the date such amount is paid to the Administrative Agent, at the Federal Funds
Rate for its account or the account of such Issuing Bank, as applicable. If such
Lender shall pay to the Administrative Agent such amount for the account of such
Issuing Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Letter of Credit Advance made by such Lender on such Business
Day for purposes of this Agreement, and the outstanding principal amount of the
Letter of Credit Advance made by such Issuing Bank shall be reduced by such
amount on such Business Day.

          (d) Drawing and Reimbursement. The payment by any Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a Letter of Credit Advance, which
shall be a Base Rate Advance, in the amount of such draft.

          (e) Failure to Make Letter of Credit Advances. The failure of any
Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.

          SECTION 2.04 The CAF Advances. (a) From time to time on any Business
Day during the period from the Effective Date until the Termination Date, the
Borrower may request CAF Advances from the Lenders in amounts such that the
Total Aggregate Outstanding Extensions of Credit at any time shall not exceed
the total of the Revolving Commitments at such time (the "CAF Facility").

          (b) Under the terms and conditions set forth below, the Borrower may
borrow, repay pursuant to Section 2.08 and reborrow under this Section 2.04.

          SECTION 2.05 Competitive Bid Procedure. (a) In order to request a CAF
Advance, the Borrower shall deliver to the Administrative Agent a written notice
in the form of Exhibit E, attached hereto (a "Competitive Bid Request"), to be
received by the Administrative Agent (i) in the case of each CAF Eurodollar Rate
Advance, not later than 3:00 P.M. (New York City time), four (4) Business Days
before the Borrowing Date specified for such CAF Eurodollar Rate Advance and
(ii) in the case of each Fixed Rate Advance, not later than 11:00 A.M. (New York
City time), one (1) Business Day before the Borrowing Date specified for such
Fixed Rate Advance. Each Competitive Bid Request shall in each case refer to
this Agreement and specify (i) the date of Borrowing of such CAF Advances (which
shall be a Business Day), (ii) the aggregate principal amount thereof, (iii)
whether the CAF Advances then being requested are to be CAF Eurodollar Rate
Advances or Fixed Rate Advances, (iv) the maturity date for each CAF Advance
requested to be made and (v) the interest payment dates for each CAF Advance
requested to be made. The Administrative Agent shall promptly notify each Lender
by telex or facsimile transmission of the contents of each Competitive Bid
Request received by it. Each Competitive Bid Request may solicit bids for CAF
Advances in an aggregate principal amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and for not more than three alternative maturity
dates for such CAF Advances. The maturity date for each CAF Advance shall be not
less than 15 days nor more than 180 days after the applicable date of CAF
Borrowing (and in any event shall not extend beyond the Termination Date).

          (b) Each Lender may, in its sole discretion, irrevocably offer to make
one or more CAF Advances to the Borrower responsive to each Competitive Bid
Request from the Borrower. Any such irrevocable offer by a Lender must be
received by the Administrative Agent, in the form of Exhibit F hereto (a
"Competitive Bid"), (i) in the case of each CAF Eurodollar Rate Advance, not
later than 10:30 A.M. (New York City time), three (3) Business Days before the
Borrowing Date specified for such CAF Eurodollar Rate Advance and (ii) in the
case of each Fixed Rate Advance, not later than 9:30 A.M. (New York City time)
on the Borrowing Date specified for such Fixed Rate Advance. Competitive Bids
that do not conform substantially to the format of Exhibit F may be rejected by
the Administrative Agent after conferring with, and upon the instruction of, the
Borrower, and the Administrative Agent shall notify the Lender of such rejection
as soon as practicable. Each Competitive Bid shall refer to this Agreement and
(i) specify the maximum principal amount of CAF Advances for each maturity date
(which shall be in an aggregate principal amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and which may equal, but not
exceed, the principal amount requested for such maturity date by the Borrower)
and the aggregate maximum principal amount of CAF Advances for all maturity
dates (which amount, with respect to any Lender, may exceed such Lender's
Commitment) that the Lender is willing to make to the

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       22

Borrower, and (ii) specify the CAF Rate at which the Lender is prepared to make
each such CAF Advance. A Competitive Bid submitted by a Lender pursuant to this
Section 2.05(b) shall be irrevocable absent manifest error.

          (c) The Administrative Agent shall (i) in the case of each CAF
Eurodollar Rate Advance, not later than 11:00 A.M. (New York City time) three
(3) Business Days before the Borrowing Date specified for such CAF Eurodollar
Rate Advance and (ii) in the case of each Fixed Rate Advance, not later than
10:00 A.M. (New York City time) on the Borrowing Date specified for such Fixed
Rate Advance, notify the Borrower in writing of all the Competitive Bids made
(arranging each such bid in ascending interest rate order), and the CAF Rate or
Rates and the maximum principal amount of each CAF Advance in respect of which a
Competitive Bid was made, and the identity of the Lender that made each bid. The
Administrative Agent shall send a copy of all Competitive Bids to the Borrower
for its records as soon as practicable after completion of the bidding process
set forth in this Section 2.05.

          (d) The Borrower may in its sole and absolute discretion, subject only
to the provisions of this Section 2.05(d), accept or reject any Competitive Bid
referred to in Section 2.05(c); provided, however, that the aggregate amount of
the Competitive Bids for CAF Advances so accepted by the Borrower may not exceed
the lesser of (i) the principal amount of the applicable CAF Borrowing requested
by the Borrower in respect thereof and (ii) the amount of the Commitments less
the Total Aggregate Outstanding Extensions of Credit then outstanding, after
giving effect to the application of the proceeds of such respective CAF
Borrowing on the Borrowing Date therefor. The Borrower shall notify the
Administrative Agent in writing whether and to what extent it has decided to
accept or reject any or all of the bids referred to in Section 2.05(c) by
delivering to the Administrative Agent a written notice in the form of Exhibit G
hereto (a "Competitive Bid Confirmation"), (i) in the case of each CAF
Eurodollar Rate Advance, not later than 1:00 P.M. (New York City time), three
(3) Business Days before the Borrowing Date specified for such CAF Eurodollar
Rate Advance and (ii) in the case of each Fixed Rate Advance, not later than
11:00 A.M. (New York City time) on the Borrowing Date specified for such Fixed
Rate Advance, which Competitive Bid Confirmation shall specify the principal
amount of CAF Advances for each relevant maturity date to be made by each such
bidding Lender (which amount for each such maturity date shall be equal to or
less than the maximum amount for such maturity date specified in the Competitive
Bid of such Lender, and for all maturity dates included in such Competitive Bid
in respect thereof shall be equal to or less than the aggregate maximum amount
specified in such Competitive Bid for all such maturity dates); provided,
however, that (A) the failure by the Borrower to so deliver a Competitive Bid
Confirmation by the specified time shall be deemed to be a rejection of all the
bids referred to in Section 2.05(c) for the related Competitive Bid Request; (B)
the Borrower shall not accept a bid made at a particular CAF Rate for a
particular maturity if the Borrower has decided to reject a bid made at a lower
CAF Rate for such maturity; (C) if the Borrower shall accept bids made at a
particular CAF Rate for a particular maturity but shall be restricted by other
conditions hereof from borrowing the maximum principal amount of CAF Advances in
respect of which bids at such CAF Rate have been made, then the Borrower shall
accept a pro rata portion of each bid made at such CAF Rate based as nearly as
possible on the respective maximum principal amounts of CAF Advances offered to
be made by the relevant Lenders pursuant to such bids; and (D) no bid shall be
accepted for a CAF Advance by any Lender unless such CAF Advance is in an
aggregate principal amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. Notwithstanding the foregoing, if it is necessary
for the Borrower to accept a pro rata allocation of the bids made in response to
a Competitive Bid Request (whether pursuant to the events specified in clause
(C) above or otherwise) and the available principal amount of CAF Advances to be
allocated among the Lenders is not sufficient to enable CAF Advances to be
allocated to each Lender in an aggregate principal amount not less than
$5,000,000 or in integral multiples of $1,000,000 in excess thereof, then the
Borrower shall, subject to clause (D) above, select the Lenders to be allocated
such CAF Advances and shall round allocations up or down to the next higher or
lower multiple of $1,000,000 as it shall deem appropriate; provided that the
allocations among the Lenders to be allocated such CAF Advances shall be made
pro rata based as nearly as possible on the respective maximum principal amounts
of CAF Advances offered to be made by such Lenders. The Competitive Bid
Confirmation given by the Borrower pursuant to this Section 2.05(d) shall be
irrevocable.

          (e) Upon receipt from the Administrative Agent of the Eurodollar Rate
applicable to any CAF Eurodollar Rate Advance to be made by any Lender pursuant
to a Competitive Bid that has been accepted by the Borrower pursuant to this
Section 2.05, the Administrative Agent shall notify such Lender of the
applicable Eurodollar Rate.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       23

          (f) If the Administrative Agent shall at any time elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to the Borrower by (i) in the case of a CAF Eurodollar Rate Advance, not later
than 10:15 A.M. (New York City time), and (ii) in the case of a Fixed Rate
Advance, not later than 9:15 A.M. (New York City time), in each case, on the
Business Day on which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to Section 2.05(b) above.

          (g) If the Borrower accepts pursuant to Section 2.05(d) one or more of
the offers made by any Lender or Lenders, the Administrative Agent shall
promptly notify each Lender that has made such an offer of the aggregate amount
of such CAF Advances to be made on the Borrowing Date for each maturity date and
of the acceptance or rejection of any offers to make such CAF Advances made by
such Lender. Each Lender that is to make a CAF Advance shall, before 12:00 Noon
(New York City time) on the Borrowing Date specified in the Competitive Bid
Request applicable thereto, make available to the Administrative Agent at its
office set forth in Section 8.02 the amount of CAF Advances to be made by such
Lender, in immediately available funds. The Administrative Agent shall, no later
than 1:00 P.M. (New York City time) on such Borrowing Date, make such funds
available to the Borrower at the Borrower's account as shall be designated by it
to the Administrative Agent from time to time. As soon as practicable after each
Borrowing Date, the Administrative Agent shall notify each Lender of the
aggregate amount of CAF Advances advanced on such Borrowing Date and the
respective maturity dates thereof.

          (h) The Borrower shall repay to the Administrative Agent for the
account of each Lender that has made a CAF Advance (or the Eligible Assignee in
respect thereof, as the case may be) on the maturity date of each CAF Advance
(such maturity date being that specified by the Borrower for repayment of such
CAF Advance in the related Competitive Bid Request) the then unpaid principal
amount of such CAF Advance. The Borrower shall not, without the consent of the
relevant Lender, have the right to prepay, at its option, any principal amount
of any CAF Advance.

All notices required by this Section 2.05 shall be made in accordance with
Section 8.02 hereof; provided, however, that each request or notice required to
be made under Section 2.05(a) or 2.04(d) by the Borrower may be made by the
giving of telephone notice to the Administrative Agent that is promptly
confirmed by delivery of a notice in writing (complying in all material respects
with the form of Exhibit B or Exhibit E, as the case may be) to the
Administrative Agent.

          SECTION 2.06 Fees. (a) Commitment Fee. The Borrower agrees to pay to
the Administrative Agent for the account of each Lender the commitment fee on
the aggregate amount of such Lender's Unused Revolving Credit Commitment, from
the Effective Date in the case of each Initial Lender and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date at a rate per
annum equal to the Applicable Percentage in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing June 30, 2006, and on the Termination Date.

          (b) Agent's Fees. The Borrower shall pay to the Administrative Agent
for its own account such fees as may from time to time be agreed between the
Borrower and the Administrative Agent.

          (c) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
Administrative Agent for the account of each Lender a commission, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing June 30, 2006, and on the Termination Date, on such Lender's Pro Rata
Share of the average daily aggregate Available Amount during such quarter of all
Letters of Credit outstanding from time to time at the rate of the Applicable
Margin for Eurodollar Rate Advances under the Revolving Facility.

          (ii) The Borrower shall pay to each Issuing Bank, for its own account,
a fronting fee payable in arrears quarterly on the last day of each March, June,
September and December, commencing June 30, 2006, and on the Termination Date,
in an amount equal to 0.125% on the average daily aggregate Available Amount
during such quarter of all Letters of Credit issued by such Issuing Bank and
outstanding from time to time.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       24

          (iii) The Borrower shall pay to each Issuing Bank, for its own
account, issuance fees and transfer fees in connection with the issuance or
administration of each Letter of Credit as the Borrower and such Issuing Bank
shall agree.

          (iv) The Borrower shall pay the Applicable Utilization Fees in
accordance with Section 2.09(a).

          (v) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Lenders all commissions received by the
Administrative Agent for their respective accounts pursuant to this Section
2.06(c).

          SECTION 2.07 Termination or Reduction of the Revolving Commitments.
The Borrower shall have the right, upon at least three Business Days' notice to
the Administrative Agent, to terminate in whole or permanently reduce ratably in
part the unused portions of the respective Revolving Commitments of the Lenders,
provided that (i) each partial reduction shall be in a minimum aggregate amount
of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii)
no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments made under Section 2.12 by the Borrower on the
effective date thereof, the Total Aggregate Outstanding Extensions of Credit
then outstanding would exceed the Total Commitments then in effect. Any
terminated or permanently reduced portion of the respective Revolving
Commitments of the Lenders may not be reinstated.

          Each reduction of Revolving Commitments pursuant to this Section 2.07
shall be applied pro rata to the Revolving Commitments of each Lender. If at any
time, including after giving effect to any reduction of the Revolving
Commitments pursuant to this Section 2.07, the Total Aggregate Outstanding
Extensions of Credit exceed the Total Commitments, the Borrower shall be
obligated, first, to prepay the Revolving Advances and the Letter of Credit
Advances in the amount of such excess and second, to prepay the CAF Advances
(whether or not consented to by the relevant Lender) to the extent that the
aggregate amount of CAF Advances exceeds such Total Commitments after prepayment
of all Revolving Advances and Letter of Credit Advances.

          SECTION 2.08 Repayment. (a) Revolving Advances. The Borrower shall
repay to the Administrative Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Revolving Advances then
outstanding.

          (b) Letter of Credit Advances. The Borrower shall repay to the
Administrative Agent for the account of each Issuing Bank and each other Lender
that has made a Letter of Credit Advance on or before the date of such payment
if the Borrower receives notice of such payment on or before 10:00 a.m. (New
York City time) on the date such payment is made by such Issuing Bank and if
such notice is received after 10:00 a.m. (New York City time) on the next
Business Day after such payment is to be made by such Issuing Bank, the
outstanding principal amount of each Letter of Credit Advance made by each of
them.

          (c) Obligations Absolute.

          (i) The Borrower's payment obligations under Section 2.08 shall be
     absolute and unconditional under any and all circumstances and irrespective
     of any set-off, counterclaim or defense to payment that the Borrower may
     have or have had against the relevant Issuing Bank or any beneficiary of a
     Letter of Credit other than a defense based upon the gross negligence or
     willful misconduct of such Issuing Bank or violation of the standards of
     care specified in the Uniform Commercial Code of the State of New York.

          (ii) The Borrower also agrees with each Issuing Bank that no Issuing
     Bank shall be responsible for, and the Borrower's payment obligations under
     Section 2.08 shall not be affected by, among other things, (i) the validity
     or genuineness of documents or of any endorsements thereon, even though
     such documents shall in fact prove to be invalid, fraudulent or forged,
     (ii) any dispute between or among the Borrower and any beneficiary of any
     Letter of Credit or any other party to which such Letter of Credit

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       25

     may be transferred or (iii) any claims whatsoever of the Borrower against
     any beneficiary of such Letter of Credit or any such transferee.

          (iii) No Issuing Bank shall be liable for any error, omission,
     interruption or delay in transmission, dispatch or delivery of any message
     or advice, however transmitted, in connection with any Letter of Credit,
     except for errors or omissions caused by such Issuing Bank's gross
     negligence or willful misconduct or in violation of the standards of care
     specified in the Uniform Commercial Code of the State of New York.

          (iv) The Borrower agrees that any action taken or omitted by any
     Issuing Bank under or in connection with any Letter of Credit or the
     related drafts or documents, if done in the absence of gross negligence or
     willful misconduct and in accordance with the standards of care specified
     in the Uniform Commercial Code of the State of New York, shall be binding
     on the Borrower and shall not result in any liability of such Issuing Bank
     to the Borrower.

          SECTION 2.09 Interest. (a) Scheduled Interest. The Borrower shall pay
interest on the unpaid principal amount of each Revolving Advance and Letter of
Credit Advance owing to each Lender from the date of such Revolving Advance and
Letter of Credit Advance to but excluding the date such principal amount shall
be paid in full, at the following rates per annum:

          (i) Base Rate Advances. During such periods as such Revolving Advance
     or Letter of Credit Advance is a Base Rate Advance, a rate per annum equal
     at all times to the sum of (x) the Base Rate in effect from time to time
     plus (y) the Applicable Margin in effect from time to time plus (z) the
     Applicable Utilization Fee, payable in arrears quarterly on the last day of
     each March, June, September and December, during such periods and on the
     date such Base Rate Advance shall be Converted or paid in full.

          (ii) Eurodollar Rate Advances. During such periods as such Advance is
     a Revolving Advance or Letter of Credit Advance bearing interest at the
     Eurodollar Rate, a rate per annum equal at all times during each Interest
     Period for such Revolving Advance to the sum of (x) the Eurodollar Rate for
     such Interest Period for such Revolving Advance or Letter of Credit Advance
     plus (y) the Applicable Margin in effect from time to time plus (z) the
     Applicable Utilization Fee, payable in arrears on the last day of such
     Interest Period and, if such Interest Period has a duration of more than
     three months, on each day that occurs during such Interest Period every
     three months from the first day of such Interest Period and on the date
     such Eurodollar Rate Advance shall be Converted or paid in full.

          (iii) CAF Eurodollar Rate Advances. In the case of each CAF Eurodollar
     Rate Advance, a rate per annum equal at all times to the sum of the
     Eurodollar Rate applicable to such CAF Advance plus or minus, as the case
     may be, the CAF Margin specified by a Lender with respect to such CAF
     Advance in its Competitive Bid submitted pursuant to Section 2.05(b),
     payable on the date or dates specified in the relevant Competitive Bid
     Request.

          (b) Default Interest. Upon the occurrence and during the continuance
of any default in the payment of any amount owed hereunder, the Administrative
Agent may, and upon the request of the Required Lenders shall, require the
Borrower to pay interest ("Default Interest") on (i) the unpaid principal amount
of each Revolving Advance or Letter of Credit Advance past due and owing to each
Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii)
above, at a rate per annum equal at all times to 2.00% per annum above the rate
per annum required to be paid on such Revolving Advance or Letter of Credit
Advance pursuant to clause (a)(i), (a)(ii) or (a)(iii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable hereunder that is not paid when due, from the date such amount shall be
due until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2.00% per annum above the rate per annum required to be paid on Base
Rate Advances pursuant to clause (a)(i) above; provided, however, that following
acceleration of the Advances pursuant to Section 6.01, Default Interest shall
accrue and be payable hereunder whether or not previously required by the
Administrative Agent.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       26

          SECTION 2.10 Interest Rate Determination. (a) The Administrative Agent
shall give prompt notice to the Borrower and the Lenders of the applicable
interest rate determined by the Administrative Agent for purposes of Section
2.09(a)(i), (ii) or (iii).

          (b) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Revolving Advances or Letter of Credit Advances will
not adequately reflect the cost to such Required Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such Interest Period,
the Administrative Agent shall forthwith so notify the Borrower and the Lenders,
whereupon (i) each Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance,
and (ii) the obligation of the Lenders to make, or to Convert Revolving Advances
or Letter of Credit Advances into, Eurodollar Rate Advances shall be suspended
until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist.

          (c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Revolving Advances or Letter of Credit Advances will automatically, on the
last day of the then existing Interest Period therefor, Convert into Base Rate
Advances. If no Advances are outstanding at the time of delivery of a Notice of
Borrowing with respect to Eurodollar Rate Advances and the Borrower shall fail
to select an Interest Period for such Advances, such Advances shall be made as
Base Rate Advances.

          (d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Revolving Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $10,000,000, such Revolving
Advances shall automatically Convert into Base Rate Advances.

          (e) Upon the occurrence and during the continuance of any Event of
Default under Section 6.01(a), (i) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Revolving Advances into, Eurodollar Rate Advances shall be
suspended.

          SECTION 2.11 Optional Conversion of Revolving Advances. The Borrower
may on any Business Day, upon notice given to the Administrative Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the date
of the proposed Conversion and subject to the provisions of Sections 2.10 and
2.14, Convert all Revolving Advances of one Type comprising the same Borrowing
into Revolving Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(b) and no
Conversion of any Revolving Advances shall result in more separate Borrowings
than permitted under Section 2.02(b). Each such notice of a Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the Revolving Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Revolving Advance. Each notice of Conversion shall
be irrevocable and binding on the Borrower.

          SECTION 2.12 Optional Prepayments of Revolving Advances. The Borrower
may, upon at least two Business Days' notice to the Administrative Agent (or
such shorter or no notice as may be satisfactory to the Administrative Agent),
in the case of a Revolving Borrowing consisting of Eurodollar Rate Advances, or
upon same day notice to the Administrative Agent, in the case of a Revolving
Borrowing consisting of Base Rate Advances, stating the proposed date and
aggregate principal amount of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding principal amount of the Revolving
Advances comprising part of the same Revolving Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in a minimum aggregate principal amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and (y) in the event of any such
prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       27

          SECTION 2.13 Increased Costs. (a) If, after the date hereof, due to
either (i) the introduction of or any change in or in the interpretation of any
law or regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to any Lender of agreeing to make
or making, funding or maintaining Eurodollar Rate Advances or CAF Eurodollar
Rate Advances (excluding for purposes of this Section 2.13 any such increased
costs resulting from (A) Taxes or Other Taxes (as to which Section 2.16 shall
govern), (B) net income taxes and franchise taxes imposed on such Lender as a
result of a present or former connection between the jurisdiction of the
government or taxing authority imposing such tax and such Lender other than a
connection arising solely from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or the Advances and (C) changes in the rate of tax on the overall net
income of such Lender), then the Borrower shall from time to time, upon demand
by such Lender (with a copy of such demand to the Administrative Agent), pay to
the Administrative Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such actual increased cost; provided,
however, that before making any such demand, each Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. A certificate as to the amount of such
increased cost, submitted to the Borrower and the Administrative Agent by such
Lender, shall be conclusive and binding for all purposes, absent manifest error.

          (b) If any Lender determines in good faith that compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Lender (with a copy of such demand to the Administrative Agent), the Borrower
shall pay to the Administrative Agent for the account of such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate
such Lender or such corporation in the light of such circumstances, to the
extent that such Lender reasonably determines such increase in capital to be
allocable to the existence of such Lender's commitment to lend hereunder. A
certificate as to such amounts submitted to the Borrower and the Administrative
Agent by such Lender shall be conclusive and binding for all purposes, absent
manifest error. The Borrower shall pay to the Administrative Agent for the
account of such Lender or to the Administrative Agent for its own account, as
the case may be, the amount shown as due on any such certificate within 10
Business Days after receipt thereof.

          (c) The agreements contained in this Section 2.13 shall survive the
termination of this Agreement and the payment of all amounts payable hereunder;
provided, however, that in no event shall the Borrower be obligated to reimburse
or compensate any Lender for amounts contemplated by this Section 2.13 for any
period prior to the date that is 90 days prior to the date upon which such
Lender requests in writing such reimbursement or compensation from the Borrower.

          SECTION 2.14 Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Administrative Agent that it has
determined in good faith that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for any Lender or
its Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or CAF Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances or CAF Eurodollar Rate Advances hereunder, (a) each
Eurodollar Rate Advance or CAF Eurodollar Rate Advance, as the case may be, will
automatically, upon such demand, Convert into a Base Rate Advance or an Advance
that bears interest at the rate set forth in Section 2.09(a)(i), as the case may
be, and (b) the obligation of the Lenders to make Eurodollar Rate Advances or
CAF Eurodollar Rate Advances or to Convert Revolving Advances into, Eurodollar
Rate Advances shall be suspended until the Administrative Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist; provided, however, that before making any such demand, each Lender
agrees to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Eurodollar Lending Office
if the making of such a designation would allow such Lender or its Eurodollar
Lending Office to continue to perform its obligations to make Eurodollar Rate
Advances or CAF Eurodollar Rate Advances, as the case may be, or to continue to
fund or maintain Eurodollar Rate Advances or CAF Eurodollar Rate Advances, as
the case may be, and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                       28

          SECTION 2.15 Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes (if any), irrespective of any right
of counterclaim or set-off, not later than 12:00 Noon (New York City time) on
the day when due in U.S. dollars to the Administrative Agent at the
Administrative Agent's Account in same day funds. The Administrative Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest or facility fees ratably (other than amounts payable
pursuant to Sections 2.05, 2.13, 2.16 or 8.04(c)) to the Lenders for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 8.07(c), from and after the effective date specified in such Assignment
and Acceptance, the Administrative Agent shall make all payments hereunder and
under the Notes or CAF Notes (if any) in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.

          (b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note or
CAF Note, as the case may be, held by such Lender (if any), to charge from time
to time against any or all of the Borrower's accounts with such Lender any
amount so due.

          (c) All computations of interest based on the Base Rate and of
facility fees and utilization fees shall be made by the Administrative Agent on
the basis of a year of 365 or 366 days, as the case may be, and all computations
of interest based on the Eurodollar Rate, the CAF Rate or the Federal Funds Rate
or in respect of Fixed Rate Advances shall be made by the Administrative Agent
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable. Each determination by the
Administrative Agent of an interest rate hereunder shall be prima facie evidence
of the correctness thereof.

          (d) Whenever any payment hereunder or under the Notes or CAF Notes (if
any) shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
facility fee, as the case may be; provided, however, that, if such extension
would cause payment of interest on or principal of Eurodollar Rate Advances or
CAF Eurodollar Rate Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business Day.

          (e) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.

          SECTION 2.16 Taxes. (a) Any and all payments by the Borrower to or for
the account of any Lender or the Administrative Agent hereunder or under the
Notes or CAF Notes (if any) or any other documents to be delivered hereunder
shall be made, in accordance with Section 2.15 or the applicable provisions of
such other documents, free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges, or withholdings
and all liabilities with respect thereto, excluding, in the case of each Lender
and the Administrative Agent, net income taxes and franchise taxes imposed on it
as a result of a present or former connection between the jurisdiction of the
government or taxing authority imposing such tax and the Administrative Agent or
such Lender other than a connection arising solely from the Administrative Agent
or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any Note or CAF Note,
if any (all such non excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities in respect of payments hereunder or under the Notes
or CAF Notes (if any) being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable

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                                       29

hereunder or under any Note or CAF Note or any other documents to be delivered
hereunder to any Lender or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.16) such Lender or the Administrative Agent (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 pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law; provided, however, that the Borrower shall
not be required to increase any such sums payable to any Lender with respect to
any Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of Section 2.16(e) or (ii) that are United States withholding taxes
imposed on sums payable to such Lender at the time such Lender becomes a party
to this Agreement, except to the extent that any such Lender's assignor (if any)
was entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Taxes pursuant to this Section 2.16. Whenever any
Taxes or Other Taxes (as defined in Section 2.16(b)) are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Lender or Administrative
Agent, as the case may be, either (A) official tax receipts or notarized copies
of such receipts to such Lender within thirty (30) days after payment of any
applicable tax or (B) a certificate executed by a Responsible Officer of the
Borrower confirming that such Taxes or Other Taxes have been paid, together with
evidence of such payment.

          (b) In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or CAF
Notes (if any) or any other documents to be delivered hereunder or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes or CAF Notes (if any) or any other
documents to be delivered hereunder (hereinafter referred to as "Other Taxes").

          (c) The Borrower shall indemnify each Lender and the Administrative
Agent for and hold it harmless against the full amount of Taxes or Other Taxes
(including, without limitation, taxes of any kind imposed or asserted by any
jurisdiction on amounts payable under this Section 2.16) imposed on or paid by
such Lender or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, including, without limitation or duplication, any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any failure by the Borrower to pay any Taxes or Other
Taxes when due to the appropriate taxing authority or to remit to any Lender the
receipts or other evidence of payment of Taxes or Other Taxes.

          (d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent, at its address referred to
in Section 8.02, the original or a certified copy of a receipt evidencing such
payment to the extent such a receipt is issued therefor, or other written proof
of payment thereof that is reasonably satisfactory to the Administrative Agent.
In the case of any payment hereunder or under the Notes or CAF Notes (if any) or
any other documents to be delivered hereunder by or on behalf of the Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Administrative Agent, at
such address, an opinion of counsel acceptable to the Administrative Agent
stating that such payment is exempt from Taxes. For purposes of this subsection
(d) and subsection (e), the terms "United States" and "United States person"
shall have the meanings specified in Section 7701 of the Internal Revenue Code.

          (e) Each Lender registered in the Register that is not a United States
person as defined in Section 7701(a)(30) of the Internal Revenue Code agrees
that it will deliver to the Borrower and the Administrative Agent on the
Effective Date, or on the date which it becomes a party to this Agreement, two
duly completed copies of United States Internal Revenue Service Form W-8BEN,
W-8ECI, W-8EXP or W-8IMY (or other appropriate corresponding form) or any
successor applicable form, as the case may be. Each such Lender also agrees to
deliver to the Borrower and the Administrative Agent two further copies of the
said Form W-8BEN, W-8ECI, W-8EXP or W-8IMY or successor applicable forms or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrower, and such extensions or renewals thereof as may reasonably be requested
by the Borrower or the Administrative Agent, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would

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                                       30

otherwise be required that renders all such forms inapplicable or that would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender so advises the Borrower and the Administrative
Agent. Each such Lender shall certify in the case of a Form W-8BEN, W-8ECI,
W-8EXP or W-8IMY that is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes. In
the event that any such Lender fails to deliver any forms required under this
Section 2.16(e), the Borrower's obligation to pay additional amounts shall be
reduced to the amount that it would have been obligated to pay had such forms
been provided.

          (f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form, certificate or other document
described in Section 2.16(e) (other than if such failure is due to a change in
law, or in the interpretation or application thereof, occurring subsequent to
the date on which a form, certificate or other document originally was required
to be provided, or if such form, certificate or other document otherwise is not
required under subsection (e) above), such Lender shall not be entitled to
indemnification under Section 2.16(a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form,
certificate or other document required hereunder, the Borrower shall take such
steps as the Lender shall reasonably request to assist the Lender to recover
such Taxes.

          (g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.16 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.

          (h) If any Taxes or Other Taxes are not correctly or legally asserted
and the Administrative Agent or any Lender determines, in its sole discretion,
that it has received a refund of those Taxes or Other Taxes as to which it has
been indemnified by the Borrower, the Administrative Agent or such Lender shall
within 20 days after such refund pay to the Borrower the amount of such refund
to the extent that the Borrower indemnified the Administrative Agent or such
Lender for such Taxes or Other Taxes pursuant to this Section 2.16, net of any
out-of-pocket costs of the Administrative Agent or such Lender 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 or such Lender, 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 or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
the Borrower or any other Person.

          SECTION 2.17 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set off, or otherwise) on account of the Revolving Advances owing to it (other
than pursuant to Sections 2.13, 2.16, 2.19 or 8.04(c)) in excess of its ratable
share of payments on account of the Revolving Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Advances owing to them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.17 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

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                                       31

          SECTION 2.18 Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely for
general corporate purposes, including capital expenditures and to repay
commercial paper backstop.

          SECTION 2.19 Extension Option. The Borrower may request that the
Commitments be extended for additional one year periods by providing not less
than 65 days' written notice to the Administrative Agent prior to any
anniversary of the Closing Date (each, a "Noticed Anniversary Date"). If a
Lender agrees, in its individual and sole discretion, to extend its Commitment
(such Lender, an "Extending Lender"), it will notify the Administrative Agent,
in writing, of its decision to do so no later than 20 days prior to the
applicable Noticed Anniversary Date. The Administrative Agent will notify the
Borrower, in writing, of the Lenders' decisions no later than 15 days prior to
such Noticed Anniversary Date. The Extending Lenders' Commitments will be
extended for an additional year from the Termination Date (the "Extended
Termination Date") or the Extended Termination Date (the "Second Extended
Termination Date"); provided that (i) more than 50% of the Commitments is
extended or otherwise committed to by Extending Lenders and any new Lenders and
(ii) on the date of any request by the Borrower to extend the Commitments, the
applicable conditions set forth in Section 3.02 shall be satisfied. No Lender
shall be required to consent to any such extension request and any Lender that
declines or does not respond to the Borrower's request for commitment renewal (a
"Declining Lender") will have its Commitment terminated on the then existing
Termination Date (without regard to any renewals by other Lenders). The Borrower
will have the right to accept commitments from Eligible Assignees in an amount
equal to the amount of the Commitments of any Declining Lenders; provided that
the Extending Lenders will have the right to increase their Commitments up to
the amount of the Declining Lenders' Commitments before the Borrower will be
permitted to substitute any Eligible Assignees for the Declining Lenders. The
Borrower may only extend the Termination Date twice during the term of this
Agreement pursuant to this Section 2.19.

          SECTION 2.20 Increase in the Aggregate Revolving Commitments. (a) The
Borrower may, at any time but in any event not more than twice in any calendar
year prior to the Termination Date, whether or not the Revolving Commitments
have been reduced pursuant to Section 2.07, by notice to the Administrative
Agent, request that the aggregate amount of the Commitments be increased by an
amount of $10,000,000 or an integral multiple of $5,000,000 in excess thereof (a
"Commitment Increase") to be effective as of a date that is at least 90 days
prior to the scheduled Termination Date then in effect (the "Increase Date") as
specified in the related notice to the Administrative Agent; provided, however,
that (i) in no event shall the aggregate amount of the Commitments at any time
exceed $750,000,000 and (ii) on the date of any request by the Borrower for a
Commitment Increase and on the related Increase Date, the applicable conditions
set forth in Section 3.02 shall be satisfied.

          (b) The Administrative Agent shall promptly notify the Lenders of a
request by the Borrower for a Commitment Increase, which notice shall include
(i) the proposed amount of such requested Commitment Increase, (ii) the proposed
Increase Date and (iii) the date by which the Lenders wishing to participate in
the Commitment Increase must commit to an increase in the amount of their
respective Revolving Commitments (the "Commitment Date"). Lender Bank that is
willing, in its sole discretion, to participate in such requested Commitment
Increase (each an "Increasing Lender") shall give written notice to the
Administrative Agent and the Borrower on or prior to the Commitment Date of the
amount by which it is willing to increase its Revolving Commitment. If the Banks
notify the Administrative Agent and the Borrower that they are willing to
increase the amount of their respective Revolving Commitments by an aggregate
amount that exceeds the amount of the requested Commitment Increase, the
requested Commitment Increase shall be allocated among the Lenders willing to
participate therein in such amounts as are agreed between the Borrower and the
Administrative Agent.

          (c) Promptly following each Commitment Date, the Administrative Agent
shall notify the Borrower as to the amount, if any, by which the Lenders are
willing to participate in the requested Commitment Increase. If the aggregate
amount by which the Lenders are willing to participate in any requested
Commitment Increase on any such Commitment Date is less than the requested
Commitment Increase, then the Borrower may request Lenders to increase their
participation and extend offers to one or more Eligible Assignees to participate
in any portion of the requested Commitment Increase that has not been committed
to by the Lenders as of the applicable Commitment Date; provided, however, that
the Revolving Commitment of each such Eligible Assignee shall be in an amount
not less than $10,000,000.

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          (d) On each Increase Date, each Eligible Assignee that accepts an
offer to participate in a requested Commitment Increase in accordance with
Section 2.20(b) (each such Eligible Assignee, an "Assuming Bank") shall become a
Lender party to this Agreement as of such Increase Date and the Revolving
Commitment of each Increasing Lender for such requested Commitment Increase
shall be so increased by such amount (or by the amount allocated to such Lender
pursuant to the last sentence of Section 2.20(b)) as of such Increase Date;
provided, however, that the Administrative Agent shall have received on or
before such Increase Date the following, each dated such date:

               (i) (A) certified copies of resolutions of the Board of Directors
          of the Borrower or the Executive Committee of such Board approving the
          Commitment Increase and the corresponding modifications to this
          Agreement and (B) opinions of counsel for the Borrower (which may be
          in-house counsel), in form and substance reasonably acceptable to the
          Administrative Agent, covering the matters covered by the opinions of
          counsel delivered pursuant to Section 3.01 (d)(iv) and Section
          3.01(d)(v) hereof;

               (ii) an assumption agreement from each Assuming Lender, if any,
          substantially in the form of Exhibit I hereto (each an "Assumption
          Agreement"), duly executed by such Eligible Assignee, the
          Administrative Agent and the Borrower; and

               (iii) confirmation from each Increasing Lender of the increase in
          the amount of its Revolving Commitment in a writing satisfactory to
          the Borrower and the Administrative Agent.

On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.20(d), the Administrative Agent
shall notify the Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier, of
the occurrence of the Commitment Increase to be effected on such Increase Date
and shall record in the Register the relevant information with respect to each
Increasing Lender and each Assuming Lender on such date.

          (e) The Administrative Agent shall promptly notify the Borrower and
the Lenders of any increase in the amount of the aggregate Revolving Commitments
pursuant to this Section and of the respective adjusted Revolving Commitment and
Commitment Percentage of each Lender after giving effect thereto. The Borrower
acknowledges that, in order to maintain the Revolving Advances in accordance
with the Commitment Percentage of each Lender, a non-pro-rata increase in the
aggregate Revolving Commitment may require prepayment or funding of all or
portions of certain Revolving Advances on the date of such increase (and any
such prepayment or funding shall be subject to the other provisions of this
Agreement). Effective upon such increase, the amount of the participations held
by each Lender in each Letter of Credit then outstanding shall be adjusted such
that, after giving effect to such adjustments, each Lender shall hold
participations in each such Letter of Credit in accordance with the Commitment
Percentage of such Lender after giving effect to such increase.

          SECTION 2.21 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender to the Borrower (with a copy of such notice to
the Administrative Agent) to the effect that a promissory note or other evidence
of indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of pledge, enforcement or otherwise) the Advances owing
to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender, with a copy to the Administrative Agent, a Note or a CAF
Note, as the case may be, in substantially the form of Exhibit A or Exhibit D
hereto, respectively and as the case may be, payable to the order of such Lender
in a principal amount equal to the amount of the Revolving Advance or the CAF
Advance, as the case may be, of such Lender. All references to Notes or CAF
Notes in the Loan Documents shall mean Notes or CAF Notes, respectively and if
any, to the extent issued hereunder.

          (b) The Register maintained by the Administrative Agent pursuant to
Section 8.07(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances comprising
such

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                                       33

Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, and (iv) the amount of any
sum received by the Administrative Agent from the Borrower hereunder and each
Lender's share thereof.

          (c) Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, 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, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
Lender Party 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.

                                  ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

          SECTION 3.01 Conditions Precedent to Effectiveness of Sections 2.01
and 2.04. Sections 2.01 and 2.04 of this Agreement shall become effective on and
as of the first date prior to March 31, 2006 (the "Effective Date") on which the
following conditions precedent have been satisfied:

          (a) The Administrative Agent shall have received, for the benefit of
     the lenders under the Existing 5-Year Revolving Credit Facility, all
     accrued interest and fees, including any facility fees, utilization fees
     and letter of credit fees, due and payable under the Existing 5-Year
     Revolving Credit Facility as of the Closing Date.

          (b) The effectiveness, substantially concurrently with the effective
     of this Agreement, of (i) the $1,200,000,000 credit facility to be arranged
     by the Global Coordinators for CenterPoint Energy, Inc. and (ii) the
     $300,000,000 credit facility to be arranged by the Global Coordinators for
     CenterPoint Energy Houston Electric, LLC.

          (c) The Borrower shall have paid all accrued fees and expenses of the
     Lenders and the Administrative Agent (including the accrued fees and
     expenses of counsel to the Administrative Agent) and taxes, if any, due and
     payable hereunder and under the Fee Letter.

          (d) The Administrative Agent shall have received on or before the
     Effective Date the following, each dated such day, in form and substance
     satisfactory to the Administrative Agent and (except for the Notes) in
     sufficient copies for each Lender:

               (i) The Notes, duly executed by the Borrower and made payable to
          the order of each Lender who has requested a Note, pursuant to Section
          2.21(a).

               (ii) Certified copies of the (A) resolutions of the board of
          directors of the Borrower approving this Agreement and the Notes (if
          any), and of all documents evidencing other necessary corporate action
          and governmental approvals, if any, with respect to this Agreement and
          the Notes (if any) and (B) certificate of incorporation and bylaws of
          the Borrower (such certificate, duly executed by an authorized officer
          of the Borrower, shall state that such resolutions, certificate of
          incorporation and bylaws are in full force and effect as of the
          Effective Date).

               (iii) A certificate of the Secretary or an Assistant Secretary of
          the Borrower certifying the names and true signatures of the officers
          of the Borrower authorized to sign this Agreement and the Notes (if
          any) and the other documents to be delivered hereunder.

               (iv) A favorable opinion of Baker Botts LLP, counsel for the
          Borrower, in form and substance satisfactory to the Administrative
          Agent.

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                                       34

               (v) A favorable opinion of the in-house counsel of the Borrower,
          in form and substance satisfactory to the Administrative Agent.

          (e) The Administrative Agent shall have received from the Borrower
     such other approvals, opinions or documents as any Lender through the
     Administrative Agent may reasonably request.

          SECTION 3.02 Conditions Precedent to Each Revolving Borrowing,
Issuance and Commitment Increase. The obligation of each Lender to make a
Revolving Advance on the occasion of each Revolving Borrowing and the Obligation
of each Issuing Bank to issue or amend a Letter of Credit (including the initial
issuance) or renewal of a Letter of Credit, other than in the case of an
automatic renewal, and each Commitment Increase and each extension of
Commitments pursuant to Section 2.19 hereof shall be subject to the conditions
precedent that the Effective Date shall have occurred and on the date of such
Revolving Borrowing, issuance or the Commitment Increase (a) the following
statements shall be true (and each of the giving of the Applicable Notice of
Borrowing, Notice of Letter of Credit Issuance or request for Commitment
Increase and the acceptance by the Borrower of the proceeds of such Revolving
Borrowing or of such Letter of Credit or the renewal of such Letter of Credit,
other than in the case of an automatic renewal, shall constitute a
representation and warranty by the Borrower that on the date of such Revolving
Borrowing, Issuance, renewal or Commitment Increase such statements are true):

          (i) the representations and warranties contained in Section 4.01
     (except after the Effective Date, the last sentence of subsection (e)
     thereof, subsection (f)(i) thereof, subsection (i) (only with respect to
     environmental issues) and other representations that by their terms are
     limited to a specific date) are correct in all material respects on and as
     of such date, before and after giving effect to such Revolving Borrowing,
     issuance or renewal or Commitment Increase and to the application of the
     proceeds therefrom, as through made on and as of such date; and

          (ii) no event has occurred and is continuing, or would result from
     such Revolving Borrowing, issuance or renewal of any Letter of Credit or
     such Commitment Increase or from the application of the proceeds therefrom,
     that constitutes a Default;

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request.

          SECTION 3.03 Conditions Precedent to Each CAF Borrowing. The
obligation of each Lender that is to make a CAF Advance on the occasion of a CAF
Borrowing to make such CAF Advance as part of such CAF Borrowing is subject to
the conditions precedent that (i) the Administrative Agent shall have received
the written confirmatory Competitive Bid Request pursuant to Section 2.05(a)
with respect thereto, (ii) the Administrative Agent shall have received a
Competitive Bid Confirmation from the Borrower pursuant to Section 2.05(d),
(iii) on or before the date of such CAF Borrowing, but prior to such CAF
Advance, the Administrative Agent shall have received a CAF Note in accordance
with Section 2.21(a) payable to the order of such Lender for each of the one or
more CAF Advances to be made by such Lender as part of such CAF Borrowing, in a
principal amount equal to the principal amount of the CAF Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such CAF
Advance in accordance with Section 2.05, and (iv) on the date of such CAF
Borrowing the following statements shall be true (and each of the giving of the
applicable Competitive Bid Request and the acceptance by the Borrower of the
proceeds of such CAF Borrowing shall constitute a representation and warranty by
the Borrower that on the date of such CAF Borrowing such statements are true):

          (a) the representations and warranties contained in Section 4.01
     (except after the Effective Date, the last sentence of subsection (e)
     thereof, subsection (f)(i) thereof, subsection (i) (only with respect to
     environmental issues) and other representations and warranties that by
     their terms are limited to a specific date) are correct in all material
     respects on and as of the date of such CAF Borrowing, before and after
     giving effect to such CAF Borrowing and to the application of the proceeds
     therefrom, as though made on and as of such date,

          (b) no event has occurred and is continuing, or would result from such
     CAF Borrowing or from the application of the proceeds therefrom, that
     constitutes a Default, and

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                                       35

          (c) no event has occurred and no circumstance exists as a result of
     which the information concerning the Borrower that has been provided to the
     Administrative Agent and each Lender by the Borrower in connection herewith
     would include an untrue statement of a material fact or omit to state any
     material fact or any fact necessary to make the statements contained
     therein, in the light of the circumstances under which they were made, not
     misleading.

          SECTION 3.04 Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender 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 the Lenders unless an officer
of the Administrative Agent responsible for the transactions contemplated by
this Agreement shall have received notice from such Lender prior to the date
that the Borrower, by notice to the Lenders, designates as the proposed
Effective Date, specifying its objection thereto. The Administrative Agent shall
promptly notify the Lenders of the occurrence of the Effective Date.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

          SECTION 4.01 Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:

          (a) The Borrower is a corporation duly organized, validly existing and
     in good standing under the laws of the State of Delaware.

          (b) The execution, delivery and performance by the Borrower of this
     Agreement and the Notes or CAF Notes (if any), and the consummation of the
     transactions contemplated hereby, are within the Borrower's corporate
     powers, have been duly authorized by all necessary corporate action, and do
     not (i) contravene the Borrower's certificate of incorporation or by laws
     or any law or any contractual restriction binding on or affecting the
     Borrower, or (ii) constitute a default under any existing indenture, loan
     agreement or other material agreement to which the Borrower or any
     Subsidiary of the Borrower is a party.

          (c) No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body or any other
     third party is required for the due execution, delivery and performance by
     the Borrower of this Agreement or the Notes or CAF Notes (if any), and no
     law or regulation is applicable that restrains, prevents or imposes
     materially adverse conditions upon the transactions contemplated hereby.

          (d) This Agreement has been, and each of the Notes or CAF Notes (if
     any) when delivered hereunder will have been, duly executed and delivered
     by the Borrower. This Agreement is, and each of the Notes or CAF Notes (if
     any) when delivered hereunder will be, the legal, valid and binding
     obligations of the Borrower enforceable against the Borrower in accordance
     with their respective terms.

          (e) The Consolidated balance sheet of the Borrower and its
     Subsidiaries as of December 31, 2004, and the related Consolidated
     statements of income and cash flows of the Borrower and its Subsidiaries
     for the fiscal year then ended, accompanied by an opinion of Deloitte &
     Touche LLP, independent public accountants, copies of which have been
     furnished to each Lender, fairly present, in all material respects, the
     Consolidated financial condition of the Borrower and its Subsidiaries as at
     such date and the Consolidated results of the operations of the Borrower
     and its Subsidiaries for the period ended on such date, all in accordance
     with generally accepted accounting principles consistently applied. Since
     December 31, 2005, there has been no Material Adverse Change.

          (f) There is no pending or threatened action, suit, investigation,
     litigation or proceeding, including, without limitation, any Environmental
     Action, affecting the Borrower or any of its Subsidiaries before any court,
     governmental agency or arbitrator that (i) could, as of the Effective Date,
     be reasonably

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<PAGE>

                                       36

     likely to have a Material Adverse Effect or (ii) purports to affect the
     legality, validity or enforceability of this Agreement or any other Loan
     Document or the consummation of the transactions contemplated hereby.

          (g) The Borrower is not engaged in the business of extending credit
     for the purpose of purchasing or carrying Margin Stock, and no proceeds of
     any Advance will be used to purchase or carry any Margin Stock or to extend
     credit to others for the purpose of purchasing or carrying any Margin
     Stock.

          (h) Neither the Borrower nor any Subsidiary of the Borrower is an
     "investment company" as defined in, or otherwise subject to regulation
     under, the Investment Company Act of 1940, as amended.

          (i) The Borrower is and each of its Subsidiaries are in substantial
     compliance with all applicable laws, ordinances, rules, regulations, and
     requirements of governmental authorities (including, without limitation,
     Environmental Laws and ERISA and the rules and regulations thereunder)
     except for any non-compliance that could not reasonably be expected to have
     a Material Adverse Effect.

          (j) All written information heretofore furnished by the Borrower to
     the Administrative Agent or any Lender for purposes of or in connection
     with this Agreement or any transaction contemplated hereby or thereby is,
     and all such information hereafter furnished by the Borrower to the
     Administrative Agent or any Lender will be, true and accurate in all
     material respects on the date as of which such information is stated in the
     light of the circumstances under which such information was provided (as
     modified or supplemented by other information so furnished, when taken
     together as a whole as of the date so stated); provided, that, with respect
     to projected financial information, the Borrower represents only that such
     information was prepared in good faith based on assumptions believed to be
     reasonable at the time, it being recognized by the Lenders that such
     projections as to future events are not to be viewed as facts and that
     actual results during the period or periods covered by any such projections
     may differ from the projected results. The Borrower has disclosed to the
     Administrative Agent any and all facts specific to the Borrower and its
     Subsidiaries and known as of the date hereof to a Responsible Officer of
     the Borrower that could reasonably be expected to result in a Material
     Adverse Effect or which could reasonably be expected to materially and
     adversely affect or may affect (to the extent the Borrower can now
     reasonably foresee), the business, operations or financial condition of the
     Borrower and its Subsidiaries, taken as a whole.

                                   ARTICLE V

                            COVENANTS OF THE BORROWER

          SECTION 5.01 Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder or any Letter of
Credit is outstanding under this Agreement, the Borrower will:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
     Subsidiaries to comply, in all material respects, with all applicable laws,
     rules, regulations and orders, such compliance to include, without
     limitation, compliance with ERISA and Environmental Laws, except to the
     extent the failure to so comply could not reasonably be expected to have a
     Material Adverse Effect.

          (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
     Significant Subsidiaries to pay and discharge, before the same shall become
     delinquent, (i) all taxes, assessments and governmental charges or levies
     imposed upon it or upon its property and (ii) all lawful claims that, if
     unpaid, might by law become a Lien upon its property or unless the failure
     to pay could not reasonably be expected to result in a Material Adverse
     Effect; provided, however, that neither the Borrower nor any of its
     Significant Subsidiaries shall be required to pay or discharge any such
     tax, assessment, charge or claim that is being contested in good faith and
     by proper proceedings and as to which appropriate reserves are being
     maintained or unless the failure to pay could not reasonably be expected to
     result in a Material Adverse Effect.

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                                       37

          (c) Maintenance of Insurance. Maintain, and cause each of its
     Subsidiaries to maintain, insurance with responsible and reputable
     insurance companies or associations in such amounts and covering such risks
     as is usually carried by companies engaged in similar businesses and owning
     similar properties; provided, however, that the Borrower and its
     Subsidiaries may self-insure to the same extent as other companies engaged
     in similar businesses and owning similar properties and to the extent
     consistent with prudent business practice.

          (d) Preservation of Corporate Existence, Etc. Preserve and maintain,
     and cause each of its Subsidiaries to preserve and maintain, its corporate
     existence, rights (charter and statutory) and franchises, except (other
     than in the case of the Borrower) to the extent such failure could not
     reasonably be expected to have a Material Adverse Effect; provided,
     however, that the Borrower and its Subsidiaries may consummate any merger
     or consolidation permitted under Section 5.02(b) and provided further that
     neither the Borrower nor any of its Subsidiaries shall be required to
     preserve any right or franchise if the board of directors of the Borrower
     or such Subsidiary shall determine that the preservation thereof is no
     longer desirable in the conduct of the business of the Borrower or such
     Subsidiary, as the case may be, and that the loss thereof is not
     disadvantageous in any material respect to the Borrower, such Subsidiary or
     the Lenders.

          (e) Visitation Rights. The Borrower will, and will cause each of its
     Subsidiaries to, at any reasonable time and from time to time, permit up to
     six representatives of the Lenders designated by the Required Lenders, or
     representatives of the Administrative Agent, on not less than five (5)
     Business Days' notice, to examine and make copies of and abstracts from the
     records and books of account of, and visit the properties of, the Borrower
     and each Significant Subsidiary and to discuss the general business affairs
     of the Borrower and each of its Subsidiaries with their respective officers
     and independent certified public accountants; subject, however, in all
     cases to the imposition of such conditions as the Borrower and each of its
     Significant Subsidiaries shall deem necessary based on reasonable
     considerations of safety and security; provided, however, that neither the
     Borrower nor any of its Subsidiaries shall be required to disclose to the
     Administrative Agent, any Lender or any agents or representatives thereof
     any information which is the subject of attorney-client privilege or
     attorney work-product privilege properly asserted by the applicable Person
     to prevent the loss of such privilege in connection with such information
     or which is prevented from disclosure pursuant to a confidentiality
     agreement with third parties. Notwithstanding the foregoing, none of the
     conditions precedent to the exercise of the right of access described in
     the preceding sentence that relate to notice requirements or limitations on
     the Persons permitted to exercise such right shall apply at any time when a
     Default or an Event of Default shall have occurred.

          (f) Keeping of Books. Keep, and cause each of its Subsidiaries to
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial transactions and the assets and business of
     the Borrower and each such Subsidiary in accordance with GAAP.

          (g) Maintenance of Properties, Etc. Maintain and preserve, and cause
     each of its Subsidiaries to maintain and preserve, all of its material
     properties that are used or useful in the conduct of its business in good
     working order and condition, ordinary wear and tear excepted, to the extent
     the failure to so maintain would not reasonably be expected to have a
     Material Adverse Effect.

          (h) Maintenance of Existing Business. Maintain and preserve its
     fundamental business of being a local gas distribution company and an owner
     and operator of natural gas pipeline systems.

          (i) Use of Proceeds. Use the proceeds of each Advance only for general
     corporate purposes, including to repay the Existing 5-Year Revolving Credit
     Facility and for capital expenditures, of the Borrower and its
     Subsidiaries, and the repayment of commercial paper.

          (j) Reporting Requirements. Furnish to the Lenders:

               (i) as soon as practicable and in any event within 60 days after
          the end of each of the first three quarters of each fiscal year of the
          Borrower, unaudited Consolidated balance sheets of the Borrower and
          its Subsidiaries, prepared in conformity with GAAP consistently
          applied, as of the end of such quarter and Consolidated statements of
          income and cash flows of the Borrower

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                                       38

          and its Subsidiaries (including Securitization Subsidiaries and
          Unrestricted Subsidiaries), prepared in conformity with GAAP
          consistently applied, for the period commencing at the end of the
          previous fiscal year and ending with the end of such quarter, duly
          certified (subject to year end audit adjustments and the inclusion of
          abbreviated footnotes) by a Responsible Officer of the Borrower as
          having been prepared in accordance with generally accepted accounting
          principles and certificates of a Responsible Officer of the Borrower
          as to compliance with the terms of this Agreement and setting forth in
          reasonable detail the calculations necessary to demonstrate compliance
          with Section 5.03 (which requirement may be satisfied by delivering
          the Borrower's quarterly report on Form 10-Q with respect to such
          fiscal quarter as filed with the Securities and Exchange Commission);

               (ii) as soon as practicable and in any event within 120 days
          after the end of each fiscal year of the Borrower commencing 2006, a
          copy of the annual audit report for such year for the Borrower and its
          Subsidiaries (including Securitization Subsidiaries and Unrestricted
          Subsidiaries), containing Consolidated balance sheets of the Borrower
          and its Subsidiaries as of the end of such fiscal year and
          Consolidated statements of income and cash flows of the Borrower and
          its Subsidiaries (including Securitization Subsidiaries and
          Unrestricted Subsidiaries) for such fiscal year accompanied by an
          opinion of an independent public accountant, in each case prepared in
          conformity with GAAP consistently applied (which requirement may be
          satisfied by delivering the Borrower's annual report on Form 10-K with
          respect to such fiscal year as filed with the Securities and Exchange
          Commission) together with a certificate of a Responsible Officer of
          the Borrower identifying Significant Subsidiaries determined with
          respect to such financial statements;

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

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

               (v) promptly after the commencement thereof, notice of all
          actions and proceedings before any court, governmental agency or
          arbitrator affecting the Borrower or any of its Subsidiaries of the
          type described in Section 4.01(f); and

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

     Information required to be delivered pursuant to the foregoing Sections
     5.01(j)(i), (ii) and (iv) shall be deemed to have been delivered on the
     date on which the Borrower provides notice (including notice by e-mail) to
     the Administrative Agent (which notice the Administrative Agent will convey
     promptly to the Lenders) that such information has been posted on the
     Securities and Exchange Commission website on the internet at
     sec.gov/edgar/searches.htm or at another website identified in such notice
     and accessible by the Lenders without charge; provided that such notice may
     be included in a certificate delivered pursuant to Section 5.01(j)(i).

          SECTION 5.02 Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder or any Letter of Credit
is outstanding under this Agreement, the Borrower will not:

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                                       39

          (a) Restrictions on Liens. Pledge, mortgage or hypothecate, or permit
     to exist, and will not permit any Subsidiary (other than a Project Finance
     Subsidiary or an Unrestricted Subsidiary) to pledge, mortgage or
     hypothecate, or permit to exist, except in favor of Borrower or any
     Subsidiary (other than a Project Finance Subsidiary or an Unrestricted
     Subsidiary), any Lien upon, any Principal Property or Equity Interest in
     any Significant Subsidiary (other than a Project Finance Subsidiary or an
     Unrestricted Subsidiary) owning any Principal Property, at any time owned
     by Borrower or a Subsidiary (other than a Project Finance Subsidiary or an
     Unrestricted Subsidiary), to secure any Indebtedness; provided, however,
     that this restriction shall not apply to or prevent the creation or
     existence of:

               (i) Permitted Liens;

               (ii) any Lien in existence on the date hereof securing
          Indebtedness of the Borrower or any of its Subsidiaries; provided that
          no such Lien described in this clause (ii) encumbers any additional
          Property after the date hereof and that the principal amount of
          Indebtedness secured thereby is not increased;

               (iii) Liens required to be granted pursuant to "equal and
          ratable" clauses existing on the date hereof under Contractual
          Obligations of the Borrower and its Restricted Subsidiaries (and
          extensions and renewals thereof);

               (iv) Liens arising in connection with the securitization of
          accounts receivable of the Borrower and its Subsidiaries, in the case
          of the Borrower and its Subsidiaries, to the extent affecting only the
          accounts receivable of the Borrower and its Subsidiaries and assets
          customarily related thereto;

               (v) Liens on fixed or capital assets and related inventory and
          intangible assets acquired, constructed, improved, altered or repaired
          by the Borrower or any Restricted Subsidiary; provided that (A) such
          Liens secure Indebtedness otherwise permitted by this Agreement, (B)
          such Liens and the Indebtedness secured thereby are incurred prior to
          or within 365 days after such acquisition or the later of the
          completion of such construction, improvement, alteration or repair or
          the date of commercial operation of the assets constructed, improved,
          altered or repaired, (C) the Indebtedness secured thereby does not
          exceed the cost of acquiring, constructing, improving, altering or
          repairing such fixed or capital assets, as the case may be, and (D)
          such Lien shall not apply to any other property or assets of the
          Borrower or of its Restricted Subsidiaries (other than repairs,
          renewals, replacements, additions, accessions, improvements and
          betterments thereto);

               (vi) Liens on Property and repairs, renewals, replacements,
          additions, accessions, improvements and betterments thereto existing
          at the time such Property is acquired by the Borrower or any
          Restricted Subsidiary and not created in contemplation of such
          acquisition (or on repairs, renewals, replacements, additions,
          accessions and betterments thereto), and Liens on the Property of any
          Person at the time such Person becomes a Restricted Subsidiary of the
          Borrower and not created in contemplation of such Person becoming a
          Restricted Subsidiary of the Borrower (or on repairs, renewals,
          replacements, additions, accessions and betterments thereto);

               (vii) rights reserved to or vested in any Governmental Authority
          by the terms of any right, power, franchise, grant, license or permit,
          or by any Requirements of Law, to terminate such right, power,
          franchise, grant, license or permit or to purchase, condemn,
          expropriate or recapture or to designate a purchaser of any of the
          Property of the Borrower or any of its Restricted Subsidiaries;

               (viii) rights reserved to or vested in (or exercised by) any
          Governmental Authority to control, regulate or use any Property of a
          Person or its activities, including zoning, planning and environmental
          laws and ordinances and municipal regulations;

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                                       40

               (ix) Liens on Property of the Borrower or any of its Restricted
          Subsidiaries securing non-recourse Indebtedness of the Borrower or any
          such Restricted Subsidiary;

               (x) any extension, renewal or refunding of any Lien permitted by
          clauses (i) through (ix) above on the same Property previously subject
          thereto; provided that no extension, renewal or refunding of any such
          Lien shall increase the principal amount of any Indebtedness secured
          thereby immediately prior to such extension, renewal or refunding,
          unless such Indebtedness is permitted under Section 5.03;

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

               (xii) Liens not otherwise permitted by this Section 5.02(a)
          securing Indebtedness of the Borrower and its Restricted Subsidiaries
          so long as the aggregate outstanding principal amount of the
          obligations secured thereby does not at any time exceed at the time of
          incurrence of such obligations (including any such incurrence
          resulting from any extension, renewal or refunding of such
          obligations), as to the Borrower and all of its Restricted
          Subsidiaries, 10% of Net Tangible Assets.

          (b) Consolidation, Mergers or Disposal of Assets. And will not permit
     any Significant Subsidiary to, (i) consolidate with, or merge into or
     amalgamate with or into, any other Person; (ii) liquidate, wind up or
     dissolve itself (or suffer any liquidation or dissolution); or (iii)
     convey, sell, transfer, lease or otherwise dispose of all or substantially
     all of its assets to any Person; provided, however, that nothing contained
     in this Section 5.02(b) shall prohibit (A) a merger involving a Subsidiary
     in which the Borrower or, if the Borrower is not a party to such merger, a
     Wholly-Owned Significant Subsidiary is the surviving entity; (B) the
     liquidation, winding up or dissolution of a Significant Subsidiary if all
     of the assets of such Significant Subsidiary are conveyed, transferred or
     distributed to the Borrower or a Wholly-Owned Significant Subsidiary; (C)
     the conveyance, sale, transfer, lease or other disposal of all or
     substantially all (or any lesser portion) of the assets of any Significant
     Subsidiary to the Borrower or a Wholly-Owned Significant Subsidiary; or (D)
     additional conveyances, sales, transfers, leases or other disposals of
     assets of the Borrower and its Subsidiaries, provided, that the aggregate
     net book value of all assets of the Borrower and its Subsidiaries conveyed,
     sold, transferred, leased or otherwise disposed of pursuant to this clause
     (D) shall not exceed $200,000,000 or shall constitute assets that are no
     longer necessary for the operation of the business of the Borrower and its
     Subsidiaries; provided that, in each case covered by this Section 5.02(b),
     immediately before and after giving effect to any such merger, dissolution
     or liquidation, or conveyance, sale, transfer, lease or other disposition,
     no Default shall have occurred and be continuing.

          (c) [Reserved.]

          (d) Subsidiary Indebtedness. Permit any Significant Subsidiary (other
     than a Project Finance Subsidiary or an Unrestricted Subsidiary) to be a
     party to, guarantee, assume, create, incur, issue or otherwise be liable in
     any manner in connection with or suffer to exist, any Indebtedness or
     preferred stock other than (i) Indebtedness for Borrowed Money and
     preferred stock which does not exceed at any time outstanding an aggregate
     amount for all Significant Subsidiaries of $100,000,000 (for purposes of
     this clause (i), the amount of Indebtedness for Borrowed Money will be the
     outstanding principal amount thereof, and the amount of any preferred stock
     will be the greater of the par value thereof or the consideration received
     in the issuance thereof), (ii) assumed Indebtedness for Borrowed Money and
     preferred stock of any Person that becomes a Subsidiary (other than a
     Project Finance Subsidiary or an Unrestricted Subsidiary) after the date
     hereof, if such Indebtedness for Borrowed Money or preferred stock is in
     existence at the time such Person becomes a Subsidiary (other than a
     Project Finance Subsidiary or an Unrestricted Subsidiary) and was not
     created in contemplation thereof and no other Subsidiary is liable
     therefor, (iii) Indebtedness for Borrowed Money owed to and held by, and
     preferred stock held by, the Borrower or any Wholly-Owned Subsidiary of the
     Borrower, (iv) Non-Recourse Debt and (v) Indebtedness for Borrowed Money
     existing on the date hereof, any refinancing thereof in an amount not
     greater than the

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                                       41

     outstanding amount thereof at the time of such refinancing and any
     preferred stock existing on the date hereof.

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

          (f) Affiliate Transaction. And will not permit any Subsidiary of
     Borrower to, make, directly or indirectly, (i) any transfer, sale, lease or
     other disposition of any Property to any Affiliate of Borrower or any
     Subsidiary of Borrower or any purchase or acquisition of any Property from
     any such Affiliate; or (ii) any other arrangement or transaction directly
     or indirectly with or for the benefit of any such Affiliate (including
     without limitation, guaranties and assumptions of obligations of any such
     Affiliate); provided, that (A) Borrower and any such Subsidiary may enter
     into any arrangement or other transaction with any such Affiliate if the
     monetary or business consideration arising therefrom would be substantially
     at least as advantageous to Borrower or such Subsidiary as the monetary or
     business consideration which would be obtained in a comparable arm's length
     transaction with a Person not an Affiliate of Borrower or any Subsidiary of
     Borrower; (B) Borrower and any Subsidiary of Borrower may become liable in
     connection with guaranties of the obligations of any such Affiliate in the
     ordinary course of business, provided that, the amount of any such
     guaranty, to the extent such guaranty relates to Indebtedness for Borrowed
     Money, of the obligations of any such Affiliate shall be included in the
     determination of Total Debt for purposes of Section 5.03(a) hereof; (C)
     Borrower and its Subsidiaries may make purchases of receivables of any kind
     from the Borrower and the Subsidiaries of Borrower on terms that any of
     them deem acceptable; (D) intercompany borrowings between Borrower and any
     Subsidiary of Borrower and between any Subsidiaries of the Borrower and
     other such Subsidiaries of the Borrower may be on terms that they deem
     acceptable or under the Parent's money pool; (E) Borrower may enter into
     any arrangement or other transaction with any Wholly-Owned Subsidiary of
     Borrower, and any Wholly-Owned Subsidiary of Borrower may enter into any
     arrangement or other transaction with Borrower or any other Wholly Owned
     Subsidiary of Borrower, in each case under this clause (E) only if such
     arrangements and other transactions do not involve any Person other than
     Borrower and Wholly-Owned Subsidiaries of Borrower; and (F) Borrower may
     enter into arrangements or other transactions permitted by Section 5.02(b).

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       42

          (g) Use of Proceeds: Regulation U. Use the proceeds of any Borrowing
     (i) to purchase or carry, within the meaning of Regulation U, any Margin
     Stock, (ii) to participate in any tender offer for the securities of any
     Person, unless such tender offer has been approved by the board of
     directors, general partners or other governing body of such Person or (iii)
     for any purpose that would violate or result in a violation of any law or
     regulation. Borrower will not, and will not permit any of its Subsidiaries
     to engage principally, or as one of its important activities, in the
     business of extending credit for the purpose of purchasing or carrying,
     within the meaning of Regulation U, any Margin Stock.

          (h) Takeover Bids. Use the proceeds of any Borrowing to it to
     participate in any unsolicited bid for any other Person.

          (i) Certain Investments, Loans, Advances, Guaranties and Acquisitions.
     Permit, or permit any of its Significant Subsidiaries to purchase or
     acquire (including pursuant to any merger) any Capital Stock, evidence of
     indebtedness or other securities of or other interest in (including any
     option, warrant or other right to acquire any of the foregoing), make any
     loans or advances to, Guarantee any obligation of, or make any investment
     or other interest in or capital contribution to any Unrestricted Subsidiary
     or purchase or otherwise acquire (in one transaction or a series of
     transactions) any assets of any Unrestricted Subsidiary constituting a
     business unit, (any of the foregoing, an "Investment") at any time if the
     aggregate amount of Net Tangible Assets of all Unrestricted Subsidiaries at
     such time exceeds, or would exceed as a result of any Investment the lesser
     of (i) 10% of the Consolidated Net Tangible Assets of Parent and (ii) 15%
     of the Consolidated Net Tangible Assets of the Borrower.

          SECTION 5.03 Total Debt to Capitalization Ratio. So long as any
Advance shall remain unpaid or any Lender shall have any Commitment hereunder,
the Borrower will maintain a ratio of Total Debt for Borrowed Money to
Consolidated Capitalization of no greater than 0.65:1.00, calculated on a
quarterly basis.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

          SECTION 6.01 Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:

          (a) The Borrower shall fail to pay (i) any principal of any Advance
     when the same becomes due and payable, or (ii) any interest on any Advance,
     any fees payable under the Fee Letter, any Applicable Utilization Fees, the
     Facility Fee payable pursuant to Section 2.06(a) or any Letter of Credit
     fees under Section 2.06(c) within five Business Days after the same becomes
     due and payable or (iii) any other payment of fees or other amounts payable
     under this Agreement or any Note or CAF Note, as the case may be, within
     ten Business Days after notice of such payment is received by the Borrower
     from the Administrative Agent or the Required Lenders; or

          (b) Any representation or warranty made by the Borrower herein or by
     the Borrower (or any of its officers) in this Agreement or any other Loan
     Document shall prove to have been incorrect in any material respect when
     made; or

          (c) (i) The Borrower shall fail to perform or observe any term,
     covenant or agreement contained in Sections 5.01(d), (e), (h) or (j)(iii),
     5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any
     other term, covenant or agreement contained in this Agreement on its part
     to be performed or observed if such failure shall not have been remedied
     within 30 days after the earlier of notice thereof to it by the
     Administrative Agent or the Required Lenders or discovery thereof by a
     Responsible Officer of the Borrower; or

          (d) The Borrower or any of its Significant Subsidiaries (other than a
     Project Finance Subsidiary or an Unrestricted Subsidiary) shall fail to pay
     any principal of or premium or interest on any Indebtedness for Borrowed
     Money that is outstanding in a principal amount of at least $50,000,000 in
     the

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       43

     aggregate (but excluding Indebtedness outstanding hereunder) of the
     Borrower or such Subsidiary (as the case may be), when the same becomes due
     and payable (whether by scheduled maturity, required prepayment,
     acceleration, demand or otherwise), and such failure shall continue after
     the applicable grace period, if any, specified in the agreement or
     instrument relating to such Indebtedness; or any other event shall occur or
     condition shall exist under any agreement or instrument relating to any
     such Indebtedness and shall continue after the applicable grace period, if
     any, specified in such agreement or instrument, if the effect of such event
     or condition is to accelerate, or to permit the acceleration of, the
     maturity of such Indebtedness; or any such Indebtedness shall be declared
     to be due and payable, or required to be prepaid or redeemed (other than by
     a regularly scheduled required prepayment or redemption), purchased or
     defeased, or an offer to prepay, redeem, purchase or defease such
     Indebtedness shall be required to be made, in each case prior to the stated
     maturity thereof; or

          (e) The Borrower or any of its Significant Subsidiaries (other than a
     Project Finance Subsidiary or an Unrestricted Subsidiary) shall generally
     not pay its debts as such debts become due, or shall admit in writing its
     inability to pay its debts generally, or shall make a general assignment
     for the benefit of creditors; or any proceeding shall be instituted by or
     against the Borrower or any of its Significant Subsidiaries (other than any
     Project Finance Subsidiary or an Unrestricted Subsidiary) seeking to
     adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
     reorganization, arrangement, adjustment, protection, relief, or composition
     of it or its debts under any law relating to bankruptcy, insolvency or
     reorganization or relief of debtors, or seeking the entry of an order for
     relief or the appointment of a receiver, trustee, custodian or other
     similar official for it or for any substantial part of its property and, in
     the case of any such proceeding instituted against it (but not instituted
     by it), either such proceeding shall remain undismissed or unstayed for a
     period of 30 days, or any of the actions sought in such proceeding
     (including, without limitation, the entry of an order for relief against,
     or the appointment of a receiver, trustee, custodian or other similar
     official for, it or for any substantial part of its property) shall occur;
     or the Borrower or any of its Significant Subsidiaries (other than any
     Project Finance Subsidiary or an Unrestricted Subsidiary) shall take any
     action in furtherance of, or indicating its consent to, approval of, or
     acquiescence in, any of the acts described in this subsection (e); or

          (f) Judgments or orders for the payment of money (not paid or fully
     covered by insurance as to which the relevant insurance company has
     acknowledged coverage) in excess of $50,000,000 in the aggregate shall be
     rendered against the Borrower or any of its Significant Subsidiaries (other
     than a Project Finance Subsidiary or an Unrestricted Subsidiary) and either
     (i) enforcement proceedings shall have been commenced by any creditor upon
     such judgment or order or (ii) there shall be any period of 60 consecutive
     days during which a stay of enforcement of such judgment or order, by
     reason of a pending appeal or otherwise, shall not be in effect; or

          (g) For any reason, (i) the Parent fails to own, directly or
     indirectly, at least 50% of the economic interest in Borrower, or (ii) the
     Parent fails to own, directly or indirectly, at least 50% of the
     outstanding shares of stock, Voting Stock or other ownership interests
     having ordinary voting power (other than stock or such other ownership
     interests having such power only by reason of the happening of a
     contingency) to elect directors or other managers of Borrower, or (iii) the
     Borrower fails to own, directly or indirectly, at least 50% of the economic
     interest in CenterPoint Energy - Mississippi River Transmission
     Corporation, a Delaware corporation ("MRT"), or (iv) the Borrower fails to
     own, directly or indirectly, at least 50% of the economic interest in
     CenterPoint Energy Gas Transmission Company, a Delaware corporation
     ("CEGT"), or (v) the Borrower fails to own at least 50% of the outstanding
     shares of stock, Voting Stock or other ownership interests having ordinary
     voting power (other than stock or such other ownership interests having
     such power only by reason of the happening of a contingency) to elect
     directors or other managers of MRT or (vi) the Borrower fails to own at
     least 50% of the outstanding shares of stock, Voting Stock or other
     ownership interests having ordinary voting power (other than stock or such
     other ownership interests having such power only by reason of the happening
     of a contingency) to elect directors or other managers of CEGT; or

          (h) The Borrower or any of its ERISA Affiliates shall incur, or could
     be reasonably expected to incur, liability with respect to the existence of
     an event or events, individually or in the aggregate, that could reasonably
     be expected to have a Material Adverse Effect arising out of or in
     connection with: (i) the

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>
                                       44

     occurrence of any ERISA Event; (ii) the partial or complete withdrawal of
     the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or
     (iii) the reorganization or termination of a Multiemployer Plan;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances (other than Letter of
Credit Advances by an Issuing Bank pursuant to Section 2.03(c)) and of each
Issuing Bank to issue Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes
or CAF Notes (if any), the unpaid principal amount of all outstanding Advances,
all interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes or CAF Notes (if any), all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall automatically be terminated and (B) the Notes or CAF Notes
(if any), the unpaid principal amount of all outstanding Advances, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

          SECTION 6.02 Actions in Respect of the Letters of Credit upon Default.
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lenders in same day funds at the Administrative Agent's Office an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code, the
Borrower shall be obligated to pay to the Administrative Agent on behalf of the
Lenders in same day funds at the Administrative Agent's Office, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower. If at any time the Administrative Agent
determines that any funds held are subject to any right or claim of any Person
other than the Agents and the Lenders or that the total amount of such funds is
less than the aggregate Available Amount of all Letters of Credit, the Borrower
will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held, an amount
equal to the excess of (a) such aggregate Available Amount over (b) the total
amount of funds, if any, then held that the Administrative 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, such funds shall be applied to reimburse
the relevant Issuing Bank or Lenders, as applicable, to the extent permitted by
applicable law.

                                   ARTICLE VII

                            THE ADMINISTRATIVE AGENT

          SECTION 7.01 Authorization and Action. Each Lender and Issuing Bank
hereby appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes or CAF Notes, if any), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes or CAF
Notes (if any); provided, however, that the Administrative Agent shall be
required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender prompt notice of each notice
given to it by the Borrower pursuant to the terms of this Agreement.

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       45

          SECTION 7.02 Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its respective directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Administrative Agent: (i) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to inquire as to the
performance, observance or satisfaction of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or the existence at any
time of any Default or to inspect the property (including the books and records)
of the Borrower; (iv) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or, if applicable, the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other instrument or document furnished pursuant hereto; and (v)
shall incur no liability under or in respect of this Agreement by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopier, telegram or electronic communication) believed by it to be genuine
and signed or sent by the proper party or parties.

          SECTION 7.03 Citibank and Affiliates. With respect to its Commitment,
the Advances made by it and the Note or CAF Note, if any, issued to it, Citibank
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not the Administrative Agent; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include Citibank in its respective individual capacities. Citibank and its
respective Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, accept investment banking engagements from and generally
engage in any kind of business with, the Borrower, any of its Subsidiaries and
any Person who may do business with or own securities of the Borrower or any
such Subsidiary, all as if Citibank was not the Administrative Agent and without
any duty to account therefor to the Lenders. The Administrative Agent shall have
no duty to disclose any information obtained or received by it or any of its
Affiliates relating to the Borrower or any of its Subsidiaries to the extent
such information was obtained or received in any capacity other than as the
Administrative Agent.

          SECTION 7.04 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.

          SECTION 7.05 Indemnification. (a) The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective principal amounts of the Notes (if any) then held by
each of them (or if no Notes are at the time outstanding or if any Notes are
held by Persons that are not Lenders, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Administrative Agent under this Agreement (collectively, the "Indemnified
Costs"), provided that no Lender shall be liable for any portion of the
Indemnified Costs resulting from the Administrative Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any out of pocket expenses (including counsel fees) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that the
Administrative Agent is not reimbursed for such expenses by the Borrower. In the
case of any investigation, litigation or proceeding giving rise to any
Indemnified Costs, this Section 7.05 applies whether any such investigation,
litigation or proceeding is brought by the Administrative Agent, any Lender or a
third party.

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       46

          (b) Each Lender severally agrees to indemnify each Issuing Bank (to
the extent not promptly reimbursed by the Borrower) from and against such
Lender's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by such Issuing Bank under the Loan Documents; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Issuing Bank's gross negligence or willful misconduct as
found in a final, non-appealable judgment by a court of competent jurisdiction.
Without limitation of the foregoing, each Lender agrees to reimburse such
Issuing Bank promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower.

          (c) For purposes of this Section 7.05, each Lender's ratable share of
any amount shall be determined, at any time, according to the sum of (i) the
aggregate principal amount of the Advances outstanding at such time and owing to
such Lender's, (ii) such Lender's Pro Rata Shares of the aggregate Available
Amount of all Letters of Credit outstanding at such time, and (iii) such Lender
Party's Unused Revolving Credit Commitments at such time; provided that the
aggregate principal amount of Letter of Credit Advances owing to any Issuing
Bank shall be considered to be owed to the Lenders ratably in accordance with
their respective Revolving Commitments. The failure of any Lender to reimburse
any Agent or any Issuing Bank, as the case may be, promptly upon demand for its
ratable share of any amount required to be paid by the Lenders to such Agent or
such Issuing Bank, as the case may be, as provided herein shall not relieve any
other Lender of its obligation hereunder to reimburse such Agent or such Issuing
Bank, as the case may be, for its ratable share of such amount, but no Lender
shall be responsible for the failure of any other Lender to reimburse such Agent
or such Issuing Bank, as the case may be, for such other Lender's ratable share
of such amount. Without prejudice to the survival of any other agreement of any
Lender hereunder, the agreement and obligations of each Lender contained in this
Section 7.05 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents.

          SECTION 7.06 Successor Administrative Agents. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrower and may be removed at any time with or without cause by the Required
Lenders; provided, however, that any removal of the Administrative Agent will
not be effective until it has also been replaced as Issuing Bank and released
from all of its obligations in respect thereof. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Administrative
Agent, then the retiring Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000, 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 (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 Issuing Bank directly, until such time as the Required Lenders
appoint a successor Administrative Agent as provided for above in this
paragraph. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.

          SECTION 7.07 Agents; Lead Arrangers; Global Coordinators. None of the
Lenders or other Persons identified on the facing page or signature pages of
this Agreement as a "co-syndication agent", "co-documentation agent", "lead
arranger" or "global coordinator" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than, in the case
of such Lenders, those applicable to all Lenders

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       47

as such. Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Lender.

                                  ARTICLE VIII

                                  MISCELLANEOUS

          SECTION 8.01 Amendments, Etc. No amendment or waiver of any provision
of this Agreement or the Notes (if any), nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by the relevant Lenders, do any of the following:
(a) waive any of the conditions specified in Section 3.01, without the consent
of any affected Lender, (b) increase the Commitments of any affected Lender, (c)
reduce the principal of, or interest on, the Notes (if any) or any fees or other
amounts payable hereunder to such Lender, (d) postpone any date fixed for any
payment of principal of, or interest on, the Notes (if any) or any fees or other
amounts payable hereunder to such Lender, (e) change the percentage of the
Commitments or the aggregate unpaid principal amount of the Notes (if any), the
number of Lenders, or the Available Amount of outstanding Letters of Credit,
that shall be required for the Lenders or any of them to take any action
hereunder without the consent of all Lenders, or (f) amend Section 2.17 in a
manner that would alter pro rata sharing of payments required thereby or this
Section 8.01 without the consent of all Lenders; and provided further that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement or any Note.

          SECTION 8.02 Notices, Etc. (a) All notices and other communications
provided for hereunder shall be either (x) in writing (including telecopier or
telegraphic communication) and mailed, telecopied, telegraphed or delivered or
(y) as and to the extent set forth in Section 8.02(b) and in the proviso to this
Section 8.02(a), in an electronic medium and delivered as set forth in Section
8.02(b), if to the Borrower, at its address at P.O. Box 2805, Houston, TX 77252,
Attention: Assistant Treasurer (telecopy: 713 207 3301); if to any Lender, at
its Domestic Lending Office specified opposite its name on Schedule I hereto; if
to any other Lender, at its Domestic Lending Office specified in the Assignment
and Acceptance pursuant to which it became a Lender; if to the Global
Coordinators, at the addresses specified on Schedule II hereto; and if to the
Administrative Agent, at its address at Two Penns Way, Suite 200, New Castle,
Delaware, 19720, Attention: Bank Loan Syndications Department/Jacqueline Caine
(telecopy: 212 994 0961), with a copy to 388 Greenwich Street, New York, New
York, 10013, Attention: Nietzsche Rodricks (telecopy: 212 816 8098); or, as to
the Borrower or the Administrative Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Administrative Agent; provided, that
materials required to be delivered pursuant to Section 5.01(j)(i), (ii) and (iv)
shall be delivered to the Administrative Agent as specified therein. All such
notices and communications shall, when mailed, telecopied, telegraphed or
emailed, be effective when deposited in the mails, telecopied, delivered to the
telegraph company or confirmed by email, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VII
shall not be effective until received by the Administrative Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Notes or CAF Notes (if any) or of any Exhibit
hereto to be executed and delivered hereunder shall be effective as delivery of
a manually executed counterpart thereof.

          (b) The Borrower hereby acknowledges that (i) 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") and (ii) the Administrative Agent will make available to the
Lenders certain notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that initiates or responds to the legal process (all such
non-excluded information being referred to herein collectively as the
"Communications") on IntraLinks or another relevant website (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent) (the "Platform"). The Borrower hereby agrees that all Communications 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, (ii) by marking Communications
"PUBLIC," the Borrower shall be deemed to

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       48

have authorized the Administrative Agent, the Issuing Banks and the Lenders to
treat such Communications as not containing any material non-public information
with respect to the Borrower or its securities for purposes of United States
Federal and state securities laws, it being understood that certain of such
Communications may be subject to the confidentiality requirements hereof, (iii)
all Communications marked "PUBLIC" are permitted to be made available through a
portion of the Platform designated "Public Investor," and (iv) the
Administrative Agent shall be entitled to treat any Communications that are not
marked "PUBLIC" as being suitable only for posting on a portion of the Platform
not designated "Public Investor." Notwithstanding the foregoing, (A) the
Borrower shall be under no obligation to mark any Communications "PUBLIC," and
each Public Lender hereby waives its right to receive any Communications that
are not marked "PUBLIC"; and (B) the Administrative Agent shall treat
Communications that are deemed to have been delivered based on notice pursuant
to the last sentence of Section 5.01(j) as "PUBLIC."

          (c) [Reserved].

          (d) [Reserved].

          (e) Each Lender agrees that e-mail notice to it (at the address
provided pursuant to the next sentence and deemed delivered as provided in the
next paragraph) specifying that Communications has been posted to the Platform
shall constitute effective delivery of such Communications to such Lender for
purposes of this Agreement. Each Lender agrees (i) to notify the Administrative
Agent in writing (including by electronic communication) from time to time to
ensure that the Administrative Agent has on record an effective e-mail address
for such Lender to which the foregoing notice may be sent by electronic
transmission and (ii) that the foregoing notice may be sent to such e-mail
address.

          (f) Each party hereto agrees that any electronic communication
referred to in this Section 8.02 shall be deemed delivered upon the posting of a
record of such communication (properly addressed to such party at the e-mail
address provided to the Administrative Agent) as "sent" in the e-mail system of
the sending party or, in the case of any such communication to the
Administrative Agent, upon the posting of a record of such communication as
"received" in the e-mail system of the Administrative Agent; provided that if
such communication is not so received by the Administrative Agent during the
normal business hours of the Administrative Agent, such communication shall be
deemed delivered at the opening of business on the next Business Day for the
Administrative Agent.

          (g) Each party hereto acknowledges that (i) the distribution of
material through an electronic medium is not necessarily secure and there are
confidentiality and other risks associated with such distribution, (ii) the
Communications and the Platform are provided "as is" and "as available," (iii)
none of the Administrative Agent, its affiliates nor any of their respective
officers, directors, employees, agents, advisors or representatives
(collectively, the "Citigroup Parties") warrants the adequacy of the Platform or
the accuracy or completeness of any Communications, and each Citigroup Party
expressly disclaims liability for errors or omissions in any Communications or
the Platform, and (iv) no warranty of any kind, express, implied or statutory,
including, without limitation, any warranty of merchantability, fitness for a
particular purpose, non-infringement of third party rights or freedom from
viruses or other code defects, is made by any Citigroup Party in connection with
any Communications or the Platform.

          SECTION 8.03 No Waiver; Remedies. No failure on the part of any Lender
or Agent to exercise, and no delay in exercising, any right hereunder or under
any Note or CAF Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

          SECTION 8.04 Costs and Expenses. (a) The Borrower agrees to pay on
demand all reasonable costs and expenses of the Administrative Agent and Global
Coordinators in connection with the preparation, execution, delivery,
administration, modification and amendment of or any consent or waiver under
this Agreement, the Notes (if any) and the other documents to be delivered
hereunder, including, without limitation, (A) all reasonable due diligence,
syndication (including printing, distribution and bank meetings), computer and
duplication expenses, (B) the reasonable fees and expenses of counsel for the
Administrative Agent and the Lead Arrangers with respect thereto and with
respect to advising the Administrative Agent as to its rights and
responsibilities under this

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       49

Agreement and (C) all reasonable out-of-pocket expenses incurred by the Issuing
Banks in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder. The Borrower further
agrees to pay on demand all costs and expenses of the Administrative Agent and
the Lenders, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Notes (if any) and the
other documents to be delivered hereunder, including, without limitation,
reasonable fees and expenses of counsel for the Administrative Agent, the Lead
Arrangers and each Lender in connection with the enforcement of rights under
this Section 8.04(a).

          (b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, the Global Coordinators and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "Indemnified Party") from and against any and all claims, damages, losses,
liabilities and reasonable expenses (including, without limitation, reasonable
fees and expenses of counsel) incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
(i) the Notes or CAF Notes (if any), this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries or any Environmental Action
relating in any way to the Borrower or any of its Subsidiaries, except to the
extent such claim, damage, loss, liability or expense is found in a final, non
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or willful misconduct. In the case of
an investigation, litigation or other proceeding to which the indemnity in this
Section 8.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, equityholders or creditors, any Indemnified Party or any other
Person, whether or not any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. Each of the
parties hereto agrees not to assert any claim for special, indirect,
consequential or punitive damages against any other party hereto, any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability arising out of or otherwise relating to
the Notes or CAF Notes (if any), this Agreement, the Letters of Credit any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances.

          (c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance or CAF Eurodollar Rate Advance is made by the Borrower to or for
the account of a Lender other than on the last day of the Interest Period for
such Advance, as a result of a payment or Conversion pursuant to Sections
2.10(d) or (e), 2.12 or 2.14, acceleration of the maturity of the Notes or CAF
Notes (if any), as the case may be, pursuant to Section 6.01 or for any other
reason, the Borrower shall, upon demand by such Lender (with a copy of such
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment or Conversion, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.

          (d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.12, 2.15 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes or CAF
Notes (if any).

          SECTION 8.05 Right of Set off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes or CAF Notes, if any, due and payable
pursuant to the provisions of Section 6.01, each Lender, the Issuing Banks and
each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by 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 indebtedness at any time owing by
such Lender or such Affiliate to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note or CAF Note, as the case may be, held
by such Lender or the Issuing Banks, whether or not such Lender or Issuing Bank
shall have made any demand under this Agreement or such Note or CAF Note and
although such obligations may be unmatured or are owed to a branch or office of
such Lender or the Issuing Bank different from the branch or office holding such
deposit or obligated on such indebtedness. Each Lender and Issuing Bank agrees
promptly to

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       50

notify the Borrower after any such set off and application, provided that the
failure to give such notice shall not affect the validity of such set off and
application. The rights of each Lender, the Issuing Bank and its Affiliates
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set off) that such Lender, Issuing Bank and
its Affiliates may have.

          SECTION 8.06 Binding Effect. This Agreement shall become effective
(other than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have been notified by each Lender that such
Lender has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Administrative Agent and each Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of each Lender.

          SECTION 8.07 Assignments and Participations. (a) Each Lender may
assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Revolving Advances owing to it and the Note or Notes, if any,
held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement (other than any right to make CAF Advances, CAF Advances owing to it
and CAF Note or CAF Notes, if any), (ii) except in the case of an assignment to
a Person that, immediately prior to such assignment, was a Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, the
amount of the Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, (iii) each such assignment
shall be to an Eligible Assignee, (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note,
if any, subject to such assignment, and (v) the parties to each such assignment
shall deliver to the Administrative Agent a processing and recordation fee of
$3,500. Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Sections 2.13, 2.16 and 8.04
to the extent any claim thereunder relates to an event arising prior to such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).

          (b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT

<PAGE>

                                       51

          (c) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the "Register"). The entries in the Register
shall be prima facie evidence of the correctness thereof, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

          (d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note, if any, subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note a new Note to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder, a new Note to the order of
the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.

          (e) Each Issuing Bank may assign to one or more Eligible Assignees all
or a portion of its rights and obligations under the undrawn portion of its
Letter of Credit Commitment at any time; provided, however, that (i) except in
the case of an assignment to a Person that immediately prior to such assignment
was an Issuing Bank or an assignment of all of an Issuing Bank's rights and
obligations under this Agreement, the amount of the Letter of Credit Commitment
of the assigning Issuing Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $10,000,000 and shall be in an
integral multiple of $1,000,000 in excess thereof, (ii) each such assignment
shall be to an Eligible Assignee and (iii) the parties to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,500.

          (f) Each Lender may sell participations to one or more banks or other
entities (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Note or Notes, if any, held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation. A
Participant shall not be entitled to receive any greater payment under Sections
2.13 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.

          (g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 8.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree

                     CERC 5-YEAR REVOLVING CREDIT AGREEMENT
<PAGE>

                                       52

to preserve the confidentiality of any Confidential Information relating to the
Borrower received by it from such Lender.

          (h) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time and without the consent of the Borrower or the
Administrative Agent (i) create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System, and (ii) with notice to the Borrower and the Administrative Agent,
assign all or part of its rights and obligations under this Agreement to any of
its Affiliates.

          (i) In the event that any Lender requests payments of reimbursement,
compensation or indemnification from the Borrower pursuant to Sections 2.02,
2.13 or 2.16 herein, then the Borrower shall have the right, but not the
obligation, at its own expense, upon 5 Business Days notice to such Lender and
the Administrative Agent, to replace such Lender with an assignee (in accordance
with and subject to the restrictions contained in paragraphs (a) and (b) above),
and such Lender hereby agrees to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in paragraphs (a) and
(b) above) all its interests, rights and obligations in respect of its
Commitment to such assignee; provided, however, that (i) no such assignment
shall conflict with any law, rule and regulation or order of any governmental
authority, (ii) no Default has occurred or is continuing, (iii) the Borrower has
satisfied all of its obligations under this Agreement relating to such assigning
Lender through the date of such assignment, (iv) the Borrower shall pay to the
Administrative Agent the administrative fee in the amount of $3,500 if such
replacement Lender assignee is not an existing Lender, and (v) such assignee
shall pay to such assigning Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Advances made by such Lender hereunder and the Borrower, the Administrative
Agent or such assignee, as applicable, shall pay to such Lender all other
amounts accrued for such Lender's account or owed to it hereunder.

          SECTION 8.08 Patriot Act Notification. Each Lender 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 "Patriot
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 Patriot Act. The
Borrower shall, and shall cause each of their Subsidiaries to, provide, to the
extent commercially reasonable, such information and take such actions as are
reasonably requested by the Administrative Agent or any Lenders in order to
assist the Administrative Agent and the Lenders in maintaining compliance with
the Patriot Act.

          SECTION 8.09 Confidentiality. Neither the Administrative Agent nor any
Lender shall disclose any Confidential Information to any other Person without
the consent of the Borrower, other than (a) to the Administrative Agent's or
such Lender's Affiliates and their officers, directors, employees, agents and
advisors and, as contemplated by Section 8.07(f), to actual or prospective
assignees and participants, and then only on a confidential basis, (b) as
required by any law, rule or regulation or judicial process and (c) as requested
or required by any state, federal or foreign authority or examiner regulating
banks or banking or any other regulatory or self-regulatory authorities. The
Borrower may disclose to any and all Persons, without limitation of any kind,
the U.S. tax treatment and U.S. tax structure of the transactions contemplated
by this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to the Borrower relating to such U.S. tax treatment
and U.S. tax structure.

          SECTION 8.10 Governing Law. This Agreement and the Notes (if any)
shall be governed by, and construed in accordance with, the laws of the State of
New York.

          SECTION 8.11 Counterparts; Integration; Electronic Execution.

          (a) Execution in Counterparts, Integration. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. This Agreement, and any separate letter agreements with respect to
fees payable to the Administrative Agent and the

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       53

Lead Arrangers, 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. Delivery
of an executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement.

          (b) Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Acceptance
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.

          SECTION 8.12 Removal of Lender. Notwithstanding anything herein to the
contrary, the Borrower may, at any time in its sole discretion, remove any
Lender upon 15 Business Days' written notice to such Lender and the
Administrative Agent (the contents of which notice shall be promptly
communicated by the Administrative Agent to each other Lender), such removal to
be effective at the expiration of such 15-day notice period; provided, however,
that no Lender may be removed hereunder (i) at a time when an Event of Default
shall have occurred and be continuing or (ii) after giving effect to the
removal, the Total Aggregate Outstanding Extensions of Credit would exceed the
total of the Revolving Commitments. Each notice by the Borrower under this
Section shall constitute a representation by the Borrower that the removal
described in such notice is permitted under this Section. Concurrently with such
removal, the Borrower shall pay to such removed Lender all amounts owing to such
Lender hereunder and under any other Loan Document in immediately available
funds. Upon full and final payment hereunder of all amounts owing to such
removed Lender, such Lender shall make appropriate entries in its accounts
evidencing payment of all Loans hereunder and releasing the Borrower from all
obligations owing to the removed Lender in respect of the Loans hereunder and
surrender to the Administrative Agent for return to the Borrower any Notes of
the Borrower then held by it. Effective immediately upon such full and final
payment, such removed Lender will not be considered to be a "Lender" for
purposes of this Agreement except for the purposes of any provision hereof that
by its terms survives the termination of this Agreement and the payment of the
amounts payable hereunder. Effective immediately upon such removal, the
Commitments of such removed Lender shall immediately terminate and such Lender's
participation share in any outstanding Letters of Credit shall immediately
terminate and such participation share shall be divided among the remaining
Lenders according to their Pro Rata Share. Such removal will not, however,
affect the Commitments of any other Lender hereunder.

          SECTION 8.13 Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes or CAF Notes (if any), or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by 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 shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the Notes or CAF Notes (if any) in the courts of
any jurisdiction.

          (b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes or CAF
Notes (if any) in any New York State or federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                      CENTERPOINT ENERGY RESOURCES CORP.,
                                        as Borrower

                                      By           /s/ Marc Kilbride
                                          --------------------------------------
                                          Name: Marc Kilbride
                                          Title: Vice President and Treasurer

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      CITIBANK, N.A., as Administrative Agent
                                        and as a Bank

                                      By           /s/ Nietzsche Rodricks
                                          --------------------------------------
                                          Name: Nietzsche Rodricks
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      JPMORGAN CHASE BANK, N.A., as a Bank

                                      By           /s/ Robert W. Traband
                                          --------------------------------------
                                          Name: Robert W. Traband
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      BARCLAYS BANK PLC, as a Bank

                                      By           /s/ Alison McGuigan
                                          --------------------------------------
                                          Name: Alison McGuigan
                                          Title:  Associate Director

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      WACHOVIA BANK, N.A., as a Bank

                                      By           /s/ Lawrence N. Gross
                                          --------------------------------------
                                          Name: Lawrence N. Gross
                                          Title:  Assistant Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                      DEUTSCHE BANK SECURITIES, as Lead Arranger
                                        and Co-Syndication Agent

                                      By           /s/ Frederick W. Laird
                                          --------------------------------------
                                          Name: Frederick W. Laird
                                          Title:  Managing Director

                                      By           /s/ Ming K. Chu
                                          --------------------------------------
                                          Name: Ming K. Chu
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      UBS LOAN FINANCE LLC, as a Bank

                                      By           /s/ Richard L. Tavrow
                                          --------------------------------------
                                          Name: Richard L. Tavrow
                                          Title:  Director

                                      By           /s/ Irja R. Otsa
                                          --------------------------------------
                                          Name: Irja R. Otsa
                                          Title:  Associate Director

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      BANK OF AMERICA, NATIONAL ASSOCIATION,
                                        as Syndication Agent and a Bank

                                      By           /s/ Kevin P. Bertelsen
                                          --------------------------------------
                                          Name: Kevin P. Bertelsen
                                          Title:  Senior Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      ABN AMRO BANK, N.V., as Documentation
                                        Agent and as a Bank

                                      By           /s/ John D. Reed
                                          --------------------------------------
                                          Name: John D. Reed
                                          Title:  Director

                                      By           /s/ R. Scott Donaldson
                                          --------------------------------------
                                          Name: R. Scott Donaldson
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      THE BANK OF NOVA SCOTIA, as a Bank

                                      By           /s/ Thane Rattew
                                          --------------------------------------
                                          Name: Thane Rattew
                                          Title:  Managing Director

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
                                        as a Bank

                                      By           /s/ Brian T. Caldwell
                                          --------------------------------------
                                          Name: Brian T. Caldwell
                                          Title:  Director

                                      By           /s/ Gregory S. Richards
                                          --------------------------------------
                                          Name: Gregory S. Richards
                                          Title:  Associate

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      THE ROYAL BANK OF SCOTLAND PLC,
                                        as Documentation Agent and as a Bank

                                      By           /s/ Emily Freedman
                                          --------------------------------------
                                          Name: Emily Freedman
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
                                        as a Bank

                                      By           /s/ Douglas M. Barnell
                                          --------------------------------------
                                          Name: Douglas M. Barnell
                                          Title:  Vice President & Manager

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      LEHMAN BROTHERS BANK, FSB, as a Lender

                                      By           /s/ Gary T. Taylor
                                          --------------------------------------
                                          Name: Gary T. Taylor
                                          Title:  Senior Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      MORGAN STANLEY BANK, as a Bank

                                      By           /s/ Daniel Twenge
                                          --------------------------------------
                                          Name: Daniel Twenge
                                          Title:  Vice President
                                                   Morgan Stanley Bank

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      MERRILL LYNCH BANK USA, as a Bank

                                      By           /s/ David Millett
                                          --------------------------------------
                                          Name: David Millett
                                          Title: Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      HSBC BANK USA, National Association,
                                        as a Bank

                                      By           /s/ Richard Ward
                                          --------------------------------------
                                          Name: Richard Ward
                                          Title:  First Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      ROYAL BANK OF CANADA, as a Bank

                                      By          /s/ David A. McCluskey
                                          --------------------------------------
                                          Name: David A. McCluskey
                                          Title:  Authorized Signatory

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      THE NORTHERN TRUST COMPANY, as a Bank

                                      By           /s/ Preeti Sullivan
                                          --------------------------------------
                                          Name: Preeti Sullivan
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                      SUNTRUST BANK, as a Bank

                                      By        /s/ Kelley Brandenburg
                                          --------------------------------------
                                          Name: Kelley Brandenburg
                                          Title:  Vice President

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                  Schedule III

                             COMMITMENT PERCENTAGES

<TABLE>
<CAPTION>
Bank                                     Commitment Percentage
----                                     ---------------------
<S>                                      <C>
JPMorgan Chase Bank, N.A.                        7.561%
Citibank, N.A.                                   7.561%
Bank of America, National Association            7.561%
Barclays Bank plc                                7.561%
Deutsche Bank AG New York Branch                 7.561%
Wachovia Bank, N.A.                              7.561%
ABN AMRO Bank, N.V.                              6.146%
The Bank of Nova Scotia                          6.146%
Credit Suisse, Cayman Islands Branch             6.146%
The Royal Bank of Scotland plc                   6.146%
UBS Loan Finance LLC                             6.146%
The Bank of Tokyo-Mitsubishi UFJ, Ltd.           3.659%
Morgan Stanley Bank                              3.659%
Lehman Brothers Bank, FSB                        3.659%
Merrill Lynch Bank USA                           3.659%
HSBC Bank USA, N.A.                              2.927%
Royal Bank of Canada                             2.927%
The Northern Trust Company                       1.707%
SunTrust Bank                                    1.707%
TOTAL:                                          100.00%
</TABLE>

   Schedule III to the CenterPoint Energy Resources Corp. Amended and Restated
                                Credit Agreementexv4w1

 

Exhibit 4.1

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

GLOBAL EMPLOYMENT HOLDINGS, INC.

Warrant To Purchase Common Stock

Warrant No.:

Number of Shares of Common Stock:

Date of Issuance: March 31, 2006 (“Issuance Date”)

          Global Employment Holdings, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, [NAME OF BUYER], the registered holder hereof or its permitted assigns (the
"Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement
hereof, the “Warrant”), at any time or times on or after the date hereof (the “Initial
Exercisability Date”), but not after 11:59 p.m., New York Time, on the Expiration Date (as defined
below), [ # OF SHARES] fully paid nonassessable shares of Common Stock (as defined below) (the
"Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall
have the meanings set forth in Section 15. This Warrant is one of the Warrants to purchase Common
Stock (the “SPA Warrants”) issued pursuant to Section 1 of the Notes Securities Purchase Agreement,
dated as of March 31, 2006 (the “Subscription Date”), by and among Global Employment Solutions,
Inc. and the investors (the “Buyers”) referred to therein (the “Securities Purchase Agreement”).

          1.     EXERCISE OF WARRANT.

               (a)     Mechanics of Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by
the Holder from time to time on or after the Initial Exercisability Date, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant and (ii) (A) payment to the Company of
an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of
immediately available funds or (B) by notifying the Company that this Warrant is being exercised
pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to
deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of
the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect
as cancellation of the original Warrant and issuance of a new

 

 

Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before
the first Business Day following the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the “Exercise Delivery
Documents”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or before the third Business Day following the date on which the Company has received
all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program and so long as the certificates therefor are not required to bear a
legend pursuant to Section 2(g) of the Securities Purchase Agreement, credit such aggregate number
of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission System,
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and dispatch by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the Company’s share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such
exercise, which certificate shall not bear any restrictive legend so long as the certificate is not
required to bear such a legend pursuant to Section 2(g) of the Securities Purchase Agreement. Upon
delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A) above or
notification to the Company of a Cashless Exercise referred to in Section 1(d), the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with
respect to which this Warrant has been exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being acquired upon an
exercise, then the Company shall as soon as practicable and in no event later than three Business
Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section
7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of
this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to
the nearest whole number. The Company shall pay any and all taxes which may be payable with
respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

               (b)     Exercise Price. For purposes of this Warrant, “Exercise Price” means $6.25,
subject to adjustment as provided herein.

               (c)     Company’s Failure to Timely Deliver Securities. If, at any time, the Holder
of this Warrant submits the Exercise Delivery Documents, and the Company fails for any reason or
for no reason to deliver, on or prior to the Share Delivery Date, the number of shares of Common
Stock to which the Holder is entitled upon such exercise (an “Exercise Default”), then the Company
shall pay to the Holder payments (“Exercise Default Payments”) for an Exercise Default in the
amount of (i) (N/365), multiplied by (ii) the amount that the Closing Sale Price of the Common
Stock on the date the Exercise Notice giving rise to the Exercise Default is transmitted in
accordance with this Section 1 (the “Exercise Default Date”) exceeds the Exercise Price in respect
of such Warrant Shares, multiplied by (iii) the number of shares of Common Stock the Company failed
to so deliver in such Exercise Default, multiplied by (iv) .18, where N equals the number of days
from the Exercise Default Date which gave rise to the Exercise Default to the date that the Company
effects the full exercise of this Warrant. The accrued Exercise Default Payment for each calendar
month shall be paid in cash to the Holder by the fifth day of the month following the month in
which it has accrued. In addition to the foregoing, if within three Trading Days after the
Company’s receipt of the facsimile copy of an Exercise Notice the Company shall fail to issue and
deliver a certificate to the Holder and register such shares of Common Stock on the

- 2 -

 

Company’s share register or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder, and if
on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”),
then the Company shall, within three Business Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the
"Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to
the Holder a certificate or certificates representing such shares of Common Stock and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of shares of Common Stock, times (B) the Closing Sale Price on the date of exercise.
Nothing herein shall limit the Holder’s right to pursue actual damages for the Company’s failure to
maintain a sufficient number of authorized shares of Common Stock or to otherwise issue shares of
Common Stock upon exercise of this Warrant in accordance with the terms hereof, and the Holder
shall have the right to pursue all remedies available at law or in equity (including a decree of
specific performance and/or injunctive relief).

               (d)     Cashless Exercise. Notwithstanding anything contained herein to the contrary,
the Holder may, in its sole discretion, exercise this Warrant in whole or from time to time in part
and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise
the “Net Number” of shares of Common Stock determined according to the following formula (a
"Cashless Exercise”):

Net Number = (A x B) — (A x C)

                        B

               For purposes of the foregoing formula:

          A= the total number of shares with respect to which this Warrant is then being
exercised.

          B= the Closing Sale Price of the shares of Common Stock (as reported by Bloomberg)
on the date immediately preceding the date of the Exercise Notice.

          C= the Exercise Price then in effect for the applicable Warrant Shares at the time
of such exercise.

               (e)     Disputes. In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance
with Section 12.

               (f)     Limitations on Exercises; Beneficial Ownership. The Company shall not effect
the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to
the extent that after giving effect to such exercise, such Holder (together with such Holder’s
affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of
Common Stock outstanding immediately after giving effect to such exercise. For purposes of the
foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such
Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to

- 3 -

 

which the determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this
Warrant beneficially owned by such Holder and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company beneficially owned by
such Holder and its affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence, for purposes of this
paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Form
10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the
Company shall within one Business Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including the SPA Securities and the SPA Warrants, by the Holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was reported. By written
notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage
to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such
increase will not be effective until the 61st day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other
holder of SPA Warrants. Notwithstanding anything to the contrary set forth herein, the provisions
of this Section 1(f) shall not be implemented in strict conformity with the terms of this Section
1(f) if necessary to correct any portion of this Section 1(f) which may be defective or
inconsistent with the intended beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this Section 1(f) shall apply to a successor Holder of this Warrant.

               (g)     Insufficient Authorized Shares. If at any time while any of the Warrants
remain outstanding the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the
Warrants at least a number of shares of Common Stock equal to 130% of the number of shares of
Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants
then outstanding (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company
shall immediately take all action necessary to increase the Company’s authorized shares of Common
Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the
Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as
practicable after the date of the occurrence of an Authorized Share Failure, but in no event later
than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its stockholders for the approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall provide each stockholder with a
proxy statement and shall use its best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its board of directors to recommend to
the stockholders that they approve such proposal. If the Company fails to remedy any Authorized
Share Failure within 60 days after the date on which such Authorized Share Failure occurs, then the
Company shall immediately notify the holders of the Warrants of such occurrence and each holder of
Warrants shall thereafter have the option, exercisable in whole or in part at any time and from
time to time, by delivery of a Redemption Notice (as defined in Section 4(c) below) to the Company,
to require the Company to redeem for cash, at an amount per share equal to the Redemption Price (as
defined in Section 4(c)), a portion of this Warrant such that, after giving effect to

- 4 -

 

such redemption, the then unissued portion of the holder’s Reserved Amount (as defined below)
allocable to the Warrants then held by such holder is at least equal to the Required Reserved
Amount with respect to the remaining Warrants held by such holder. If the Company fails to redeem
such portion of this Warrant within five business days after its receipt of such Redemption Notice,
then the holder hereof shall be entitled to interest on the Redemption Price at a per annum rate
equal to 12% from the date on which such Redemption Price is required to be paid hereunder until
the actual date of payment of the Redemption Price hereunder. The initial number of shares of
Common Stock reserved for issuance upon exercise of the SPA Warrants (the “Reserved Amount”) shall
be allocated pro rata among the holders of the SPA Warrants based on the number of shares of Common
Stock issuable upon exercise of the SPA Warrants. Each increase to the Reserved Amount shall be
allocated pro rata among the holders of the SPA Warrants based on the number of shares of Common
Stock issuable upon exercise of the SPA Warrants at the time of such increase. In the event any
holder shall sell or otherwise transfer any of the holder’s SPA Warrants or any such other
securities, each transferee shall be allocated a pro rata portion of such transferor’s Reserved
Amount. Any portion of the Reserved Amount that remains allocated to any person or entity which
does not hold any SPA Warrants shall be allocated to the remaining holders of the SPA Warrants pro
rata based on the number of shares of Common Stock issuable upon exercise of the SPA Warrants then
held by such holders.

               (h)     Listing. The Company shall promptly secure the listing or quotation of the
shares of Common Stock issuable upon the exercise of this Warrant upon the Principal Market or upon
such other Eligible Market, if any, upon which shares of Common Stock are then listed or quoted
(subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long
as any other shares of Common Stock shall be so listed or quoted, such listing or quotation of all
shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list or apply for quotation on each Eligible Market, and shall maintain such
listing or quotation of, any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall be listed or quoted
on such Eligible Market. In the event that the Common Stock is suspended from trading on, or is
not listed (and authorized) for trading on, any Eligible Market for an aggregate of 10 or
more Trading Days in any 12 month period after the date on which the Common Stock is first approved
for trading on such Eligible Market, the holder of this Warrant shall have the right to deliver a
Redemption Notice (as defined in Section 4(c) below) and require the Company to pay such holder in
cash an amount equal to the Redemption Price (as defined in Section 4(c) below), plus any interest
or penalties accruing thereon, all pursuant to the procedures set forth in Section 4(c) below.

               (i)     Blue Sky Laws. The Company shall, on or before the date of issuance of any
Warrant Shares, take such actions as the Company shall reasonably determine are necessary to
qualify the Warrant Shares for, or obtain exemption for the Warrant Shares for, sale to the holder
of this Warrant upon the exercise hereof under applicable securities or “blue sky” laws of the
states of the United States, and shall provide evidence of any such action so taken to the holder
of this Warrant prior to such date; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 1(i), (ii) subject itself
to general taxation in any such jurisdiction or (iii) file a general consent to service of process
in any such jurisdiction.

          2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price
and the number of Warrant Shares shall be adjusted from time to time as follows:

               (a)     Adjustment upon Issuance of shares of Common Stock. If and whenever on or
after the Subscription Date the Company issues or sells, or in accordance with this Section 2 is
deemed to have issued or sold, any shares of Common Stock (including, without limitation, the
issuance

- 5 -

 

or sale of shares of Common Stock owned or held by or for the account of the Company and the
issuance of any shares of Common Stock, Options or Convertible Securities in exchange for any
non-convertible security such as a non-convertible note, but excluding shares of Common Stock
deemed to have been issued by the Company in connection with any Excluded Securities (as defined in
the SPA Securities)), for a consideration per share (the “New Issuance Price”) less than a price
(the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or
sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such
Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the
product of (A) the Exercise Price in effect immediately prior to such Dilutive Issuance and (B) the
quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise
Price in effect immediately prior to such Dilutive Issuance and the number of shares of Common
Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the consideration,
if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by
multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II)
the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance.
Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares shall be
adjusted to the number of shares of Common Stock determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon
exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment. For purposes of determining the adjusted
Exercise Price under this Section 2(a), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants
any Options, whether or not immediately exercisable, and the lowest price
per share for which one share of Common Stock is issuable upon the exercise
of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is less
than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share. For
purposes of this Section 2(a)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or
upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable (but excluding any
contingent amounts) by the Company with respect to any one share of Common
Stock upon the granting or sale of the Option, upon exercise of the Option
and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible Securities
upon the exercise of such Options or upon the actual issuance of such shares
of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.

(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities, whether or not
immediately convertible, and the lowest price per share for which one share
of Common Stock is issuable upon the conversion, exercise or exchange
thereof is less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section 2(a)(ii), the
“lowest price per share for which one share of Common Stock is

- 6 -

 

issuable upon the conversion, exercise or exchange” shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable
(but excluding any contingent amounts) by the Company with respect to one
share of Common Stock upon the issuance or sale of the Convertible Security
and upon conversion, exercise or exchange of such Convertible Security. No
further adjustment of the Exercise Price or number of Warrant Shares shall
be made upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 2(a), no further adjustment of
the Exercise Price or number of Warrant Shares shall be made by reason of
such issue or sale.

(iii) Change in Option Price or Rate of Conversion. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for shares of Common Stock
increases or decreases at any time, the Exercise Price and the number of
Warrant Shares in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price and the number of Warrant Shares which would
have been in effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be,
at the time initially granted, issued or sold. For purposes of this Section
2(a)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are increased or
decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock
deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 2(a) shall be made if such adjustment
would result in an increase of the Exercise Price then in effect or a
decrease in the number of Warrant Shares.

(iv) Calculation of Consideration Received. In case any Option
is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for no consideration. If any
shares of Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company
therefor, after deduction of all underwriting discounts or allowances in
connection with such issuance or sale. If any shares of Common Stock,
Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company
will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Closing Sale Price of such
security on the date of receipt. If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving entity,
the amount of consideration therefor will be deemed to be the fair value of
such portion of the

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net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash or securities
will be determined jointly by the Company and the Required Holders. If such
parties are unable to reach agreement within 10 days after the occurrence of
an event requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five Business Days after the tenth
day following the Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Required Holders. The determination
of such appraiser shall be final and binding upon all parties absent
manifest error and the fees and expenses of such appraiser shall be borne by
the Company. If the Company issues (or becomes obligated to issue) shares
of Common Stock pursuant to any antidilution or similar adjustments (other
than as a result of stock splits, stock dividends and the like) contained in
any Convertible Securities or Options outstanding as of the Subscription
Date but not included in Schedule 3(n) to the Securities Purchase
Agreement, then all shares of Common Stock so issued shall be deemed to have
been issued for no consideration. If the Company issues (or becomes
obligated to issue) shares of Common Stock pursuant to any antidilution or
similar adjustments contained in any Convertible Securities or Options
included in Schedule 3(n) to the Securities Purchase Agreement as a
result of the issuance of the SPA Securities, the SPA Warrants or any
securities issued as part of the Junior Financing (as defined in the
Securities Purchase Agreement) and the number of shares that the Company
issues (or is obligated to issue) as a result of such issuance exceeds the
amount specified in Schedule 3(n) to the Securities Purchase
Agreement, such excess shares shall be deemed to have been issued for no
consideration. Notwithstanding anything else herein to the contrary, if
Common Stock, Options or Convertible Securities are issued or sold in
conjunction with each other as part of a single transaction or in a series
of related transactions, the holder hereof may elect to determine the amount
of consideration deemed to be received by the Company therefor by deducting
the fair value of any type of securities (the “Disregarded Securities”)
issued or sold in such transaction or series of transactions. If the holder
makes an election pursuant to the immediately preceding sentence, no
adjustment to the Exercise Price shall be made pursuant to this Section 2(a)
for the issuance of the Disregarded Securities or upon any conversion,
exercise or exchange thereof.

(v) Record Date. If the Company takes a record of the holders
of shares of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock, Options or
in Convertible Securities or (B) to subscribe for or purchase shares of
Common Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.

               (b)     Adjustment upon Subdivision or Combination of Common Stock. If the Company at
any time on or after the Subscription Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be proportionately increased. If
the

- 8 -

 

Company at any time on or after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be proportionately decreased. Any
adjustment under this Section 2(b) shall become effective at the close of business on the date the
subdivision or combination becomes effective.

               (c)     Other Events. If any event occurs of the type contemplated by the provisions
of this Section 2 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with equity
features), then the Company’s Board of Directors will make in good faith an appropriate adjustment
in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder;
provided that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or
decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

               (d)     Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment or readjustment of the Exercise Price or change in number or type of stock, securities
and/or other property issuable upon exercise of this Warrant, then, and in each such case, the
Company shall promptly make a public announcement of such adjustment or readjustment and give
notice thereof to the holder hereof, which notice shall state the Exercise Price resulting from
such adjustment or readjustment and any change in the number or type of stock, securities and/or
other property issuable upon exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Such calculation shall
be certified by the chief financial officer of the Company.

          3.     RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares
of Common Stock, by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction), other than the Special Dividend (as defined in the Securities Purchase Agreement) (a
"Distribution”), at any time after the issuance of this Warrant, then, in each such case:

               (a)     any Exercise Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of shares of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding
such record date minus the value of the Distribution (as determined in good faith by the Company’s
Board of Directors) applicable to one share of Common Stock, and (ii) the denominator shall be the
Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such
record date; and

               (b)     the number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock entitled to receive
the Distribution multiplied by the reciprocal of the fraction set forth in the immediately
preceding paragraph (a); provided that in the event that the Distribution is of shares of Common
Stock (or common equity) (“Other Shares of Common Equity”) of a company whose shares of common
equity are traded on a national securities exchange or a national automated quotation system, then
the Holder may elect to receive a warrant to purchase Other Shares of Common Equity in lieu of an
increase in the number of Warrant Shares, the terms of which shall be identical to those of this
Warrant, except that such warrant

- 9 -

 

shall be exercisable into the number of shares of Other Shares of Common Equity that would
have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price equal to the product of
the amount by which the exercise price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding paragraph (a) and the number of
Warrant Shares calculated in accordance with the first part of this paragraph (b).

          4.     PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

               (a)     Purchase Rights. In addition to any adjustments pursuant to Section 2 above,
if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record holders of any class
of shares of Common Stock (collectively, “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on the exercise of this
Warrant, but after the calculation of such number of shares, the provisions of Section 1(f) shall
continue to apply) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights. If the right to exercise or convert any such Purchase Rights would expire in
accordance with their terms prior to the exercise of this Warrant, then the terms of such Purchase
Rights shall provide that such exercise or convertibility right shall remain in effect until 30
days after the date the holder receives such Purchase Rights pursuant to the exercise hereof.

               (b)     Fundamental Transactions. The Company shall not enter into or be party to a
Fundamental Transaction unless (i) the Successor Entity and, if an entity other than the Successor
Entity is the entity whose capital stock or assets the holders of the Common Stock are entitled to
receive as a result of such Fundamental Transaction, such other entity (the “Other Entity”),
assumes in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section (4)(b) pursuant to written
agreements in form and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of
Warrants in exchange for such Warrants a security of the Successor Entity or the Other Entity, as
applicable, evidenced by a written instrument substantially similar in form and substance to this
Warrant and with appropriate provisions such that the rights and interests of the Holder and the
economic value of this Warrant are in no way diminished by such Fundamental Transaction (including,
without limitation, in the case of any such Fundamental Transaction in which the Successor Entity
or Other Entity, as applicable, is not the Company, an immediate adjustment of the Exercise Price
and Warrant Shares so that the Exercise Price and Warrant Shares immediately after the Fundamental
Transaction reflect the same relative value as compared to the value of the surviving entity’s
common stock that existed between the Exercise Price and the Warrant Shares and the value of the
Company’s Common Stock immediately prior to such Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant, but after the calculation of such number of shares,
the provisions of Section 1(f) shall continue to apply)), which instrument shall be satisfactory to
the Required Holders, and (ii) the Successor Entity or the Other Entity, if applicable, is a
publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible
Market (a “Public Successor”). Upon the occurrence of any Fundamental Transaction, the Successor
Entity or the Other Entity, as applicable, shall succeed to, and be substituted for (so that from
and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the
“Company” shall refer instead to the Successor Entity or the Other Entity, as applicable), and may
exercise every right and power of the Company and shall assume all of the obligations of the
Company

- 10 -

 

under this Warrant with the same effect as if such Successor Entity or such Other Entity, as
applicable, had been named as the Company herein. Upon consummation of the Fundamental
Transaction, the Successor Entity or the Other Entity, as applicable, shall deliver to the Holder
confirmation that there shall be issued upon exercise of this Warrant at any time after the
consummation of the Fundamental Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of publicly traded common stock (or their equivalent) of
the Successor Entity or the Other Entity, as applicable, as adjusted in accordance with the
provisions of this Warrant. In addition to and not in substitution for any other rights hereunder,
prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant
at any time after the consummation of the Fundamental Transaction but prior to the Expiration Date,
in lieu of the shares of the Common Stock (or other securities, cash, assets or other property)
purchasable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of
stock, securities, cash, assets or any other property whatsoever (including warrants or other
purchase or subscription rights) which the Holder would have been entitled to receive upon the
happening of such Fundamental Transaction had the Warrant been exercised immediately prior to such
Fundamental Transaction. Provision made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Required Holders. The provisions of this Section shall
apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall
be applied without regard to any limitations on the exercise of this Warrant.

               (c)     Notwithstanding the provisions of Section 4(b) above, at least 45 days before the
consummation of a Change of Control (as defined herein), but in no event later than 15 days prior
to the record date for the determination of stockholders entitled to vote with respect thereto (or,
with respect to a tender offer, or a change in the Board of Directors, if the Company is unable to
comply with this time requirement because of the nature of the Change of Control, as soon as the
Company reasonably believes that the Change of Control is to be consummated), but not prior to the
public announcement of such Change of Control, the Company shall deliver written notice thereof via
facsimile and overnight courier to the Holder (a “Change of Control Notice”). If the terms of a
Change of Control change materially from those set forth in a Change of Control Notice, the Company
shall deliver a new Change of Control Notice and the time periods in this clause (b) shall be
calculated based upon the Holder’s receipt of the later Change of Control Notice. At any time
during the period (the “Change of Control Period”) beginning after the Holder’s receipt of a Change
of Control Notice and ending on the date that is 15 Trading Days after the later of the
consummation of such Change of Control or delivery of the Change of Control Notice, the Holder may
require the Company to purchase all or any portion of this Warrant by delivering written notice
thereof (“Redemption Notice”) to the Company, which Redemption Notice shall indicate the portion of
this Warrant that the Holder is electing to have the Company purchase. The portion of this Warrant
to be purchased pursuant to this Section 4(c) (the “Redemption Portion”) shall be purchased by the
Company for cash at a price equal to the value of the Redemption Portion on the date of such
purchase, which value shall be determined by use of the Black Scholes Option Pricing Model
utilizing (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the remaining term of this Warrant as of such date of request and (ii) an expected volatility
equal to the greater of (A) 60% and (B) the 100 day volatility for the Company obtained from the
HVT function on Bloomberg (the “Redemption Price”). Notwithstanding anything to the contrary in
this Section 4(c), until the Redemption Price (together with any interest thereon) is paid in full,
the unexercised portion of the Warrant submitted for purchase under this Section 4(c) (together
with any interest thereon) may be exercised, in whole or in part, by the Holder for Common Stock,
or in the event the exercise date is after the consummation of the Change of Control, shares of
stock or equity interests of the Successor Entity or Other Entity, as applicable, substantially
equivalent to the Company’s Common Stock pursuant to Section

- 11 -

 

4(b). Any amount due under this Warrant that is not paid when due shall result in a late
charge being incurred and payable by the Company in an amount equal to interest on such amount at
the rate of 12% per annum from the date such amount was due until the same is paid in full.

          5.     NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company
will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, and will at all times in good faith carry out all the provisions
of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon
the exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized and unissued shares
of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, 130% of the
number of shares of Common Stock as shall from time to time be necessary to effect the exercise of
the SPA Warrants then outstanding (without regard to any limitations on exercise), including,
without limitation, those actions called for by Section 1(g) hereof.

          6.     WARRANT HOLDER NOT DEEMED A STOCKHOLDER; NOTICES OF CORPORATE ACTION.

               (a)     Except as otherwise specifically provided herein, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder
of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a shareholder of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company.

               (b)     Notwithstanding this Section 6, the Company shall provide the Holder with copies of
the same notices and other information given to the shareholders of the Company generally,
contemporaneously with the giving thereof to the shareholders. In addition, in case at any time:

                    (i) the Company shall declare any dividend upon the Common Stock payable in
shares of stock of any class or make any other distribution (other than dividends or
distributions payable in cash out of retained earnings consistent with the Company’s past
practices with respect to declaring dividends and making distributions) to the holders of
the Common Stock;

                    (ii) the Company shall offer for subscription pro rata to the holders of the
Common Stock any additional shares of stock of any class or other rights;

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                    (iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company with or
into, or sale of all or substantially all of its assets to, another corporation or entity;
or

                    (iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

then, in each such case, the Company shall give to the Holder (A) notice of the date or estimated
date on which the books of the Company shall close or a record shall be taken for determining the
holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights
or for determining the holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be
given at least 30 days prior to the record date or the date on which the Company’s books are closed
in respect thereto. Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company shall publicly disclose the substance of any notice
delivered hereunder prior to delivery of such notice to the Holder.

          7.     REISSUANCE OF WARRANTS.

               (a)     Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon
the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder
may request, representing the right to purchase the number of Warrant Shares being transferred by
the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred.

               (b)     Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying
this Warrant.

               (c)     Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the
right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of
such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be
given.

               (d)     Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with
this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the

- 13 -

 

Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

          8.     NOTICES. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the
Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of
all actions taken pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the foregoing, the Company
will give written notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at
least 15 days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any
grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.

          9.     AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of
this Warrant may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written
consent of the Required Holders; provided that no such action may, without the written consent of
the Holder (i) increase the exercise price of any SPA Warrants or decrease the number of shares or
class of stock obtainable upon exercise of any SPA Warrants or (ii) amend Section 1(f) or the
application of Section 1(f) to any provision of this Warrant. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the SPA Warrants then outstanding.

          10.     GOVERNING LAW. This Warrant shall be governed by and construed and enforced
in accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.

          11.     CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by
the Company and all the Buyers and shall not be construed against any person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant.

          12.     DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within one Business Day of
receipt, or deemed receipt, of the Exercise Notice giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within one Business Day of such disputed
determination or arithmetic calculation being submitted to the Holder, then the Company shall,
within one Business Day submit via facsimile (a) the disputed determination of the Exercise Price
to an independent, reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of

- 14 -

 

the Warrant Shares to the Company’s independent, outside accountant. The Company, at the
Company’s expense, shall cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Holder of the results no
later than five Business Days from the time it receives the disputed determinations or
calculations. Such investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.

          13.     REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other remedies available under
this Warrant and the other Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing herein shall limit the right of
the Holder to pursue actual damages for any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.
The Company therefore agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or
other security being required.

          14.     TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned
without the consent of the Company, except as may otherwise be required by Section 2(f) of the
Securities Purchase Agreement.

          15.     CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall
have the following meanings:

               (a)     “Bloomberg” means Bloomberg Financial Markets.

               (b)     “Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to remain closed.

               (c)     “Change of Control” means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such reorganization, recapitalization or
reclassification continue after such reorganization, recapitalization or reclassification to hold
publicly traded securities and, directly or indirectly, the voting power of the surviving entity or
entities necessary to elect a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities, or (ii) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of incorporation of the
Company.

               (d)     “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date,
the last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such
security by

- 15 -

 

Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated
for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 12. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.

               (e)     “Common Stock” means (i) the Company’s shares of Common Stock, par value $.0001 per
share, and (ii) any share capital into which such Common Stock shall have been changed or any share
capital resulting from a reclassification of such Common Stock.

               (f)     “Common Stock Deemed Outstanding” means, at any given time, the number of shares of
Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to
be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the Options
or Convertible Securities are actually exercisable at such time, but excluding any shares of Common
Stock owned or held by or for the account of the Company or issuable upon conversion and exercise,
as applicable, of the SPA Securities, the SPA Warrants and the securities issued as part of the
Junior Financing (as defined in the Securities Purchase Agreement).

               (g)     “Convertible Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

               (h)     “Eligible Market” means the Principal Market, The Nasdaq National Market, The Nasdaq
Capital Market, The New York Stock Exchange, Inc. or the American Stock Exchange.

               (i)     “Expiration Date” means the date 60 months after the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take place on the Principal
Market (a “Holiday”), the next date that is not a Holiday.

               (j)     “Fundamental Transaction” means: (i) a transaction or series of related transactions
pursuant to which the Company: (A) sells, conveys or disposes of all or substantially all of its
assets determined on either a quantitative or qualitative basis (the presentation of any such
transaction for stockholder approval being conclusive evidence that such transaction involves the
sale of all or substantially all of the assets of the Company); (B) merges or consolidates with or
into, or engages in any other business combination with, any other person or entity, in any case
that results in the holders of the voting securities of the Company immediately prior to such
transaction holding or having the right to direct the voting of 50% or less of the total
outstanding voting securities of the Company or such other surviving or acquiring person or entity
immediately following such transaction; or (C) sells or issues, or any of its stockholders sells or
transfers, any securities to any person or entity, or the acquisition or right to acquire
securities by any person or entity, in either case acting individually or in concert with others,
such that, following the consummation of such transaction(s), such person(s) or entity(ies)
(together with their respective affiliates, as such term is used under Section 13(d) of the
Exchange Act) would own or have the right to acquire greater than 50% of the outstanding shares of
Common Stock (on a fully-diluted basis, assuming the full conversion, exercise or exchange of all
Purchase Rights then outstanding); (ii) any reclassification or change of the outstanding shares of
Common Stock (other than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision

- 16 -

 

or combination); or (iii) any event, transaction or series of related transactions that
results in individuals serving on the Board of Directors on the date hereof (the “Incumbent Board”)
ceasing for any reason to constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the date hereof whose appointment,
election, or nomination for election by the Company’s stockholders was approved by a vote of at
least a two-thirds of the directors then comprising the Incumbent Board (other than an appointment,
election, or nomination of an individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of the directors of the Company)
shall be considered as though such person were a member of the Incumbent Board.

               (k)     “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

               (l)     “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

               (m)     “Person” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and a government
or any department or agency thereof.

               (n)     “Principal Market” means the National Association of Securities Dealers, Inc.’s OTC
Bulletin Board.

               (o)     “Registration Rights Agreement” means the registration rights agreement by and among
the Company and the Buyers.

               (p)     “Required Holders” means the holders of the SPA Warrants representing at least 66-2/3%
of the shares of Common Stock underlying the SPA Warrants then outstanding.

               (q)     “SPA Securities” means the Notes issued pursuant to the Securities Purchase Agreement.

               (r)     “Successor Entity” means the Person (or, if so elected by the Required Holders, the
Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person
(or, if so elected by the Required Holders, the Parent Entity) with which such Fundamental
Transaction shall have been entered into.

               (s)     “Trading Day” means any day on which trading the Common Stock is reported on the
Principal Market, or, if the Principal Market is not the principal trading market for the Common
Stock, then on the Eligible Market that is the principal securities exchange or securities market
on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on
which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or
any day that the Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

- 17 -

 

               (t)     “Transaction Documents” is defined in the Securities Purchase Agreement.

[Signature Page Follows]

- 18 -

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly
executed as of the Issuance Date set out above.

	 	 	 	 	 	 	 
	 	 	GLOBAL EMPLOYMENT HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: Howard Brill
	 	 
	 

	 	 	 	Title: President and Chief Executive Officer	 	 

- 19 -

 

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

GLOBAL EMPLOYMENT HOLDINGS, INC.

     The undersigned holder hereby exercises the right to purchase                                                             of the shares
of Common Stock (“Warrant Shares”) of Global Employment Holdings, Inc., a Delaware corporation (the
"Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

     1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be
made as:

                                                                       a “Cash Exercise” with respect to                                         Warrant Shares; and/or

                                                                       a “Cashless Exercise” with respect to                                                              Warrant Shares.

     2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                                                            to the Company in accordance with the
terms of the Warrant.

     3. Delivery of Warrant Shares. The Company shall deliver to the holder                                                             Warrant
Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______

	 	 	 
	 

 Name of Registered Holder

	 	 

	 	 	 	 
	By:
	 	 	 
	 

	 	 	 
	 

	 	Name:	 
	 

	 	Title:	 

 

 

ACKNOWLEDGMENT

     The Company hereby acknowledges this Exercise Notice and hereby directs Corporate Stock
Transfer to issue the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated                                                             , 2006 from the Company and acknowledged and agreed to
by Corporate Stock Transfer.

	 	 	 	 	 	 	 
	 	 	GLOBAL EMPLOYMENT HOLDINGS, INC.	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:

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