Document:

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                                                                   Exhibit 10.17

                                                                  EXECUTION COPY

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                               CALPINE CORPORATION

                       SENIOR SECURED TERM LOANS DUE 2007

                                CREDIT AGREEMENT

                            Dated as of July 16, 2003

                       GOLDMAN SACHS CREDIT PARTNERS L.P.
          Sole Lead Arranger, Sole Bookrunner and Administrative Agent

                             THE BANK OF NOVA SCOTIA
                         Arranger and Syndication Agent

              TD SECURITIES (USA) INC., ING (U.S.) CAPITAL LLC AND
                           LANDESBANK HESSEN-THURINGEN
                                  Co-Arrangers

                CREDIT LYONNAIS NEW YORK BRANCH AND UNION BANK OF
                                CALIFORNIA, N.A.
                                 Managing Agents

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                                TABLE OF CONTENTS

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                                            ARTICLE I
                           DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.     Definitions..................................................................         3

SECTION 1.02.     Other Definitions............................................................        40

SECTION 1.03.     Rules of Construction........................................................        41

                                           ARTICLE II
                                         THE TERM LOANS

SECTION 2.01.     Term Loans...................................................................        42

SECTION 2.02.     Pro Rata Shares; Availability of Funds.......................................        43

SECTION 2.03.     Use of Proceeds..............................................................        44

SECTION 2.04.     Evidence of Debt; Register; Lenders' Books and Records; Notes................        44

SECTION 2.05.     Interest.....................................................................        45

SECTION 2.06.     Conversion/Continuation......................................................        46

SECTION 2.07.     Default Interest.............................................................        47

SECTION 2.08.     Fees.........................................................................        47

SECTION 2.09.     Scheduled Payments/Commitment Reductions.....................................        47

SECTION 2.10.     Voluntary Prepayments........................................................        49

SECTION 2.11.     Mandatory Offers.............................................................        51

SECTION 2.12.     Application of Prepayments...................................................        53

SECTION 2.13.     General Provisions Regarding Payments........................................        53

SECTION 2.14.     Ratable Sharing..............................................................        54

SECTION 2.15.     Making or Maintaining Eurodollar Rate Loans..................................        55

SECTION 2.16.     Increased Costs; Capital Adequacy............................................        57
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SECTION 2.17.     Taxes; Withholding, etc......................................................        59

SECTION 2.18.     Removal or Replacement of a Lender...........................................        61

SECTION 2.19.     Additional Term Loans........................................................        62

                                           ARTICLE III
                                      CONDITIONS PRECEDENT

SECTION 3.01.     Closing Date.................................................................        65

SECTION 3.02.     Conditions to Each Term Loan.................................................        70

                                           ARTICLE IV
                                 REPRESENTATIONS AND WARRANTIES

                                            ARTICLE V
                                            COVENANTS

SECTION 5.01.     [Intentionally Omitted.].....................................................        81

SECTION 5.02.     [Intentionally Omitted.].....................................................        81

SECTION 5.03.     Reports......................................................................        81

SECTION 5.04.     Compliance Certificate.......................................................        82

SECTION 5.05.     Taxes........................................................................        83

SECTION 5.06.     Stay, Extension and Usury Laws...............................................        83

SECTION 5.07.     Restricted Payments..........................................................        83

SECTION 5.08.     Dividend and Other Payment Restrictions Affecting Subsidiaries...............        86

SECTION 5.09.     Incurrence of Indebtedness and Issuance of Preferred Stock...................        88

SECTION 5.10.     Asset Sales..................................................................        92

SECTION 5.11.     Transactions with Affiliates.................................................        95

SECTION 5.12.     Liens........................................................................        97

SECTION 5.13.     Limitation on Changes in the Nature of Business..............................        98

SECTION 5.14.     Corporate Existence..........................................................        98
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SECTION 5.15.     Offer to Repurchase Upon Change of Control..................................         99

SECTION 5.16.     Limitation on Sale and Leaseback Transactions...............................        100

SECTION 5.17.     [Intentionally Omitted.]....................................................        100

SECTION 5.18.     [Intentionally Omitted.]....................................................        100

SECTION 5.19.     Limitation on Issuances of Guarantees of Indebtedness.......................        100

SECTION 5.20.     [Intentionally Omitted.]....................................................        101

SECTION 5.21.     Payments for Consent........................................................        101

SECTION 5.22.     Designation of Restricted and Unrestricted Subsidiaries.....................        101

SECTION 5.23.     Suspension of Covenants.....................................................        101

                                           ARTICLE VI
                                           SUCCESSORS

SECTION 6.01.     Merger, Consolidation, or Sale of Assets....................................        102

SECTION 6.02.     Successor Corporation Substituted...........................................        104

                                           ARTICLE VII
                                      DEFAULTS AND REMEDIES

SECTION 7.01.     Events of Default...........................................................        104

SECTION 7.02.     Acceleration................................................................        107

SECTION 7.03.     Other Remedies..............................................................        107

SECTION 7.04.     Waiver of Past Defaults.....................................................        107

SECTION 7.05.     Control by Majority.........................................................        108

SECTION 7.06.     [Intentionally Omitted.]....................................................        108

SECTION 7.07.     [Intentionally Omitted.]....................................................        108

SECTION 7.08.     Collection Suit by Administrative Agent.....................................        108

SECTION 7.09.     Priorities..................................................................        108

                                                   ARTICLE VIII
                                                      AGENTS
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SECTION 8.01.     Appointment of Agents.......................................................        109

SECTION 8.02.     Powers and Duties...........................................................        109

SECTION 8.03.     General Immunity............................................................        109

SECTION 8.04.     Agents Entitled to Act as Lender............................................        110

SECTION 8.05.     Lenders' Representations, Warranties and Acknowledgment.....................        111

SECTION 8.06.     Right to Indemnity..........................................................        111

SECTION 8.07.     Successor Administrative Agent..............................................        112

                                           ARTICLE IX
                                     COLLATERAL AND SECURITY

                                            ARTICLE X
                                        RANKING OF LIENS

                                           ARTICLE XI
                                       COLLATERAL SHARING

SECTION 11.01.    Equal and Ratable Lien Sharing by holders of Parity Lien Debt...............        113

SECTION 11.02.    Enforcement.................................................................        113

SECTION 11.03.    Amendment...................................................................        114

                                           ARTICLE XII
                                      INTENTIONALLY OMITTED

                                          ARTICLE XIII
                                          MISCELLANEOUS

SECTION 13.01.    Notices.....................................................................        114

SECTION 13.02.    Expenses....................................................................        115

SECTION 13.03.    Indemnity...................................................................        116

SECTION 13.04.    Set-Off.....................................................................        117

SECTION 13.05.    Amendments and Waivers......................................................        117

SECTION 13.06.    Successors and Assigns; Participations......................................        119
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SECTION 13.07.    Independence of Covenants...................................................        124

SECTION 13.08.    Survival of Representations, Warranties and Agreements......................        124

SECTION 13.09.    No Waiver; Remedies Cumulative..............................................        124

SECTION 13.10.    Marshalling; Payments Set Aside.............................................        124

SECTION 13.11.    Severability................................................................        124

SECTION 13.12.    Term Loan Obligations Several; Independent Nature of Lenders' Rights........        125

SECTION 13.13.    Headings....................................................................        125

SECTION 13.14.    Applicable Law..............................................................        125

SECTION 13.15.    Consent to Jurisdiction.....................................................        125

SECTION 13.16.    Waiver Of Jury Trial........................................................        125

SECTION 13.17.    Confidentiality.............................................................        126

SECTION 13.18.    Usury Savings Clause........................................................        127

SECTION 13.19.    Counterparts................................................................        128

SECTION 13.20.    Effectiveness...............................................................        128

SECTION 13.21.    Statements Required in Certificate or Opinion...............................        128
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APPENDICES:  A                Initial Term Loan Commitments
             B                Notice Addresses

SCHEDULES:   1.01(a)          Mortgaged Properties
             1.01(b)          Pledged Subsidiaries
             4.01(c)          Capital Stock Matters
             4.01(aa)         Subsidiary Companies of Holding Companies
             4.01(cc)         First-Tier Public Utility Subsidiaries
             4.01(dd)         Exempt Wholesale Generators
             4.01(ee)         Texas Subsidiaries
             4.01(hh)         Retail Service Subsidiaries
             4.01(ii)         FERC Complaints

EXHIBITS:    A                Assignment Agreement
             B                Certificate Re Non-Bank Status
             C                Conversion/Continuation Notice
             D                Funding Notice
             E                Lender Addendum
             F                Lender Joinder Agreement
             G                Term Loan Note

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This CREDIT AGREEMENT, dated as of July 16, 2003, is entered into by and among
CALPINE CORPORATION, a Delaware corporation (the "Company"), the Lenders party
hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P., as Administrative
Agent (together with its successors in such capacity, the "Administrative
Agent") and as Sole Lead Arranger and Sole Bookrunner (in such capacity, the
"Sole Lead Arranger"), THE BANK OF NOVA SCOTIA, as Arranger and Syndication
Agent, TD SECURITIES (USA) INC., ING (U.S.) CAPITAL LLC and LANDESBANK
HESSEN-THURINGEN, as Co-Arrangers, and CREDIT LYONNAISE NEW YORK BRANCH and
UNION BANK OF CALIFORNIA, N.A., as Managing Agents.

                                    RECITALS:

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1.                                  The Company intends to borrow $750,000,000
in aggregate principal amount of Term Loans (the "Initial Term Loans") under
this Agreement.

2.                                  The Company intends to issue (i)
$500,000,000 in aggregate principal amount of Second-Priority Senior Secured
Floating Rate Notes due 2007, (the "2007 Notes") pursuant to the Indenture,
dated as of July 16, 2003 (the "2007 Indenture"), by and among the Company and
Wilmington Trust Company, as Trustee (together with its successors in such
capacity, the "2007 Trustee"), (ii) $1,150,000,000 in aggregate principal of
8.50% Second Priority Senior Secured Notes due 2010, (the "2010 Notes") pursuant
to the Indenture, dated as of July 16, 2003 (the "2010 Indenture"), by and among
the Company and Wilmington Trust Company, as Trustee (together with its
successors in such capacity, the "2010 Trustee") and (iii) $900,000,000 in
aggregate principal amount of 8.75% Second Priority Senior Secured Notes due
2013, (the "2013 Notes", together with the 2007 Notes and the 2010 Notes, the
"Initial Notes") pursuant to the Indenture, dated as of July 16, 2003 (the "2013
Indenture", together with the 2007 Indenture and the 2010 Indenture, the
"Indentures"), by and among the Company and Wilmington Trust Company, as Trustee
(together with its successors in such capacity, the "2013 Trustee", together
with the 2007 Trustee and the 2010 Trustee, the "Trustees").

3.                                  The Company intends to enter into an Amended
and Restated Credit Agreement dated as of July 16, 2003 (as amended, modified,
renewed, restated or replaced from time to time, the "Credit Agreement"), among,
inter alia, the Company, the lenders referred to therein, and The Bank of Nova
Scotia, as administrative agent, relating to a $500,000,000 senior secured
credit facility to be made available in the form of revolving loans and term
loans, including letters of credit to be issued thereunder.

4.                                  Pursuant to the Guarantee and Collateral
Agreement, dated as of July 16, 2003 (the "Guarantee and Collateral Agreement"),
by and among the Company, the Canadian Guarantors (as defined below) and the
Collateral Trustee (as defined below), the Canadian Guarantors shall guarantee,
on a limited basis as provided therein, payment of the Initial Term Loans, all
other Term Loan Obligations and all other Secured Obligations (such terms as
defined below).

5.                                  The Company intends to secure the Initial
Term Loans, all other Term Loan Obligations and all other Secured Obligations,
including its obligations under the Credit Agreement and any future Priority
Lien Debt (as defined below), on a priority basis, and, subject to such
priority, its obligations under the 2007 Notes, 2010 Notes, 2013 Notes and
Initial Term Loans and any future Parity Lien Debt (as defined below) Equally
and Ratably (as defined below), with security interests in all present and
future Collateral (as defined below).

6.                                  The Company has entered into the Collateral
Trust Agreement (as defined below) which sets forth the terms on which the
Company has appointed the Collateral Trustee as trustee for the present and
future holders of the Secured Obligations to receive, hold, maintain,
administer, enforce and distribute all Security Documents, and all guarantees
granted thereunder, at any time delivered to the Collateral Trustee and all
interests, rights, powers and remedies of the Collateral Trustee thereunder and
the proceeds thereof.

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                                   ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01      Definitions.

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

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

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

Acquired Debt shall be deemed to be incurred on the date the acquired Person
becomes a Restricted Subsidiary.

         "Additional Notes" means, with respect to any series of the Initial
Notes, Notes (other than the Initial Notes) issued under the applicable
Indenture in accordance with Sections 2.02 and 4.09 thereof, as part of the same
series as the applicable Initial Notes.

         "Adjusted Eurodollar Rate" means, with respect to a Eurodollar Rate
Loan for the relevant Interest Period, the sum of the quotient of (a) the
Eurodollar Base Rate applicable to such Interest Period, divided by (b) one
minus the Applicable Reserve Requirement (expressed as a decimal) applicable to
such Interest Period.

         "Administrative Agent" is defined in the Recitals hereto.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings. For purposes of Section 5.11 herein,
"Affiliate" shall also mean any Person of which the Company owns 10% or more of
any class of Capital Stock or rights to acquire 10% or more of any class of
Capital Stock and any Person who would be an Affiliate of any such Person
pursuant to the first sentence hereof.

"Agents" means the Administrative Agent and the Sole Lead Arranger.

"Agreement" means this Credit Agreement, dated as of July 16, 2003.

"Applicable Reserve Requirement" means, at any time, for any Eurodollar Rate
Loan, the maximum rate, expressed as a decimal, at which reserves (including,
without limitation, any

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basic marginal, special, supplemental, emergency or other reserves) are required
to be maintained with respect thereto against "Eurocurrency liabilities" (as
such term is defined in Regulation D) under regulations issued from time to time
by the Board of Governors of the Federal Reserve System or other applicable
banking regulator. Without limiting the effect of the foregoing, the Applicable
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (i) any category of liabilities which
includes deposits by reference to which the applicable Adjusted Eurodollar Rate
or any other interest rate of a Term Loan is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar Rate
Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credit for proration, exceptions or offsets that may be available
from time to time to the applicable Lender. The rate of interest on Eurodollar
Rate Loans shall be adjusted automatically on and as of the effective date of
any change in the Applicable Reserve Requirement.

         "Asset Sale" means:

                  (1) the sale, lease, conveyance or other disposition of any
         assets or rights; provided that the sale, conveyance or other
         disposition of all or substantially all of the assets of the Company
         and its Restricted Subsidiaries taken as a whole shall be governed by
         Sections 5.15 and 6.01 of this Agreement and not by Section 5.10; and

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

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

                  (1)(A) any single transaction or series of related
         transactions that involves the sale of uninstalled turbines and related
         equipment, and (B) any single transaction or series of related
         transactions that involves other assets having a Fair Market Value of
         less than $50.0 million, it being understood that, in connection with
         any sale, lease, conveyance or other disposition of any Designated
         Assets or rights relating thereto in connection with a farm-out
         transaction, such transaction shall be valued as at the time of
         execution and delivery of binding contractual arrangements relating
         thereto;

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

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

                  (4) the sale or lease of products, services or accounts
         receivable in the ordinary course of business and any sale or other
         disposition of damaged, worn-out or obsolete assets in the ordinary
         course of business;

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                  (5) a Restricted Payment that does not violate Section 5.07 or
         a Permitted Investment;

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

                  (7) the sale or other disposition of all or any part of the
         Company's right to amounts that have or are to become due and payable
         by Pacific Gas & Electric Company under that certain Agreement dated as
         of July 1, 1999, as amended, between Pacific Gas & Electric Company and
         Calpine Gilroy L.P., a California limited partnership (PG&E Log No.
         08C002) For Termination and Buy-Out of Standard Offer 4 Power Purchase
         Agreement, as such rights were purchased from Calpine Gilroy Cogen L.P.
         by the Company pursuant to the Purchase Agreement dated as of March 8,
         2002, as amended, between Calpine Gilroy Cogen L.P. and the Company.

"Assignment Agreement" means an Assignment and Assumption Agreement
substantially in the form of Exhibit A with such amendments or modifications as
may be approved by the Administrative Agent.

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

"Bankruptcy Case" means any case under Title 11 of the United States Code or any
successor bankruptcy law commenced voluntarily or involuntarily against the
Company or any other Obligor.

"Bankruptcy Code" means Title 11, U.S. Code, as amended, or any similar federal
or state law for the relief of debtors.

"Base Rate" means, for any day, a fluctuating rate of interest per annum equal
to the higher of (i) the Prime Rate for such day and (ii) the sum of (a) the
Federal Funds Effective Rate for such day and (b) one-half of one percent (0.5%)
per annum.

"Base Rate Loan" means a Term Loan bearing interest at a rate determined by
reference to the Base Rate.

"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by

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conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only after the passage of time. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.

         "Board of Directors" means:

                  (1) with respect to a corporation, the Board of Directors of
         the corporation or any committee thereof duly authorized to act on
         behalf of such board;

                  (2) with respect to a partnership, the Board of Directors of
         the general partner of the partnership;

                  (3) with respect to a limited liability company, the managing
         member or members or any controlling committee of managing members
         thereof; and

                  (4) with respect to any other Person, the board or committee
         of such Person serving a similar function.

"Business Day" means (i) any day excluding Saturday, Sunday or any day which is
a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted Eurodollar
Rate or Eurodollar Rate Loans, the term "Business Day" shall mean any day which
is a Business Day described in clause (i) and which is also a day for trading by
and between banks in Dollar deposits in the London interbank market.

"Calculation Date" shall have the meaning provided in the definition of "Fixed
Charge Coverage Ratio."

"Canadian Gas Assets" means Designated Assets owned by a direct or indirect
Restricted Subsidiary of one or more Canadian Guarantors.

"Canadian Guarantors" means Quintana Minerals (USA) Inc., a Delaware
corporation, JOQ Canada, Inc., a Delaware limited liability company and Quintana
Canada Holdings LLC, a Delaware limited liability company, and any successor to
any of the foregoing.

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

"Capital Stock" means:

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

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

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

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

                  "Cash Equivalents" means:

                  (1) the lawful currency of any country where the Company owns
         or operates a Facility;

                  (2) securities issued or directly and fully guaranteed or
         insured by the United States government or any state thereof (or any
         agency or instrumentality thereof), by the Canadian government (or any
         agency or instrumentality thereof), or by the government of a member
         state of the European Union (or any agency or instrumentality thereof),
         in each case the payment of which is backed by the full faith and
         credit of the United States, Canada or the relevant member state of the
         European Union, as the case may be, and having maturities of not more
         than six months from the date of acquisition;

                  (3) certificates of deposit and eurodollar time deposits with
         maturities of six months or less from the date of acquisition, bankers'
         acceptances with maturities not exceeding six months and overnight bank
         deposits, in each case, with any lender party to the Credit Agreement
         or with any domestic commercial bank having capital and surplus in
         excess of $500.0 million and a Thomson Bank Watch or successor rating
         agency rating of "B" or better;

                  (4) repurchase obligations with a term of not more than seven
         days for underlying securities of the types described in clauses (2)
         and (3) above entered into with any financial institution meeting the
         qualifications specified in clause (3) above;

                  (5) commercial paper having one of the two highest ratings
         obtainable from Moody's or S&P and maturing within six months after the
         date of acquisition; and

                  (6) money market funds at least 95% of the assets of which
         constitute Cash Equivalents of the kinds described in clauses (1)
         through (5) of this definition.

         "CCEC" means Calpine Canada Energy Ltd., a Nova Scotia limited
liability company that is wholly-owned by the Canadian Guarantors.

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<PAGE>

"Certificate re Non-Bank Status" means a certificate substantially in the form
of Exhibit B.

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

                  (1) the direct or indirect sale, transfer, conveyance or other
         disposition (other than by way of merger or consolidation), in one or a
         series of related transactions, of all or substantially all of the
         properties or assets of the Company and its Restricted Subsidiaries
         taken as a whole to any "person" (as that term is used in Section 13(d)
         of the Exchange Act);

                  (2) the adoption of a plan relating to the liquidation or
         dissolution of the Company;

                  (3) the consummation of any transaction (including any merger
         or consolidation) the result of which is that any "person" (as defined
         above) becomes the Beneficial Owner, directly or indirectly, of more
         than 50% of the Voting Stock of the Company, measured by voting power
         rather than number of shares;

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

                  (5) the first day on which a majority of the members of the
         Board of Directors of the Company are not Continuing Directors.

"Closing Date" means the date on which the Initial Term Loans are made.

"Code" means the Internal Revenue Code of 1986, as amended to the date hereof
and from time to time hereafter, and any successor statute.

"Collateral" means all properties and assets at any time owned or acquired by
the Company, except the Excluded Assets, and the Canadian Guarantors' ownership
interest in 65% of the aggregate outstanding Voting Stock of CCEC.

"Collateral Trust Agreement" the Collateral Trust Agreement dated as of July 16,
2003, among the Company, the Trustees, the Administrative Agent and the
Collateral Trustee.

"Collateral Trustee" means The Bank of New York in its capacity as collateral
trustee under the Collateral Trust Agreement, together with its successors in
such capacity.

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"Company" means Calpine Corporation, and any and all successors thereto.

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

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

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

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

(4) depreciation, amortization (including amortization of intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income;

         minus non-cash items increasing such Consolidated Net Income for such
         period, other than the accrual of revenue in the ordinary course of
         business;

         in each case, on a consolidated basis and determined in accordance with
         GAAP.

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

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

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

                                       9

<PAGE>

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

         "Consolidated Net Worth" means, with respect to any specified Person as
of any date, the sum of:

                  (1) the consolidated equity of the common stockholders of such
         Person and its consolidated Subsidiaries as of such date; plus

                  (2) the respective amounts reported on such Person's balance
         sheet as of such date with respect to any series of preferred stock
         (other than Disqualified Stock) that by its terms is not entitled to
         the payment of dividends unless such dividends may be declared and paid
         only out of net earnings in respect of the year of such declaration and
         payment, but only to the extent of any cash received by such Person
         upon issuance of such preferred stock.

"Conversion/Continuation Date" means the effective date of a continuation or
conversion, as the case may be, as set forth in the applicable
Conversion/Continuation Notice.

"Conversion/Continuation Notice" means a Conversion/Continuation Notice
substantially in the form of Exhibit C

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

                  (1) was a member of such Board of Directors on the date of
         this Agreement; or

                  (2) was nominated for election or elected to such Board of
         Directors with the approval of a majority of the Continuing Directors
         then still in office or with the approval of a majority of Directors
         whose election was previously so approved from time to time.

"Control Agreement" means the Designated Asset Sale Proceeds Account Control
Agreement dated July 16, 2003, among the Company, the Collateral Trustee and an
institution reasonably acceptable to the Initial Purchasers, as depository
agent.

"Credit Date" means the date that a Term Loan is made.

"Credit Agreement" is defined in the recitals hereto.

"Credit Agreement Agent" means, at any time, the Person serving at such time as
the "Agent" or "Administrative Agent" under the Credit Agreement or any other
representative of the lenders thereunder then most recently designated by a
majority of such lenders, in a written notice delivered to each Parity Debt
Representative and the Collateral Trustee, as the Credit Agreement Agent for the
purposes of the Parity Lien Debt Documents.

                                       10

<PAGE>

"Credit Facilities" means one or more debt facilities (including the Credit
Agreement) with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced
(including by means of sales of debt securities to institutional investors) in
whole or in part from time to time.

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

"Designated Assets" means all geothermal energy assets (including any related
extraction, processing or similar equipment and geothermal power plants) and all
natural gas assets (including any related extraction, processing or similar
equipment, other than natural gas power plants) owned by the Company or any of
its Restricted Subsidiaries from time to time, including the equity interests of
any Restricted Subsidiary owning any Designated Assets, but excluding (i) any
geothermal energy assets that are both unproven and undeveloped and (ii)
contracts for the purchase or sale of natural gas and natural gas supplied under
such contracts.

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

"Dollars" and the sign "$" mean the lawful money of the United States of
America.

"Eligible Assignee" means (i) any Lender, any Affiliate of any Lender and any
Related Fund (any two or more Related Funds being treated as a single Eligible
Assignee for all purposes hereof), and (ii) any commercial bank, insurance
company, investment or mutual fund or other entity that is an "accredited
investor" (as defined in Regulation D under the Securities Act) and which
extends credit or buys loans as one of its businesses.

"Environmental Claim" means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise) by any Governmental Authority or any other
Person arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law, (ii) in connection with any Hazardous
Material or any actual or alleged Hazardous Materials Activity or (iii) in
connection with any

                                       11

<PAGE>

actual or alleged damage, injury, threat or harm to health, safety, natural
resources or the environment.

"Equally and Ratably" means, in reference to sharing of Liens or proceeds
thereof as between the holders of Parity Lien Obligations with respect to each
outstanding Series of Parity Lien Debt, that such Liens or proceeds:

                  (1) shall be allocated and distributed first to each Parity
         Debt Representative for each outstanding series of Parity Lien Debt,
         for account of the holders of such Series of Parity Lien Debt, ratably
         in proportion to the principal of and interest and premium (if any)
         outstanding on each outstanding Series of Parity Lien Debt when the
         allocation or distribution is made, and thereafter

                  (2) shall be allocated and distributed (if any remain after
         payment in full of all of the principal of and interest and premium (if
         any) on all outstanding Parity Lien Debt) to each Parity Debt
         Representative for each outstanding series of Parity Lien Debt, for
         account of the holders of any remaining Parity Lien Obligations with
         respect to such outstanding Series of Parity Lien Debt, ratably in
         proportion to the aggregate unpaid amount of such remaining Parity Lien
         Obligations due and demanded (with written notice to the applicable
         Parity Debt Representative and the Collateral Trustee) prior to the
         date such distribution is made.

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

"Eurodollar Base Rate" means, with respect to a Eurodollar Rate Loan for the
relevant Interest Period, the applicable British Bankers' Association LIBOR rate
for deposits in Dollars as reported by any generally recognized financial
information service as of 11:00 a.m. (London time) two (2) Business Days prior
to the first day of such Interest Period, and having a maturity equal to such
Interest Period, provided that, if no such British Bankers' Association LIBOR
rate is available to the Administrative Agent, the applicable Eurodollar Base
Rate for the relevant Interest Period shall instead be (a) the rate determined
by the Administrative Agent to be the offered rate on such other page or other
service which displays an average British Bankers Association Interest
Settlement Rate for deposits (for delivery on the first day of such period) with
a term equivalent to such period in Dollars, determined as of approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of such
Interest Period, or (b) in the event the rates referenced in the preceding
clauses (a) is not available, the rate per annum equal to the offered quotation
rate to first class banks in the London interbank market by GSCP for deposits
(for delivery on the first day of the relevant period) in Dollars of amounts in
same day funds comparable to the principal amount of the applicable Term Loan of
the Administrative Agent, in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such
period as of approximately 11:00 a.m. (London time) two (2) Business Days prior
to the first day of such Interest Period.

                                       12

<PAGE>

"Eurodollar Rate Loan" means a Term Loan bearing interest at a rate determined
by reference to the Adjusted Eurodollar Rate.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Excluded Assets" means:

                  (1) any lease of property other than (i) a lease of a
         geothermal energy or natural gas interest or property, (ii) a lease of
         real estate underlying a power generation property or (iii) a capital
         lease;

                  (2) all deposit accounts (as defined in Article 9 of the
         Uniform Commercial Code of any relevant jurisdiction) and deposits
         therein to the extent not exceeding $50.0 million in the aggregate,
         except for the Designated Assets Sale Proceeds Account and any deposit
         account and deposits therein holding amounts referred to in clause (7)
         of this definition;

                  (3) the fixtures and equipment relating to any pipeline if, to
         the extent that and for so long as (i) the ownership or operation of
         such pipeline is regulated by any federal or state regulatory authority
         and (ii) under the law applicable to such regulatory authority the
         grant of a security interest in such fixtures and equipment is
         prohibited or a security interest in such fixtures and equipment may be
         granted only after completion of a filing with, or receipt of consent
         from, such regulatory authority which has not been effectively
         completed or received; provided, that (a) such fixtures and equipment
         shall be an Excluded Asset only to the extent and for so long as the
         conditions set forth in clauses (i) and (ii) in this clause (3) are and
         remain satisfied and to the extent such assets otherwise constitute
         Collateral, shall cease to be an Excluded Asset, and shall become
         subject to the security interests granted to the Collateral Trustee
         under the Security Documents, immediately and automatically at such
         time as such conditions cease to exist, including by reason of the
         effective completion of any required filing or effective receipt of any
         required regulatory approval, and (b) unless prohibited by law, the
         proceeds of any sale, lease or other disposition of any such fixtures
         or equipment that are Excluded Assets shall not be an Excluded Asset
         and shall at all times be and remain subject to the security interests
         granted to the Collateral Trustee under the Security Documents except
         as such proceeds are applied and used by the Company in the ordinary
         course of business and applied in accordance with Section 5.10 herein;

                  (4) all easements, rights-of-way, licenses and other real
         property interests for or pertaining to the construction, operation,
         use or maintenance of any pipeline over, upon or under land owned by
         another Person;

                  (5) with respect to personal property, any lease, license,
         permit, franchise, power, authority or right if, to the extent that and
         for so long as (i) the grant of a security interest therein constitutes
         or would result in the abandonment, invalidation or unenforceability of
         such lease, license, permit, franchise, power, authority or right or
         the termination of or a default under the instrument or agreement by
         which such lease, license, permit, franchise,

                                       13

<PAGE>

         power, authority or right is governed and (ii) such abandonment,
         invalidation, unenforceability, termination or default is not rendered
         ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
         Uniform Commercial Code (or any successor provisions) of any relevant
         jurisdiction or any other applicable law (including the United States
         bankruptcy code); provided, that (a) such lease, license, permit,
         franchise, power, authority or right shall be an Excluded Asset only to
         the extent and for so long as the conditions set forth in clauses (i)
         and (ii) of this clause (5) are and remain satisfied and to the extent
         that such assets otherwise constitute Collateral, shall cease to be an
         Excluded Asset, and shall become subject to the security interests
         granted to the Collateral Trustee under the Security Documents,
         immediately and automatically at such time as such conditions cease to
         exist, including by reason of any waiver or consent under the
         applicable instrument or agreement, and (b) the proceeds of any sale,
         lease or other disposition of any such lease, license, permit,
         franchise, power, authority or right that is or becomes an Excluded
         Asset shall not be an Excluded Asset and shall at all times be and
         remain subject to the security interests granted to the Collateral
         Trustee under the Security Documents except as such proceeds are
         applied and used by the Company in the ordinary course of business and
         applied in accordance with Section 5.10 herein;

                  (6) with respect to any real property, any lease, license,
         permit, franchise, power, authority or right if, to the extent that and
         for so long as the grant of a security interest therein (i) requires a
         third party consent which has not been obtained or (ii) constitutes or
         would result in the abandonment, invalidation or unenforceability of
         such lease, license, permit, franchise, power, authority or right or
         the termination of or a default under the instrument or agreement by
         which such lease, license, permit, franchise, power, authority or right
         is governed; provided, that such lease, license, permit, franchise,
         power, authority or right shall be an Excluded Asset only to the extent
         and for as long as the conditions set forth in clause (i) or (ii) of
         this clause (6) are and remain satisfied and to the extent such assets
         otherwise constitute Collateral, shall cease to be an Excluded Asset,
         and shall become subject to the security interests granted to the
         Collateral Trustee under the Security Documents immediately and
         automatically at such time as such conditions cease to exist except as
         such proceeds are applied and used by the Company in the ordinary
         course of business and applied in accordance with Section 5.10 herein;

                  (7) any cash proceeds (including earnings thereon) of Priority
         Lien Debt that are pledged to cash collateralize letters of credit;

                  (8) any turbines which serve as collateral pursuant to that
         certain General Agreement dated as of January 31, 2002 among the
         Company, various Subsidiaries of the Company and Siemens Westinghouse
         Power Corporation relating to various purchase contracts and letters of
         intent for gas turbine generators, steam turbine generators and related
         accessories;

                  (9) proved oil and gas reserves located in Oklahoma and
         undeveloped reserves and unproven acreage located in California, Texas,
         Wyoming, Montana, Colorado, New

                                       14

<PAGE>

         Mexico and offshore Louisiana; provided that such reserves and acreage
         has a Fair Market Value not exceeding $20.0 million in the aggregate;

                  (10) Capital Stock of Subsidiaries designated by the Company,
         but only for so long as (i) the Capital Stock of such Subsidiaries is
         not pledged to any Person (other than the Collateral Trustee on behalf
         of all holders of all Secured Debt) and (ii) such Subsidiaries
         collectively own less than 5.0% of the Company's total consolidated
         assets and collectively account for less than 5.0% of the Company's
         Consolidated Cash Flow; and

                  (11) any other property in which a security interest cannot be
         perfected by the filing of a financing statement under the Uniform
         Commercial Code of the relevant jurisdiction; provided that such
         property has a Fair Market Value not exceeding $25.0 million in the
         aggregate.

"Existing Guarantees" means the Guarantees of the Term Loans, the Notes and
certain obligations under the Credit Agreement that exist on the date of this
Agreement.

         "Existing Indebtedness" means the Indebtedness of the Company and its
Subsidiaries in existence on the date of this Agreement, until such amounts are
repaid.

         "Existing Senior Secured Credit Facilities" means the 2000 Credit
Agreement and the 2002 Credit Agreement.

         "Facility" means a power generation facility or energy producing
facility, including any related fuel reserves.

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

          "Federal Funds Effective Rate" means for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent, in its capacity as a Lender, on such day on
such transactions as determined by the Administrative Agent.

         "FERC" means the Federal Energy Regulatory Commission.

         "Final Offering Circular" means the final offering circular dated July
10, 2003 (such offering circular, as amended or supplemented, and including all
material incorporated by reference therein).

                                       15

<PAGE>

"First Amendment Assignment and Security Agreement" means the First Amendment
Assignment and Security Agreement dated as of July 16, 2003, between the Company
and the Collateral Trustee.

"First Amendment Note Pledge Agreement" means the First Amendment Note Pledge
Agreement dated as of July 16, 2003, between the Company and the Collateral
Trustee.

"First Amendment Pledge Agreement" means the First Amendment Pledge Agreement
dated as of July 16, 2003, between the Company and the Collateral Trustee.

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

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

                  (1) acquisitions that have been made by the specified Person
         or any of its Restricted Subsidiaries, including through mergers or
         consolidations or acquisitions of assets, or any Person or any of its
         Restricted Subsidiaries acquired by merger, consolidation, or the
         acquisition of all or substantially all of its assets by the specified
         Person or any of its Restricted Subsidiaries, and including any related
         financing transactions and including increases in ownership of
         Restricted Subsidiaries, during the four-quarter reference period or
         subsequent to such reference period and on or prior to the Calculation
         Date shall be given pro forma effect (in accordance with Regulation S-X
         under the Securities Act) as if they had occurred on the first day of
         the four-quarter reference period;

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

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

                                       16

<PAGE>

                  (4) any Person that is a Restricted Subsidiary on the
         Calculation Date shall be deemed to have been a Restricted Subsidiary
         at all times during such four-quarter period;

                  (5) any Person that is not a Restricted Subsidiary on such
         Calculation Date shall be deemed not to have been a Restricted
         Subsidiary at any time during such four-quarter period; and

                  (6) if any Indebtedness bears a floating rate of interest, the
         interest expense on such Indebtedness shall be calculated as if the
         rate in effect on the Calculation Date had been the applicable rate for
         the entire period (taking into account any Hedging Obligation
         applicable to such Indebtedness if such Hedging Obligation has a
         remaining term as at the Calculation Date in excess of 12 months).

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

                  (1) the consolidated interest expense of such Person and its
         Restricted Subsidiaries for such period, whether paid or accrued,
         including amortization of debt issuance costs and original issue
         discount, non-cash interest payments, the interest component of any
         deferred payment obligations, the interest component of all payments
         associated with Capital Lease Obligations, commissions, discounts and
         other fees and charges incurred in respect of letter of credit or
         bankers' acceptance financings, and net of the effect of all payments
         made or received pursuant to Hedging Obligations in respect of interest
         rates, plus one-third of all payments with respect to operating leases;
         plus

                  (2) the consolidated interest of such Person and its
         Restricted Subsidiaries that was capitalized during such period, except
         interest on Indebtedness incurred to finance the development or
         construction of a Facility; plus

                  (3) any interest accruing on Indebtedness of another Person
         that is Guaranteed by such Person or one of its Restricted Subsidiaries
         or secured by a Lien on assets of such Person or one of its Restricted
         Subsidiaries, whether or not such Guarantee or Lien is called upon, but
         excluding any such Guarantee or Lien in effect on the date of this
         Agreement unless the same is called upon; plus

                  (4) the product of (a) all dividends, whether paid or accrued
         and whether or not in cash, on any series of preferred stock of such
         Person or any of its Restricted Subsidiaries, other than dividends on
         Equity Interests payable solely in Equity Interests of the Company
         (other than Disqualified Stock) or to the Company or a Restricted
         Subsidiary of the Company, times (b) a fraction, the numerator of which
         is one and the denominator of which is one minus the effective combined
         federal, state and local statutory tax rate of such Person for the
         immediately preceding fiscal year, expressed as a decimal, in each
         case, on a consolidated basis and in accordance with GAAP.

         "Foreign Asset Sale" means an Asset Sale in respect of the Capital
Stock or assets of a Foreign Subsidiary or a Restricted Subsidiary of the type
described in Section 936 of the Code to

                                       17

<PAGE>

the extent that the proceeds of such Asset Sale are received by a Person subject
in respect of such proceeds to the tax laws of a jurisdiction other than the
United States of America or any State thereof or the District of Columbia.

         "Foreign Subsidiary" means a Subsidiary that is incorporated in a
jurisdiction other than the United States of America or a State thereof or the
District of Columbia.

"Funding Notice" means a notice substantially in the form of Exhibit D

"GAAP" means generally accepted accounting principles set forth in the
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect and, to
the extent optional, adopted by the Company, on the applicable date of
determination.

"Gilroy Agreement" means the Gilroy Receivables Assignment Agreement dated as of
July 16, 2003, between the Company and the Collateral Trustee.

"Governmental Authority" means any federal, state, municipal, national or other
government, governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a foreign
entity or government.

"GSCP" means Goldman Sachs Credit Partners L.P.

"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness (whether arising by virtue of partnership arrangements,
or by agreements to keep-well, to purchase assets, goods, securities or
services, to take or pay or to maintain financial statement conditions or
otherwise).

"Guarantors" means the Canadian Guarantors and each other Subsidiary of the
Company that Guarantees the Term Loans.

"Guarantee and Collateral Agreement" means the Guarantee and Collateral
Agreement dated as of July 16, 2003, among Quintana Minerals, (USA), Inc., JOQ
Canada, Inc. and Quintana Canada Holdings, LLC, the Company, the Trustees, the
Collateral Trustee, the Administrative Agent and the Bank of Nova Scotia, as
Credit Agreement Agent.

"Hazardous Materials" means any chemical, material or substance, exposure to
which is prohibited, limited or regulated by any Governmental Authority or which
may or could pose a

                                       18

<PAGE>

hazard to the health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or the indoor or outdoor environment.

"Hazardous Materials Activity" means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
release, threatened release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition, or handling of any Hazardous Materials, and any corrective action
or reponse action with respect to any of the foregoing.

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

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

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

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

"Highest Lawful Rate" means the maximum lawful interest rate, if any, that at
any time or from time to time may be contracted for, charged, or received under
the laws applicable to any Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

"Indebtedness" means, with respect to any specified Person, any indebtedness of
such Person (excluding accrued expenses and trade payables), whether or not
contingent:

                  (1) in respect of borrowed money;

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

                  (3) in respect of banker's acceptances;

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

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

                  (6) representing any Hedging Obligations,

                                       19

<PAGE>

         if and to the extent any of the preceding items (other than letters of
         credit, Attributable Debt and Hedging Obligations) would appear as a
         liability upon a balance sheet of the specified Person prepared in
         accordance with GAAP. In addition, the term "Indebtedness" includes all
         Indebtedness of others secured by a Lien on any asset of the specified
         Person (whether or not such Indebtedness is assumed by the specified
         Person) and, to the extent not otherwise included, the Guarantee by the
         specified Person of any Indebtedness of any other Person.

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

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

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

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

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

                      (B) the amount of the Indebtedness of such other Person.

         Notwithstanding anything to the contrary in this definition of
         Indebtedness, with respect to any contingent obligations (other than
         with respect to contractual obligations to repurchase goods sold or
         distributed, which shall be included to the extent reflected on the
         balance sheet of such Person in accordance with GAAP) of a Person, the
         maximum liability of such Indebtedness shall be as determined by such
         Person's Board of Directors, in good faith, as, in light of the facts
         and circumstances existing at the time, reasonably likely to be
         incurred upon the occurrence of the contingency giving rise to such
         obligation.

"Indemnified Liabilities" means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
claims (including Environmental Claims), costs (including the costs of any
investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up or
abate any Hazardous Materials Activity), expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or

                                       20

<PAGE>

arising out of (i) this Agreement or the other Term Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make Term Loans or the use or intended use of the proceeds thereof, or any
enforcement of any of the Term Loan Documents (including any sale of, collection
from, or other realization upon any of the Collateral or the enforcement of any
Guarantee of the Term Loan Obligations)); or (ii) any Environmental Claim or any
Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership or practice
of the Company and any of its Affiliates.

"Indentures" is defined in the Recitals.

"Initial Purchasers" means Goldman, Sachs & Co., Credit Lyonnais (USA) Inc., ING
Financial Markets LLC, Scotia Capital (USA) Inc. and TD Securities (USA) Inc.

"Initial Term Loan" means an Initial Term Loan made by a Lender to the Company
pursuant to Section 2.1(a) (Term Loans).

"Initial Term Loan Commitment" means the commitment of a Lender to make or
otherwise fund an Initial Term Loan and "Initial Term Loan Commitments" means
such commitments of all Lenders in the aggregate. The amount of each Lender's
Initial Term Loan Commitment, if any, is set forth on Appendix A, on Schedule 1
to the Lender Addendum delivered by such Lender or in the applicable Assignment
Agreement, subject to any adjustment or reduction pursuant to the terms and
conditions hereof. The aggregate amount of the Initial Term Loan Commitments as
of the Closing Date is $750,000,000.

"Initial Notes" is defined in the Recitals.

"Insolvency Proceeding" means:

                  (1) any proceeding for the reorganization, recapitalization or
         adjustment or marshalling of the assets or liabilities of the Company
         or any other Obligor, any receivership or assignment for the benefit of
         creditors relating to the Company or any other Obligor or any similar
         case or proceeding relative to the Company or any other Obligor or its
         creditors, as such, in each case whether or not voluntary;

                  (2) any liquidation, dissolution, marshalling of assets or
         liabilities or other winding up of or relating to the Company or any
         other Obligor, in each case whether or not voluntary and whether or not
         involving bankruptcy or insolvency; or

                  (3) any other proceeding of any type or nature in which
         substantially all claims of creditors of the Company or any other
         Obligor are determined and any payment or distribution is or may be
         made on account of such claims.

"Interest Payment Date" means with respect to (i) any Base Rate Loan, each April
15, July 15, October 15 and January 15 of each year, commencing on the first
such date to occur after the Closing Date and the final maturity date of such
Term Loan; and (ii) any Eurodollar Rate Loan,

                                       21

<PAGE>

the last day of each Interest Period applicable to such Term Loan; provided, in
the case of each Interest Period of longer than three months "Interest Payment
Date" shall also include each date that is three months, or an integral multiple
thereof, after the commencement of such Interest Period.

"Interest Period" means, in connection with a Eurodollar Rate Loan, an interest
period of one, two, three or six months, as selected by the Company in the
applicable Funding Notice or Conversion/Continuation Notice, (i) initially,
commencing on the Credit Date or Conversion/Continuation Date; and (ii)
thereafter, commencing on the day on which the immediately preceding Interest
Period expires; provided, (a) if an Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day unless no further Business Day occurs in such month, in
which case such Interest Period shall expire on the immediately preceding
Business Day; (b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (c), of this definition, end on the last Business Day of a calendar
month; and (c) no Interest shall extend beyond the Maturity Date.

"Interest Rate Determination Date" means, with respect to any Interest Period,
the date that is two Business Days prior to the first day of such Interest
Period.

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

"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Company's Investments in such Subsidiary that were not sold or
disposed of in an amount determined as provided in Section 5.07. Except as
otherwise provided in this Agreement, the amount of an Investment shall be
determined at the time the Investment is made and without giving effect to
subsequent changes in value.

"Lender" means each financial institution listed on the signature pages hereto
as a Lender, and any other Person that becomes a party hereto pursuant to an
Assignment Agreement or a Lender Joinder Agreement.

                                       22

<PAGE>

"Lender Addendum" means with respect to any initial Lender, a Lender Addendum,
substantially in the form of Exhibit E to be executed and delivered by such
Lender on the Closing Date as provided in Section 13.06(j).

"Lender Joinder Agreement" means an agreement substantially in the form of
Exhibit F

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.

"Magic Valley Generating Assets" means the Magic Valley Generating Station, a
natural gas fired power plant in commercial operation in Edinburg, Texas.

"Material Adverse Effect" has the meaning in Section 2(o) of the Purchase
Agreement.

"Material Designated Assets" means Designated Assets having a Fair Market Value
in the aggregate in excess of $50.0 million.

"Maturity Date" means the earlier of (i) July 16, 2007, and (ii) the date that
all Term Loans shall become due and payable in full hereunder, whether by
acceleration or otherwise.

"Moody's" means Moody's Investors Service, Inc. (or, if such entity ceases to
rate the Term Loans for reasons outside of the control of the Company, the
equivalent investment grade credit rating from any other "nationally recognized
statistical rating organization" (or successor concept) within the meaning of
Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act (or successor provision)
selected by the Company as a replacement agency).

"Mortgages" the mortgages or deeds of trust listed on Schedule 1.01(a) hereto.

"Net Income" means, with respect to any specified Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, without duplication:

                  (1) any gain (but not loss), together with any related
         provision for taxes on such gain (but not loss), realized in connection
         with: (a) any Asset Sale; or (b) the disposition of any securities by
         such Person or any of its Restricted Subsidiaries or the extinguishment
         of any Indebtedness of such Person or any of its Restricted
         Subsidiaries; and

                  (2) any extraordinary gain (but not loss), together with any
         related provision for taxes on such extraordinary gain (but not loss).

                                       23

<PAGE>

         "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including legal, accounting and investment banking fees, and
sales commissions, and any relocation expenses incurred as a result of the Asset
Sale, taxes paid or payable as a result of the Asset Sale, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Priority Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.

"New Credit Facility" means the senior secured credit facility provided under
the Credit Agreement providing for up to $500.0 million of revolving credit and
term loan borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, restated, modified, renewed, refunded, replaced or
refinanced (including by means of sales of debt securities to institutional
investors) in whole or in part from time to time.

"Non-Recourse Debt" means Indebtedness of any Restricted Subsidiary that is
incurred to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Company or any Restricted Subsidiary; provided that such Indebtedness is
without recourse to the Company (except as permitted by clause (8) of the
definition of Permitted Debt) or any Restricted Subsidiary or to any property or
assets of the Company or any Restricted Subsidiary other than property or assets
(including Capital Stock) of a Restricted Subsidiary subject to a Lien permitted
pursuant to clause (8) of the definition of Permitted Liens or property or
assets (including Capital Stock) of a Restricted Subsidiary subject to a Lien
permitted pursuant to clause (19) of the definition of Permitted Liens.

"Note Documents" means each Indenture, each of the Notes, each Sharing
Confirmation and the Security Documents.

"Note Obligations" means each of the Notes (including any Additional Notes
issued under the applicable Indenture) and all other Obligations of any Obligor
under the applicable Indenture, the applicable Notes (including any Additional
Notes issued under the applicable Indenture) and the Security Documents.

"Notes" means the Initial Notes and any Additional Notes.

"Notice" means a Funding Notice or a Conversion/Continuation Notice.

"Obligations" means any principal, interest (including any interest accruing at
the then applicable rate provided in any applicable Secured Debt Document after
the maturity of the Indebtedness thereunder and any reimbursement obligations
therein and interest accruing at the then applicable rate provided in any
applicable Secured Debt Document after the filing of any

                                       24

<PAGE>

petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Company, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

"Obligor" means the Company and each Restricted Subsidiary of the Company (if
any) that at any time guarantees or provides collateral security or credit
support for any Secured Obligations.

"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.

"Officers' Certificate" means a certificate signed on behalf of the Company by
two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 13.21
hereof.

"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Administrative Agent, that meets the requirements of Section
13.21 hereof. The counsel may be an employee of, or counsel to, the Company, any
Subsidiary of the Company or the Administrative Agent.

"Parity Debt Representative" means:

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

                  (2) in the case of the Term Loans, the Administrative Agent;
         or

                  (3) in the case of any other Series of Parity Debt, the
         trustee, agent or representative of the holders of such Series of
         Parity Lien Debt who maintains the transfer register for such Series of
         Parity Lien Debt and is appointed as a Parity Debt Representative (for
         purposes related to the administration of the Security Documents)
         pursuant to the indenture or other agreement governing such Series of
         Parity Lien Debt.

         "Parity Lien" means a Lien granted by a Security Document to the
Collateral Trustee upon any property of the Company or any other Obligor to
secure Parity Lien Obligations.

         "Parity Lien Debt" means:

                  (1) the Notes;

                  (2) the Term Loans; and

                  (3) any other Indebtedness (including Additional Notes and
         Additional Term Loans) that:

                                       25

<PAGE>

                      (A) is permitted to be incurred by the covenant described
                  under Section 5.09 herein; and

                      (B) is permitted to be secured by Parity Liens by
                  clause (2) of the definition of Permitted Liens;

         provided, in the case of each issue or series of Indebtedness referred
         to in this clause (3), that:

                  (i) on or before the date on which such Indebtedness was
         incurred by the Company such Indebtedness is designated by the Company,
         in an officers' certificate delivered to each Parity Debt
         Representative and the Collateral Trustee on or before such date, as
         Parity Lien Debt for the purposes of this Agreement and the Collateral
         Trust Agreement,

                  (ii) such Indebtedness is governed by an indenture or other
         agreement that includes a Sharing Confirmation and

                  (iii) all requirements set forth in the Collateral Trust
         Agreement as to the confirmation, grant or perfection of the Collateral
         Trustee's Liens to secure such Indebtedness or Obligations in respect
         thereof are satisfied

         (and the satisfaction of such requirements and the other provisions of
         this clause (3) shall be conclusively established, for purposes of
         entitling the holders of such Indebtedness to share Equally and Ratably
         with the other holders of Parity Lien Debt in the benefits and proceeds
         of the Collateral Trustee's Liens on the Collateral, if the Company
         delivers to the Collateral Trustee an officers' certificate in the form
         required pursuant to the Collateral Trust Agreement stating that such
         requirements and other provisions have been satisfied and that such
         Indebtedness is Parity Lien Debt, together with an Opinion of Counsel
         stating that such officers' certificate has been duly authorized by the
         Board of Directors of the Company and has been duly executed and
         delivered, and the holders of such Indebtedness and Obligations in
         respect thereof shall be entitled to rely conclusively thereon).

         "Parity Lien Debt Documents" means, collectively, the Term Loan
Documents, the Note Documents, and the indenture or agreement governing each
other Series of Parity Lien Debt and all agreements binding on any Obligor
related thereto.

         "Parity Lien Obligations" means Parity Lien Debt and all other
Obligations in respect thereof.

"Permitted Business" means the business of acquiring, constructing, managing,
developing, improving, owning and operating Facilities, as well as any other
activities reasonably related to the foregoing activities (including acquiring
and holding reserves), including investing in Facilities.

                                       26

<PAGE>

         "Permitted Investments" means:

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

                  (2) any Investment in Cash Equivalents;

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

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

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

                  (4) any Investment made as a result of the receipt of non-cash
         consideration from an Asset Sale that was made pursuant to and in
         compliance with Section 5.10 herein;

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

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

                  (7) Investments represented by Hedging Obligations;

                  (8) loans or advances to employees made in the ordinary course
         of business consistent with past practices of the Company or such
         Restricted Subsidiary in an aggregate principal amount not to exceed
         $5.0 million at any one time outstanding;

                  (9) repurchases of the Notes and repayments of the Term Loans;
         and

                  (10) other Investments in any Person having an aggregate Fair
         Market Value (measured on the date each such Investment was made and
         without giving effect to subsequent changes in value), when taken
         together with all other Investments made pursuant to this clause (10)
         that are at the time outstanding not to exceed $100.0 million;

         provided that Designated Assets held by the Company may not be invested
         in, leased to or otherwise transferred to any Restricted Subsidiary;
         provided, however, that the Company may transfer proven undeveloped gas
         reserves to its Restricted Subsidiaries in

                                       27

<PAGE>

         the ordinary course of business for consumption in the power generating
         business of such Restricted Subsidiaries during the 12-month period
         following transfer.

         "Permitted Liens" means:

                  (1) Liens on assets of the Company or any Canadian Guarantor
         securing Obligations of the Company or such Canadian Guarantor under
         one or more Credit Facilities in an aggregate amount not exceeding the
         Priority Lien Cap;

                  (2) Liens held by the Collateral Trustee Equally and Ratably
         securing the Initial Notes and the Term Loans to be issued on the date
         of this Agreement and all future Parity Lien Debt and other Parity Lien
         Obligations; provided that the Collateral Trustee's Liens may secure
         Parity Lien Debt incurred after the date of this Agreement or
         Obligations in respect thereof only if, on the date of the incurrence
         of such Parity Lien Debt, after giving pro forma effect to the
         incurrence thereof and the application of the proceeds therefrom, the
         Secured Leverage Ratio is not greater than 2.75:1.0;

                  (3) Liens in favor of the Company;

                  (4) Pledges or deposits made under workers' compensation,
         unemployment insurance laws or similar legislation, or good faith
         deposits in connection with bids, tenders, contracts (other than for
         payment of Indebtedness) or leases to which such Person is a party, and
         Liens or deposits to secure the performance of statutory obligations,
         surety or appeal bonds, performance bonds or other obligations of a
         like nature incurred in the ordinary course of business;

                  (5) Liens to secure Indebtedness (including Capital Lease
         Obligations) permitted by clause (4) of the definition of Permitted
         Debt covering only the assets acquired, designed, constructed,
         installed or improved with or financed by such Indebtedness;

                  (6) Liens existing on the date of this Agreement;

                  (7) Liens securing Indebtedness or other obligations of a
         Restricted Subsidiary owing to the Company or a Restricted Subsidiary;

                  (8) (A) Liens on assets or property of a Restricted Subsidiary
         (other than Material Designated Assets) incurred by any Restricted
         Subsidiary to secure Indebtedness of such Restricted Subsidiary
         incurred to finance the exploration, drilling, development,
         construction or purchase of or by, or repairs, improvements or
         additions to, property or assets of the Company or such Restricted
         Subsidiary, which Liens may include Liens on the Capital Stock of such
         Restricted Subsidiary (other than a Restricted Subsidiary that (i) is a
         direct Subsidiary of the Company or (ii) owns, directly or indirectly,
         Material Designated Assets), (B) Liens (other than Liens on Material
         Designated Assets) incurred by any Restricted Subsidiary that does not
         own, directly or indirectly, at the time of original incurrence of such
         a Lien under this clause (B) any Material Designated Assets

                                       28

<PAGE>

         or any operating properties or assets, securing Indebtedness incurred
         to finance the exploration, drilling, development, construction or
         purchase of or by, or repairs, improvements or additions to, property
         or assets of any Restricted Subsidiary that does not, directly or
         indirectly, own any operating properties or assets at the time of the
         original incurrence of such Lien, which Liens contemplated by this
         clause (8) may include Liens on the Capital Stock of one or more
         Restricted Subsidiaries that (i) are not direct Subsidiaries of the
         Company and (ii) do not, directly or indirectly, own any Material
         Designated Assets or operating properties or assets at the time of
         original incurrence of such Lien; or (C) without duplication, Liens
         (other than Liens on Material Designated Assets) incurred by any
         Restricted Subsidiary (which Liens may include Liens on the Capital
         Stock of such Restricted Subsidiary so long as the Capital Stock of
         such Restricted Subsidiary is not pledged as Collateral) that owns as
         of the date of this Agreement one or more of the peaking power plants
         (and no other significant assets) constructed for the purpose of
         providing peaking capacity and energy to the California Department of
         Water Resources; provided, that the Indebtedness secured by any such
         Lien contemplated by this clause (8) may not be issued more than 365
         days (or, in the case of clause (C) above, two years) after the later
         of the exploration, drilling, development, completion of construction,
         purchase, repair, improvement, addition or commencement of full
         commercial operation of the property or asset being so financed;

                  (9) Liens on property or shares of Capital Stock of a
         Subsidiary at the time such Person becomes a Subsidiary; provided that
         any such Lien may not extend to any other property owned by the
         Company;

                  (10) Liens on property at the time a Subsidiary acquires the
         property, including any acquisition by means of a merger or
         consolidation with or into the Subsidiary; provided that such Liens are
         not incurred in connection with, or in contemplation of, such merger or
         consolidation; and provided, further, that the Lien may not extend to
         any other property owned by the Company or any Restricted Subsidiary;

                  (11) Liens incurred by a Person other than the Company or any
         Subsidiary on assets that are the subject of a Capitalized Lease
         Obligation to which the Company or a Subsidiary is a party; provided
         that any such Lien may not secure Indebtedness of the Company or any
         Subsidiary (except Indebtedness secured by a Lien on any property or
         assets of the Company or such Subsidiary incurred in connection with
         Indebtedness of another Person), with the amount of such obligation
         being deemed to be the lesser of the value of such property or assets
         or the amount of the obligation so secured) and may not extend to any
         other property owned by the Company or any Restricted Subsidiary;

                  (12) Liens on assets of the Company Construction Finance
         Company, L.P. (and/or any other Restricted Subsidiary that subsequently
         owns any such assets) relating to the Magic Valley Generating Station;

                                       29

<PAGE>

                  (13) Liens not in respect of Indebtedness arising from Uniform
         Commercial Code financing statements for informational purposes with
         respect to leases incurred in the ordinary course of business and not
         otherwise prohibited by this Agreement;

                  (14) Liens not in respect of Indebtedness consisting of the
         interest of the lessor under any lease entered into in the ordinary
         course of business and not otherwise prohibited by this Agreement; and
         Liens on shares of Capital Stock of a subsidiary that does not own any
         significant assets other than a lessee's interest in a Facility or on
         the Capital Stock of a subsidiary whose only significant asset is its
         direct or indirect interest in such lessee subsidiary; provided that in
         no event shall this clause (14) allow a lien on any Capital Stock
         constituting Collateral;

                  (15) Liens which constitute banker's liens, rights of set-off
         or similar rights and remedies as to deposit accounts or other funds
         maintained with any bank or other financial institution, whether
         arising by operation of law or pursuant to contract;

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

                  (17) Liens imposed by law such as carriers', warehousemen's
         and mechanics' Liens, in each case, arising in the ordinary course of
         business and with respect to amounts not yet due or being contested in
         good faith by appropriate legal proceedings promptly instituted and
         diligently conducted and for which a reserve or other appropriate
         provision, if any, as shall be required in conformity with GAAP shall
         have been made; or other Liens arising out of judgments or awards
         against such Person with respect to which such Person shall then be
         diligently prosecuting appeal or other proceedings for review;

                  (18) survey exceptions, easements or reservations of, or
         rights of others for, licenses, rights-of-way, sewers, electric lines,
         telegraph and telephone lines and other similar purposes, or zoning or
         other restrictions as to the use of real property or Liens incidental
         to the conduct of the business of the Company or any Restricted
         Subsidiary or to the ownership of its properties that were not incurred
         in connection with Indebtedness and that do not in the aggregate
         materially adversely affect the value of said properties or materially
         impair their use in the operation of the business of the Company or any
         Restricted Subsidiary;

                  (19) Liens to secure any refinancing, refunding, extension,
         renewal or replacement (or successive refinancings, refundings,
         extensions, renewals or replacements) as a whole, or in part, of any
         Indebtedness secured by any Lien referred to in the foregoing clauses
         (6), (8), (9) and (10); provided that (A) such new Lien shall be
         limited to all or part of the same property or assets that secured the
         original Lien (plus repairs, improvements and additions to such
         property or assets and Liens on the stock or other ownership interest
         in one or more Restricted Subsidiaries beneficially owning such
         property or assets) and (B)

                                       30

<PAGE>

         the amount of the Indebtedness secured by such Lien at such time (or,
         if the amount that may be realized in respect of such Lien is limited,
         by contract or otherwise, such limited lesser amount) is not increased
         (other than by an amount necessary to pay fees and expenses, including
         premiums, related to the refinancing, refunding, extension, renewal or
         replacement of such Indebtedness);

                  (20) Liens on assets of Restricted Subsidiaries to secure
         letters of credit issued pursuant to clause (14) of the definition of
         Permitted Debt; provided if and to the extent such letters of credit
         are drawn upon, such drawing is reimbursed no later than the tenth
         Business Day following a demand for reimbursement following payment on
         the letter of credit and Liens to secure letters of credit incurred
         pursuant to clause (15) of the definition of Permitted Debt on cash
         Collateral constituting the proceeds of Priority Lien Debt;

                  (21) Liens (A) on cash and short-term investments of
         Restricted Subsidiaries to secure obligations with respect to (i)
         contracts for commercial and trading activities in the ordinary course
         of business and contracts (including physical delivery, option (whether
         cash or financial), exchange, swap and futures contracts) for the
         purchase, transmission, distribution, sale, lease or hedge of any
         energy-related commodity or service or (ii) interest rate, commodity
         price, or currency rate management contracts or derivatives and (B)
         encumbering assets of a Restricted Subsidiary, other than (i) Material
         Designated Assets or (ii) accounts or receivables, which Liens arise
         out of contracts or agreements relating to the generation, distribution
         or transmission or sale of energy and/or fuel; provided that all such
         agreements or contracts are entered into in the ordinary course of
         business; and

                  (22) other Liens to secure Indebtedness in an aggregate amount
         not to exceed $50.0 million at any time outstanding.

"Permitted Prior Liens" means (a) Liens securing Priority Lien Obligations not
exceeding the Priority Lien Cap, (b) Liens described in clauses (5), (6), (10)
or (11) of the definition of "Permitted Liens" and (c) Liens that arise by
operation of law and are not voluntarily granted, to the extent entitled by law
to priority over the security interests created by the Security Documents.

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

                  (1) the principal amount (or accreted value, if applicable) of
         such Permitted Refinancing Indebtedness does not exceed the principal
         amount (or accreted value, if applicable) of the Indebtedness extended,
         refinanced, renewed, replaced, defeased or refunded (plus all accrued
         or accumulated interest on the Indebtedness and the amount of

                                       31

<PAGE>

         all fees, costs, expenses and premiums, including swap breakage and
         defeasance costs, incurred in connection therewith);

                  (2) such Permitted Refinancing Indebtedness has a final
         maturity date equal to or later than the final maturity date of, and
         has a Weighted Average Life to Maturity equal to or greater than the
         Weighted Average Life to Maturity of, the Indebtedness being extended,
         refinanced, renewed, replaced, defeased or refunded; provided that such
         Permitted Refinancing Indebtedness may have such shorter final maturity
         date and Weighted Average Life to Maturity as is equal to or greater
         than the latest maturity date of any Term Loans borrowed under this
         Agreement; and

                  (3) if the Indebtedness being extended, refinanced, renewed,
         replaced, defeased or refunded is subordinated in right of payment to
         the Term Loans, such Permitted Refinancing Indebtedness has a final
         maturity date equal to or later than the final maturity date of, and is
         subordinated in right of payment to, the Term Loans on terms at least
         as favorable to the Lenders as those contained in the documentation
         governing the Indebtedness being extended, refinanced, renewed,
         replaced, defeased or refunded;

provided that Permitted Refinancing Indebtedness shall not include (A)
Indebtedness of the Company incurred to refinance Non-Recourse Debt of a
Restricted Subsidiary, (B) Indebtedness of a Restricted Subsidiary of the
Company that refinances Indebtedness of the Company or (C) Indebtedness of the
Company or a Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary.

"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

"Pledged Subsidiaries" means the first-tier subsidiaries listed on Schedule
1.01(b) hereto.

"preferred stock" means any Capital Stock of a Person, however designated, which
entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of the
other Capital Stock issued by such Person.

"Prime Rate" means the rate of interest per annum that Goldman Sachs Credit
Partners L.P. announces from time to time as its prime lending rate, as in
effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
Goldman Sachs Credit Partners L.P. or any other Lender may make commercial loans
or other loans at rates of interest at, above or below the Prime Rate.

"Principal Office" means, for the Administrative Agent, its "Principal Office"
as set forth on Appendix B, or such other office as the Administrative Agent may
from time to time designate in writing to the Company, the Administrative Agent
and each Lender.

                                       32

<PAGE>

"Priority Lien" means a Lien granted by a Security Document to the Collateral
Trustee upon any property of the Company or any other Obligor to secure Priority
Lien Obligations not exceeding the Priority Lien Cap.

"Priority Lien Agent" means the Credit Agreement Agent or any other agent for
holders of Priority Lien Debt.

"Priority Lien Cap" means an amount equal to (a) the Indebtedness outstanding
under the Credit Agreement or any other Credit Facility in an aggregate
principal amount not exceeding the greater of (1) $500.0 million, less the
amount of any Net Proceeds of a Sale of Designated Assets applied to repay
Priority Lien Debt and/or cash collateralize letters of credit that constitute
Priority Lien Debt and (2) the dollar amount that, on the date of incurrence of
such Indebtedness, is equal to 50% of the Company's Consolidated Cash Flow for
the then most recent four-quarter period for which financial information is
available, plus (b) any interest (including any interest accruing at the then
applicable rate provided in any applicable Priority Lien Document after the
maturity of the Indebtedness thereunder and any reimbursement obligations
therein and interest accruing at the then applicable rate provided in any
applicable Priority Lien Document after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), penalties, premiums,
fees, costs, expenses or other Obligations in respect of such Indebtedness. For
purposes of this definition of Priority Lien Cap, all letters of credit shall be
valued at face amount, whether or not drawn, and all letters of credit
denominated in a currency other than U.S. dollars shall be valued at all times
at the Equivalent Amount (as defined in the Credit Agreement) thereof on the
date of issue thereof.

"Priority Lien Debt" means Indebtedness under (a) the Credit Agreement or (b)
any other Credit Facility that is secured by a Priority Lien that was permitted
to be incurred under clause (1) of the definition of "Permitted Liens" but only
if on or before the day on which such Indebtedness under a Credit Facility
described in clause (b) above is incurred by the Company such Indebtedness is
designated by the Company, in an officers' certificate delivered to each Parity
Debt Representative and the Collateral Trustee on or before such date, as
Priority Lien Debt for the purposes of each of the Parity Lien Debt Documents
(including this Agreement) and the Collateral Trust Agreement.

"Priority Lien Documents" means the Credit Agreement or any other Credit
Facility pursuant to which any Priority Lien Debt is incurred and all other
agreements governing, securing or relating to any Priority Lien Obligations.

"Priority Lien Obligations" means the Priority Lien Debt and all other
Obligations in respect of Priority Lien Debt.

"Pro Rata Share" means with respect to all payments, computations and other
matters relating to the Term Loans of any Lender, the percentage obtained by
dividing (A) an amount equal to the aggregate outstanding Term Loans of that
Lender, by (B) an amount equal to the sum of the aggregate amount of outstanding
Term Loans of all Lenders.

                                       33

<PAGE>

"Public Equity Offering" means an underwritten primary public offering of the
Company's equity securities pursuant to an effective registration statement
under the Securities Act.

"PUHCA" means the Public Utility Holding Company Act of 1935, as amended.

"Purchase Agreement" means the Purchase Agreement dated July 10, 2003, among the
Company and the Initial Purchasers.

"Regulation A" means Regulation A of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

"Related Fund" means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

"Requisite Lenders" means one or more Lenders holding more than 50% of the sum
of the aggregate outstanding Term Loans (or, at any time prior to the funding of
the Initial Term Loans, the Initial Term Loan Commitments). For this purpose
only, Term Loans registered in the name of, or beneficially owned by, the
Company or any Affiliate of the Company shall be deemed not to be outstanding.

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

"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.

"S&P" means Standard & Poor's Ratings Group (or, if such entity ceases to rate
the Term Loans for reasons outside of the control of the Company, the equivalent
investment grade credit rating from any other "nationally recognized statistical
rating organization" (or successor concept) within the meaning of Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act (or successor provision) selected by
the Company as a replacement agency).

                                       34

<PAGE>

"Sale of Designated Assets" means any Asset Sale involving a sale or other
disposition of Designated Assets.

"SEC" means the Securities and Exchange Commission.

"Second Amendment Pledge Agreement" means the Second Amendment Pledge Agreement
dated as of July 16, 2003, between the Company and the Collateral Trustee.

"Secured Debt" means Parity Lien Debt and Priority Lien Debt.

"Secured Debt Documents" means the Parity Lien Debt Documents and the Priority
Lien Documents.

"Secured Debt Representative" means each Parity Debt Representative and the
Priority Lien Agent.

"Secured Leverage Ratio" means, on any date, the ratio of:

                  (1) the aggregate principal amount of Secured Debt outstanding
         on such date (and, for this purpose, letters of credit shall be deemed
         to have a principal amount equal to the maximum potential liability of
         the Company thereunder) to

                  (2) the aggregate amount of the Company's Consolidated Cash
         Flow for the most recent four-quarter period for which financial
         information is available.

         In addition, for purposes of calculating the Secured Leverage Ratio:

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

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

                                       35

<PAGE>

                  (3) any Person that is a Restricted Subsidiary on the Leverage
         Calculation Date shall be deemed to have been a Restricted Subsidiary
         at all times during such four-quarter period;

                  (5) any Person that is not a Restricted Subsidiary on the
         Leverage Calculation Date shall be deemed not to have been a Restricted
         Subsidiary at any time during such four-quarter period; and

                  (6) if any Indebtedness bears a floating rate of interest, the
         interest expense on such Indebtedness shall be calculated as if the
         rate in effect on the Leverage Calculation Date had been the applicable
         rate for the entire period (taking into account any Hedging Obligation
         applicable to such Indebtedness if such Hedging Obligation has a
         remaining term as at the Calculation Date in excess of 12 months).

"Secured Obligations" means the Parity Lien Obligations and the Priority Lien
Obligations.

"Secured Parties" means any Person, including the Lenders, who is holding a
Secured Obligation (including the Administrative Agent or any other Secured Debt
Representative), at any time.

"Security Documents" means the Guarantee and Collateral Agreement, the First
Amendment Pledge Agreement, the Second Amendment Pledge Agreement, First
Amendment Assignment and Security Agreement, First Amendment Note Pledge
Agreement, the Control Agreement, the Mortgages, the Collateral Trust Agreement
and all other grants or transfers for security, instruments, documents and
agreements delivered by any Obligor pursuant to any Secured Debt Document in
order to grant to the Collateral Trustee for the benefit of the Secured Parties,
a Lien on any Collateral as security for the Secured Obligations, in each case,
as amended, modified, renewed, restated or replaced, in whole or in part, from
time to time, in accordance with its terms.

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

"Series of Parity Lien Debt" means, severally, each series of the Notes, the
Term Loans and each other issue or series of Parity Lien Debt for which a single
transfer register is maintained.

"Series of Secured Debt" means, severally, each series of Notes, the Term Loans,
each other issue or series of Parity Lien Debt for which a single transfer
register is maintained and each issue or series of Priority Lien Debt for which
a single register is maintained.

"Sharing Confirmation" means, as to any Series of Parity Lien Debt, the written
agreement of the holders of such Series of Parity Lien Debt, as set forth in the
indenture or agreement governing such Series of Parity Lien Debt, for the
enforceable benefit of all holders of each other existing and future Series of
Parity Lien Debt and each existing and future Parity Debt Representative, that
all Parity Lien Obligations shall be and are secured Equally and Ratably by all
Liens at any time granted by the Company or any other Obligor to secure any
Obligations in

                                       36

<PAGE>

respect of such Series of Parity Lien Debt, whether or not upon property
otherwise constituting Collateral, that all such Liens shall be enforceable by
the Collateral Trustee for the benefit of all holders of Parity Lien Obligations
Equally and Ratably, and that the holders of Obligations in respect of such
Series of Parity Lien Debt are bound by the provisions in the Collateral Trust
Agreement relating to the order of application of proceeds from enforcement of
the Collateral Trustee's Liens upon the Collateral, and consent to and direct
the Collateral Trustee to perform its obligations under the Collateral Trust
Agreement.

"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.

"Sole Lead Arranger" is defined in the Preamble.

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

"Subsidiary" means, as applied to any Person, any corporation, limited or
general partnership, trust, association or other business entity of which an
aggregate of at least 50% of the outstanding Voting Shares, or an equivalent
controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more Subsidiaries of such Person.

"Tax" means any present or future tax, levy, impost, duty, assessment, charge,
fee, deduction or withholding of any nature and whatever called, by whomsoever,
on whomsoever and wherever imposed, levied, collected, withheld or assessed;
provided, "Tax on the overall net income" of a Person shall be construed as a
reference to a tax imposed by the jurisdiction in which that Person is organized
or in which that Person's applicable principal office (and/or, in the case of a
Lender, its lending office) is located or in which that Person (and/or, in the
case of a Lender, its lending office) is deemed to be doing business on all or
part of the net income, profits or gains (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case of a
Lender, its applicable lending office).

"Term Loan" means an Initial Term Loan or an Additional Term Loan.

"Term Loan Commitment" means any Initial Term Loan Commitment or Additional Term
Loan Commitment.

"Term Loan Document" means any of this Agreement, the Term Loan Notes, if any,
the Security Documents, each Sharing Confirmation and all other documents,
instruments or agreements

                                       37

<PAGE>

executed and delivered by a Obligor for the benefit of any Agent or any Lender
in connection herewith.

"Term Loan Note" means a promissory note in the form of Exhibit G as it may be
amended, supplemented or otherwise modified from time to time.

"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which the Indentures are qualified
under the Trust Indenture Act.

"Trustees" is defined in the Recitals.

"2000 Credit Agreement" means the Second Amended and Restated Credit Agreement,
dated as of May 23, 2000, among the Company, Bayerische Landesbank, as
Co-Arranger and Syndication Agent, The Bank of Nova Scotia, as Lead Arranger and
Administrative Agent, and the Lenders named therein.

"2002 Credit Agreement" means the Credit Agreement, dated as of March 8, 2002,
among the Company, the Lenders named therein, The Bank of Nova Scotia and
Bayerische Landesbank Girozentrale, as lead arrangers and bookrunners, Salomon
Smith Barney Inc. and Deutsche Banc Alex. Brown Inc., as lead arrangers and
bookrunners, Bank of America, National Association, and Credit Suisse First
Boston, Cayman Islands Branch, as lead arrangers and syndication agents, TD
Securities (USA) Inc., as lead arranger, The Bank of Nova Scotia, as joint
administrative agent and funding agent, and Citicorp USA, Inc., as joint
administrative agent .

"Type of Loan" means with respect to any Term Loan, a Base Rate Loan or a
Eurodollar Rate Loan.

"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

"Unrestricted Subsidiary" means any Subsidiary of the Company that is designated
by the Board of Directors as an Unrestricted Subsidiary (and any subsidiary of
an Unrestricted Subsidiary) pursuant to a Board Resolution passed after the date
of this Agreement, but only to the extent that such Subsidiary:

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

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

                                       38

<PAGE>

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

                  (4) has not guaranteed or otherwise directly or indirectly
         provided credit support for any Indebtedness of the Company or any of
         its Restricted Subsidiaries;

                  provided, however, that a corporation with no significant
         assets created for the sole purpose of serving as a co-obligor to
         facilitate a financing by a partnership of a limited liability company
         may be designated as an Unrestricted Subsidiary.

         Any designation of a Subsidiary of the Company as an Unrestricted
         Subsidiary shall be evidenced to the Administrative Agent by filing
         with the Administrative Agent a certified copy of the Board Resolution
         giving effect to such designation and an Officers' Certificate
         certifying that such designation complied with the preceding conditions
         and was permitted by Section 5.07 herein, regarding Restricted
         Payments. 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 Restricted Subsidiary of the Company as of such date and,
         if such Indebtedness is not permitted to be incurred as of such date
         under Section 5.09 herein, the Company shall be in default of this
         Agreement. The Board of Directors of the Company may at any time
         designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
         provided that such designation shall be deemed to be an incurrence of
         Indebtedness by a Restricted Subsidiary of the Company of any
         outstanding Indebtedness of such Unrestricted Subsidiary and such
         designation shall only be permitted if (1) such Indebtedness is
         permitted under Section 5.09 herein, calculated on a pro forma basis as
         if such designation had occurred at the beginning of the four-quarter
         reference period; and (2) no Default or Event of Default would be in
         existence following such designation.

"U.S." means the United States of America.

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

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

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

                                       39

<PAGE>

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

"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares) shall at the time be owned by such Person or by
one or more Wholly Owned Subsidiaries of such Person or by such Person and one
or more Wholly Owned Subsidiaries of such Person.

SECTION 1.02.     Other Definitions.

<TABLE>
<CAPTION>
                                                                                      DEFINED IN
           TERM                                                                        SECTION
---------------------------------------------------------------------------------------------------
<S>                                                                                   <C>
"Additional Term Loan Borrowing Date"..........................................         2.19
"Additional Term Loan Commitments".............................................         2.19
"Additional Term Loans"........................................................         2.19
"Affected Lender"..............................................................         2.15
"Affected Loans"...............................................................         2.15
"Affiliate Transaction" .......................................................         5.11
"Aggregate Amounts Due"........................................................         2.14
"Asset Sale Offer".............................................................         2.11
"Asset Sale Proceeds Account"..................................................         5.10
"Change of Control Offer"......................................................         5.15
"Change of Control Payment"....................................................         5.15
"Change of Control Payment Date"...............................................         5.15
"Environmental Law"............................................................         4.01
"ERCOT" .......................................................................         4.01
"Event of Default".............................................................         7.01
"EWG" .........................................................................         4.01
"Exchange Act" ................................................................         4.01
"Exchange Act Report" .........................................................         4.01
"Filing Agent".................................................................         3.01
"Financing Statements".........................................................         3.01
"FPA" .........................................................................         4.01
"Funding Guarantor"............................................................        12.05
"Increased Cost Lenders".......................................................         2.18
"Indemnitee"...................................................................        13.03
"Installment"..................................................................         2.09
"Installment Date".............................................................         2.09
"Investment Company Act" ......................................................         4.01
"Non-Consenting Lender"........................................................         2.18
"Non-US Lender"................................................................         2.17
"Offer Amount".................................................................         2.11
"Offer Period".................................................................         2.11
"Offering Documents" ..........................................................         4.01
"Oil and Gas Leases" ..........................................................         4.01
"Oil and Gas Properties" ......................................................         4.01
</TABLE>

                                       40

<PAGE>

<TABLE>
<CAPTION>
                                                                                      DEFINED IN
           TERM                                                                        SECTION
---------------------------------------------------------------------------------------------------
<S>                                                                                   <C>
"Payment Default"..............................................................         7.01
"Permitted Debt" ..............................................................         5.09
"Preliminary Offering Circular" ...............................................         4.01
"PUHCA" .......................................................................         4.01
"PURPA" .......................................................................         4.01
"QF" ..........................................................................         4.01
"Register".....................................................................         2.04
"Repayment Date"...............................................................         2.11
"Replacement Lender"...........................................................         2.18
"Restricted Payment" ..........................................................         5.07
"10-K" ........................................................................         4.01
"Terminated Lender"............................................................         2.18
"TPUC" ........................................................................         4.01
"UCC Collateral" ..............................................................         3.01
</TABLE>

SECTION 1.03.     Rules of Construction.

Unless the context otherwise requires:

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

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

                  (c)      Any of the terms defined herein may, unless the
         context otherwise requires, be used in the singular or the plural,
         depending on the reference.

                  (d)      Provisions apply to successive events and
         transactions.

                  (e)      Whenever the context may require, any pronoun shall
         include the corresponding masculine, feminine and neuter forms.

                  (f)      Any reference to any agreement or instrument shall be
         deemed to include a reference to such agreement or instrument as
         assigned, amended, amended and restated, supplemented, otherwise
         modified from time to time or replaced in accordance with the terms of
         this Agreement.

                  (g)      The use in this Agreement or any of the Term Loan
         Documents of the word "include" or "including," when following any
         general statement, term or matter, shall not be construed to limit such
         statement, term or matter to the specific items or matters set forth
         immediately following such word or to similar items or matters, whether
         or not nonlimiting language (such as "without limitation" or "but not
         limited to" or words

                                       41

<PAGE>

         of similar import) is used with reference thereto, but rather shall be
         deemed to refer to all other items or matters that fall within the
         broadest possible scope of such general statement, term or matter. The
         word "will" shall be construed to have the same meaning and effect as
         the word "shall."

                  (h)      References to sections of or rules under the
         Securities Act shall be deemed to include substitute, replacement of
         successor sections or rules adopted by the SEC from time to time.

                  (i)      References to "Sections" and "clauses" shall be to
         Sections and clauses, respectively, of this Agreement unless otherwise
         specifically provided.

                  (j)      References to "Articles" shall be to Articles of this
         Agreement unless otherwise specifically provided.

                  (k)      References to "Exhibits" and "Schedules" shall be to
         Exhibits and Schedules, respectively, of this Agreement unless
         otherwise specifically provided.

                  (l)      The use in this Agreement of the words "herein,"
         "hereof," and "hereunder," and words of similar import, shall be
         construed to refer to this Agreement in its entirety and not to any
         particular provision hereof.

                  (m)      This Agreement, the other Term Loan Documents and any
         documents or instruments delivered pursuant hereto shall be construed
         without regard to the identity of the party who drafted the various
         provisions of the same. Each and every provision of this Agreement, the
         other Term Loan Documents and instruments and documents entered into
         and delivered in connection therewith shall be construed as though the
         parties participated equally in the drafting of the same. Consequently,
         each of the parties acknowledges and agrees that any rule of
         construction that a document is to be construed against the drafting
         party shall not be applicable either to this Agreement or the other
         Term Loan Documents and instruments and documents entered into and
         delivered in connection therewith.

                                   ARTICLE II

                                 THE TERM LOANS

SECTION 2.01.     Term Loans.

                  (a)      Term Loan Commitments. Subject to the terms and
         conditions hereof, each Lender severally agrees to make, on the Closing
         Date, an Initial Term Loan to the Company in an amount equal to such
         Lender's Initial Term Loan Commitment. The Company may make only one
         borrowing under the Initial Term Loan Commitment which shall be on the
         Closing Date. Any amount borrowed under this Section and subsequently

                                       42

<PAGE>

         repaid or prepaid may not be reborrowed. All amounts owed hereunder
         with respect to the Initial Term Loans shall be paid in full no later
         than the Maturity Date. Each Lender's Initial Term Loan Commitment
         shall terminate immediately and without further action on the Closing
         Date after giving effect to the funding of such Lender's Initial Term
         Loan Commitment on such date.

                  (b)      Borrowing Mechanics for Term Loans.

                           (i)      The Company shall deliver to the
                                    Administrative Agent a fully executed
                                    Funding Notice no later than one Business
                                    Day prior to the Closing Date. Promptly upon
                                    receipt by the Administrative Agent of such
                                    Funding Notice, the Administrative Agent
                                    shall notify each Lender of the proposed
                                    borrowing.

                           (ii)     Each Lender shall make its Term Loan
                                    available to the Administrative Agent not
                                    later than 1:00 p.m. (New York City time) on
                                    the Closing Date, by wire transfer of same
                                    day funds in Dollars, at the Administrative
                                    Agent's Principal Office. Upon satisfaction
                                    or waiver of the conditions precedent
                                    specified herein, the Administrative Agent
                                    shall make the proceeds of the Initial Term
                                    Loans available to the Company on the
                                    Closing Date by causing an amount of same
                                    day funds in Dollars equal to the proceeds
                                    of all such Initial Term Loans received by
                                    the Administrative Agent from Lenders to be
                                    credited to the account of the Company at
                                    the Administrative Agent's Principal Office
                                    or to such other account as may be
                                    designated in writing to the Administrative
                                    Agent by the Company.

                           (iii)    The Term Loans shall be funded on the
                                    Closing Date as Base Rate Loans unless the
                                    Company has requested funding as Eurodollar
                                    Rate Loans upon at least three Business
                                    Days' prior notice and agreed to indemnify
                                    the Lenders for the costs as set forth in
                                    Section 2.15(c) in form and substance
                                    reasonably satisfactory to the
                                    Administrative Agent.

SECTION 2.02.     Pro Rata Shares; Availability of Funds.

                  (a)      Pro Rata Shares. All Term Loans shall be made by the
         Lenders simultaneously and proportionately to their respective Pro Rata
         Shares, it being understood that no Lender shall be responsible for any
         default by any other Lender in such other Lender's obligation to make a
         Term Loan requested hereunder nor shall any Term Loan Commitment of any
         Lender be increased or decreased as a result of a default by any other
         Lender in such other Lender's obligation to make a Term Loan requested
         hereunder.

                                       43

<PAGE>

                  (b)      Availability of Funds. Unless the Administrative
         Agent shall have been notified by any Lender prior to the applicable
         Credit Date that such Lender does not intend to make available to the
         Administrative Agent the amount of such Lender's Term Loan requested on
         such Credit Date, the Administrative Agent may assume that such Lender
         has made such amount available to the Administrative Agent on such
         Credit Date and the Administrative Agent may, in its sole discretion,
         but shall not be obligated to, make available to the Company a
         corresponding amount on such Credit Date. If such corresponding amount
         is not in fact made available to the Administrative Agent by such
         Lender, the Administrative Agent shall be entitled to recover such
         corresponding amount on demand from such Lender together with interest
         thereon, for each day from such Credit Date until the date such amount
         is paid to the Administrative Agent, at the customary rate set by the
         Administrative Agent for the correction of errors among banks for three
         Business Days and thereafter at the Base Rate. If such Lender does not
         pay such corresponding amount forthwith upon the Administrative Agent's
         demand therefor, the Administrative Agent shall promptly notify the
         Company and the Company shall immediately pay such corresponding amount
         to the Administrative Agent together with interest thereon, for each
         day from such Credit Date until the date such amount is paid to the
         Administrative Agent, at the rate payable hereunder for Base Rate
         Loans. Nothing in this Section 2.02(b) shall be deemed to relieve any
         Lender from its obligation to fulfill its Term Loan Commitments
         hereunder or to prejudice any rights that the Company may have against
         any Lender as a result of any default by such Lender hereunder.

SECTION 2.03.     Use of Proceeds. The proceeds of the Initial Term Loans made
on the Closing Date shall be applied by the Company to provide a portion of the
funding required to retire the Existing Senior Secured Credit Facilities, and
the balance of the proceeds shall be applied by the Company for working capital
and general corporate purposes, all in accordance with the terms and provisions
of the Company's then existing credit facilities and indentures. No portion of
the proceeds of any Term Loans shall be used in any manner that causes or might
cause the funding of the Term Loans or the application of such proceeds to
violate Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation thereof or to violate the
Exchange Act.

SECTION 2.04.     Evidence of Debt; Register; Lenders' Books and Records; Notes.

                  (a)      Lenders' Evidence of Debt. Each Lender shall maintain
         on its internal records an account or accounts evidencing the
         Indebtedness of the Company to such Lender, including the amounts of
         the Term Loans made by it and each repayment and prepayment in respect
         thereof. Any such recordation shall be conclusive and binding on the
         Company, absent manifest error; provided, that the failure to make any
         such recordation, or any error in such recordation, shall not affect
         the Company's Obligations in respect of any Term Loan; and provided
         further, in the event of any inconsistency between the Register and any
         Lender's records, the recordations in the Register shall govern.

                                       44

<PAGE>

                  (b)      Register. The Administrative Agent shall maintain at
         its Principal Office a register for the recordation of the names and
         addresses of the Lenders and the Term Loans of each Lender from time to
         time (the "Register"). The Register shall be available for inspection
         by the Company or any Lender at any reasonable time and from time to
         time upon reasonable prior notice. The Administrative Agent shall
         record in the Register the Term Loans, and each repayment or prepayment
         in respect of the principal amount of the Term Loans, and any such
         recordation shall be conclusive and binding on the Company and each
         Lender, absent manifest error; provided, that the failure to make any
         such recordation, or any error in such recordation, shall not affect
         the Company's Obligations in respect of any Term Loan. The Company
         hereby designates GSCP to serve as the Company's agent solely for
         purposes of maintaining the Register as provided in this Section 2.04,
         and the Company hereby agrees that, to the extent GSCP serves in such
         capacity, GSCP and its officers, directors, employees, agents and
         affiliates shall constitute "Indemnitees."

                  (c)      Term Loan Notes. If so requested by any Lender by
         written notice to the Company (with a copy to the Administrative Agent)
         at least two Business Days prior to the Closing Date, or at any time
         thereafter, the Company shall execute and deliver to such Lender
         (and/or, if applicable and if so specified in such notice, to any
         Person who is an assignee of such Lender pursuant to Section 13.06 on
         the Closing Date (or, if such notice is delivered after the Closing
         Date, promptly after the Company's receipt of such notice)), a Term
         Loan Note or Term Loan Notes to evidence such Lender's Initial Term
         Loan.

SECTION 2.05.     Interest.

                  (a)      Except as otherwise set forth herein (and, in the
         case only of Additional Term Loans, except as may be otherwise agreed
         pursuant to any written agreement between the Company and the Lenders
         funding Additional Term Loans), Term Loans shall bear interest on the
         unpaid principal amount thereof from the date made through repayment
         (whether by acceleration or otherwise) thereof as follows:

                           (i)      if a Base Rate Loan, at the Base Rate plus
                                    4.75% per annum; or

                           (ii)     if a Eurodollar Rate Loan, at the Adjusted
                                    Eurodollar Rate plus 5.75% per annum.

                  (b)      The basis for determining the rate of interest with
         respect to any Term Loan, and the Interest Period with respect to any
         Eurodollar Rate Loan, shall be selected by the Company and notified to
         the Administrative Agent and the Lenders pursuant to the applicable
         Funding Notice or Conversion/Continuation Notice, as the case may be.
         If on any day a Term Loan is outstanding with respect to which a
         Funding Notice or Conversion/Continuation Notice has not been delivered
         to the Administrative Agent in accordance with the terms hereof
         specifying the applicable basis for determining the rate of interest,
         then for that day such Term Loan shall be a Base Rate Loan.

                                       45

<PAGE>

                  (c)      In connection with Eurodollar Rate Loans there shall
         be no more than five (5) Interest Periods outstanding at any time. In
         the event that the Company fails to specify between a Base Rate Loan or
         a Eurodollar Rate Loan in the applicable Funding Notice or
         Conversion/Continuation Notice, such Term Loan (if outstanding as a
         Eurodollar Rate Loan) shall be automatically converted into a Base Rate
         Loan on the last day of the then-current Interest Period for such Term
         Loan (or if outstanding as a Base Rate Loan shall remain as, or (if not
         then outstanding) shall be made as, a Base Rate Loan). In the event
         that the Company fails to specify an Interest Period for any Eurodollar
         Rate Loan in the applicable Funding Notice or Conversion/Continuation
         Notice, Company shall be deemed to have selected an Interest Period of
         one month. As soon as practicable after 10:00 a.m. (New York City time)
         on each Interest Rate Determination Date, the Administrative Agent
         shall determine (which determination shall, absent manifest error, be
         final, conclusive and binding upon all parties) the interest rate that
         shall apply to the Eurodollar Rate Loans for which an interest rate is
         then being determined for the applicable Interest Period and shall
         promptly give notice thereof (in writing or by telephone confirmed in
         writing) to the Company and each Lender.

                  (d)      Interest payable pursuant to Section 2.05(a) shall be
         computed (i) in the case of Base Rate Loans on the basis of a 365-day
         or 366-day year, as the case may be, and (ii) in the case of Eurodollar
         Rate Loans, on the basis of a 360-day year, in each case for the actual
         number of days elapsed in the period during which it accrues. In
         computing interest on any Term Loan, the date of the making of such
         Term Loan or the first day of an Interest Period applicable to such
         Term Loan or, with respect to a Base Rate Loan being converted from a
         Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate
         Loan to such Base Rate Loan, as the case may be, shall be included, and
         the date of payment of such Term Loan or the expiration date of an
         Interest Period applicable to such Term Loan or, with respect to a Base
         Rate Loan being converted to a Eurodollar Rate Loan, the date of
         conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
         case may be, shall be excluded; provided, if a Term Loan is repaid on
         the same day on which it is made, one day's interest shall be paid on
         that Term Loan.

                  (e)      Except as otherwise set forth herein, interest on
         each Term Loan shall be payable in arrears on and to (i) each Interest
         Payment Date applicable to that Term Loan; (ii) upon any prepayment of
         that Term Loan, whether voluntary or mandatory, to the extent accrued
         on the amount being prepaid; and (iii) at maturity, including final
         maturity; provided, however, with respect to any voluntary prepayment
         of a Base Rate Loan, accrued interest shall instead be payable on the
         applicable Interest Payment Date.

SECTION 2.06.     Conversion/Continuation.

                  (a)      Subject to Section 2.15 and so long as no Default or
         Event of Default shall have occurred and then be continuing, the
         Company shall have the option:

                           (i)      to convert at any time all or any part of
                                    any Term Loan equal to $5,000,000 and
                                    integral multiples of $1,000,000 in excess
                                    of that

                                       46

<PAGE>

                                    amount from one Type of Term Loan to another
                                    Type of Loan; provided, a Eurodollar Rate
                                    Loan may only be converted on the expiration
                                    of the Interest Period applicable to such
                                    Eurodollar Rate Loan unless the Company
                                    shall pay all amounts due under Section 2.15
                                    in connection with any such conversion; or

                           (ii)     upon the expiration of any Interest Period
                                    applicable to any Eurodollar Rate Loan, to
                                    continue all or any portion of such Term
                                    Loan equal to $5,000,000 and integral
                                    multiples of $1,000,000 in excess of that
                                    amount as a Eurodollar Rate Loan.

                  (b)      The Company shall deliver a Conversion/Continuation
         Notice to the Administrative Agent no later than 10:00 a.m. (New York
         City time) at least one Business Day in advance of the proposed
         conversion date (in the case of a conversion to a Base Rate Loan) and
         at least three Business Days in advance of the proposed
         conversion/continuation date (in the case of a conversion to, or a
         continuation of, a Eurodollar Rate Loan). Except as otherwise provided
         herein, a Conversion/Continuation Notice for conversion to, or
         continuation of, any Eurodollar Rate Loans (or telephonic notice in
         lieu thereof) shall be irrevocable on and after the related Interest
         Rate Determination Date, and the Company shall be bound to effect a
         conversion or continuation in accordance therewith.

SECTION 2.07.     Default Interest. If all or a portion of the principal amount
of the Term Loans shall not be paid when due, such overdue principal amount of
Term Loans shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate that is 2.00% per annum in excess of the interest
rate otherwise payable hereunder with respect to the applicable Term Loans;
provided, in the case of Eurodollar Rate Loans, upon the expiration of the
Interest Period in effect at the time any such increase in interest rate is
effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and
shall thereafter bear interest payable upon demand at a rate which is 2.00% per
annum in excess of the interest rate otherwise payable hereunder for Base Rate
Loans. Payment or acceptance of the increased rates of interest provided for in
this Section 2.07 is not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of the Administrative Agent or any Lender.

SECTION 2.08.     Fees. The Company agrees to pay to the Agents such fees in the
amounts and at the times separately agreed upon.

SECTION 2.09.     Scheduled Payments/Commitment Reductions.

                  (a)      Scheduled Installments. The principal amounts of the
         Initial Term Loans shall be repaid in consecutive quarterly
         installments (each, an "Installment") in an amount equal to the
         aggregate principal amount of Initial Term Loans made on the

                                       47

<PAGE>

         Closing Date multiplied by the percentage set forth below opposite the
         fiscal quarter on the last day of such fiscal quarter (each, an
         "Installment Date"):

<TABLE>
<CAPTION>
----------------------------------------------------------
Fiscal Quarter                               Percentage
----------------------------------------------------------
<S>                                          <C>
October 15, 2003                               0.25%
----------------------------------------------------------
January 15, 2004                               0.25%
----------------------------------------------------------
April 15, 2004                                 0.25%
----------------------------------------------------------
July 15, 2004                                  0.25%
----------------------------------------------------------
October 15, 2004                               0.25%
----------------------------------------------------------
January 15, 2005                               0.25%
----------------------------------------------------------
April 15, 2005                                 0.25%
----------------------------------------------------------
July 15, 2005                                  0.25%
----------------------------------------------------------
October 15, 2005                               0.25%
----------------------------------------------------------
January 15, 2006                               0.25%
----------------------------------------------------------
April 15, 2006                                 0.25%
----------------------------------------------------------
July 15, 2006                                  0.25%
----------------------------------------------------------
October 15, 2006                               0.25%
----------------------------------------------------------
January 15, 2007                               0.25%
----------------------------------------------------------
April 15, 2007                                 0.25%
----------------------------------------------------------
July 15, 2007                                 96.25%
----------------------------------------------------------
</TABLE>

                                       48

<PAGE>

If any Additional Term Loans are made, such Additional Term Loans shall be
repaid on each Installment Date occurring on or after the applicable date on
which such Additional Term Loans are funded in an amount equal to (i) the
aggregate principal amount of Additional Term Loans, multiplied by (ii) the
ratio (expressed as a percentage) of (y) the amount of all other Initial Term
Loans being repaid on such Installment Date and (z) the total aggregate
principal amount of all other Initial Term Loans outstanding on such funding
date.

Notwithstanding the foregoing, (x) such Installments shall be reduced in
connection with any voluntary or mandatory prepayments of the Initial Term
Loans, in accordance with Sections 2.10, 5.10 and 5.15, as applicable; and (y)
the Term Loans, together with all other amounts owed hereunder with respect
thereto, shall, in any event, be paid in full no later than the Maturity Date.

SECTION 2.10.     Voluntary Prepayments.

                  (a)      Voluntary Prepayments.

                           (i)      The Company may not voluntarily prepay Term
                                    Loans except as provided in clause (b)
                                    below. In the event of any voluntary
                                    prepayment in accordance with clause (b),
                                    the Company may prepay any such Term Loans
                                    on any Business Day in whole or in part, in
                                    an aggregate minimum amount of $1,000,000
                                    and integral multiples of $500,000 in excess
                                    of that amount.

                           (ii)     All such prepayments shall be made:

                                    (A)      upon not less than one Business
                  Day's prior written or telephonic notice in the case of Base
                  Rate Loans;

                                    (B)      upon not less than three Business
                  Days' prior written or telephonic notice in the case of
                  Eurodollar Rate Loans; and

in each case given to the Administrative Agent by 1:00 p.m. (New York City time)
on the date required and, if given by telephone, promptly confirmed in writing
to the Administrative Agent (and the Administrative Agent shall promptly
transmit such telephonic or original notice for Term Loans, by telefacsimile or
telephone to each Lender). Upon the giving of any such notice, the principal
amount of the Term Loans specified in such notice shall become due and payable
on the prepayment date specified therein. Any prepayment of any Term Loan
pursuant to this Section shall be applied on a pro rata basis among the Lenders
and applied to reduce the scheduled remaining Installments of principal on such
Term Loan in inverse order of maturity.

                  (b)      Term Loan Call Protection.

                           (i)      The Company may not voluntarily prepay the
                                    Term Loans prior to July 15, 2005, except
                                    that the Company may on any one or more
                                    occasions make such prepayment with the
                                    proceeds of one or more Public Equity
                                    Offerings as set forth in this clause (i).
                                    In the event that for any reason the Term
                                    Loans are voluntarily prepaid prior to July
                                    15, 2005, the Company shall pay the Lenders
                                    a prepayment premium equal to a percentage
                                    of the principal amount of the Term

                                       49

<PAGE>

                                    Loans being prepaid, such percentage equal
                                    to the lesser of (1) the applicable per
                                    annum interest rate pursuant to Section
                                    2.05(a)(i) for the day on which such
                                    prepayment shall occur and (2) the
                                    applicable per annum interest rate pursuant
                                    to Section 2.05(a)(ii) for a one month
                                    Interest Period beginning on the day on
                                    which such prepayment shall occur; provided
                                    that:

                                    (A)      prior to July 15, 2005, the Company
                  shall not be permitted to prepay the Term Loans having a
                  principal amount greater than 35% of the aggregate principal
                  amount of Term Loans extended under this Agreement since the
                  Closing Date;

                                    (B)      the Company may elect to make such
                  prepayment only with the net cash proceeds of one or more
                  Public Equity Offerings; and

                                    (C)      each such prepayment must occur
                  within 45 days of the closing of such Public Equity Offering;

         In the event that for any reason the Term Loans are voluntarily prepaid
on or after July 15, 2005, the Company shall pay to Lenders a prepayment premium
equal to the percentage set forth below opposite the period in which such
prepayment shall occur multiplied by the principal amount of the Term Loans
being prepaid. Term Loans may be prepaid without prepayment premium after July
15, 2006.

<TABLE>
<CAPTION>
--------------------------------------------------------
Year Ending on                               Percentage
--------------------------------------------------------
<S>                                          <C>
July 15, 2006                                  3.00%
--------------------------------------------------------
</TABLE>

                  (c)      Notwithstanding anything to the contrary contained in
         this Section 2.10 or any other provision of this Agreement, so long as
         (i) there is no Default or Event of Default and (ii) no Event of
         Default or Default would result therefrom, the Company may purchase all
         or any portion of any Term Loan of any Lender pursuant to an agreement
         between the Company and such Lender and such purchase shall not be
         deemed to be a voluntary prepayment hereunder; provided that the
         Company promptly provides a copy of such agreement to the
         Administrative Agent. The Company shall not make any purchase of a Term
         Loan from a Lender otherwise permitted by this Section 2.10(c) if, at
         the time of such purchase, a repurchase of outstanding Notes by the
         Company without additional disclosure by the Company to the holder of
         such Notes would result in a violation by the Company of Rule 10b-5 of
         the Exchange Act unless, prior to any such purchase of any Term Loans,
         such additional disclosure is made by the Company to such Lender.
         Notwithstanding the provisions of the preceding sentence, the Company,
         the Lenders and the Agents hereby agree that nothing in this Section
         2.10(c) shall be understood to mean or suggest that the Term Loans
         constitute "securities" for

                                       50

<PAGE>

         purposes of either the Securities Act or the Exchange Act. Following
         any purchase pursuant to this Section 2.10(c), the Term Loans so
         purchased shall be disregarded and not deemed outstanding (as to which
         the Company hereby agrees) for purposes of (i) the making of, or the
         application of, any payments to the Lenders under this Agreement or any
         other Term Loan Documents, (ii) the making of any request, demand,
         authorization, direction, notice, consent or waiver under this
         Agreement or any other Term Loan Documents or (iii) the determination
         of Requisite Lenders, or for any similar or related purpose, under this
         Agreement or any other Term Loan Documents. Failure by the Company to
         make any payment to a Lender required by an agreement permitted by this
         Section 2.10(c) shall not constitute an Event of Default under Section
         7.01.

SECTION 2.11.     Mandatory Offers.

                  (a)      If the Company is required to prepay any Term Loans
         by reason of any Lender's acceptance of an Asset Sale Offer, the amount
         payable to such Lender shall be paid to the Administrative Agent for
         account of such Lender and credited to the remaining installments to
         become due on the Term Loans outstanding to such Lender. Any prepayment
         of any Term Loan pursuant hereto shall be applied to reduce the
         scheduled remaining Installments of principal on such Term Loan of such
         Lender in inverse order of maturity.

                  (b)      In the event that, pursuant to Section 5.10 hereof,
         the Company shall be required to commence an offer to all Lenders to
         repay Term Loans (an "Asset Sale Offer"), it shall follow the
         procedures specified below.

                                       51

<PAGE>

                           (i)      The Asset Sale Offer shall remain open for a
                                    period of 20 Business Days following its
                                    commencement and no longer, except to the
                                    extent that a longer period is required by
                                    applicable law (the "Offer Period"). No
                                    later than five Business Days after the
                                    termination of the Offer Period (the
                                    "Repayment Date"), the Company shall repay
                                    the principal amount of Term Loans required
                                    to be purchased pursuant to Section 5.10
                                    hereof (the "Offer Amount") or, if less than
                                    the Offer Amount has been tendered, all Term
                                    Loans for which repayment was requested in
                                    response to the Asset Sale Offer. Payment
                                    for any Term Loans shall be made in the same
                                    manner as interest payments are made.

                           (ii)     Upon the commencement of an Asset Sale
                                    Offer, the Company shall send a notice to
                                    the Administrative Agent (for delivery to
                                    each Lender). The notice shall contain all
                                    instructions and materials necessary to
                                    enable such Lenders to request repayment for
                                    the Term Loans pursuant to the Asset Sale
                                    Offer. The Asset Sale Offer shall be made to
                                    all Lenders. The notice, which shall govern
                                    the terms of the Asset Sale Offer, shall
                                    state:

                                    (A)      that the Asset Sale Offer is being
                  made pursuant to this Section 2.11 and Section 5.10 hereof and
                  the length of time the Asset Sale Offer shall remain open;

                                    (B)      the Offer Amount, the purchase
                  price and the Repayment Date;

                                    (C)      that any Term Loan for which
                  repayment is not requested or accepted for repayment shall
                  continue to accrete or accrue interest;

                                    (D)      that, unless the Company defaults
                  in making such payment, any Term Loan accepted for payment
                  pursuant to the Asset Sale Offer shall cease to accrete or
                  accrue interest after the Repayment Date;

                                    (E)      that Lenders electing to have Term
                  Loans repaid pursuant to an Asset Sale Offer may only elect to
                  have all of Term Loans repaid and may not elect to have only a
                  portion of its Term Loans;

                                    (F)      that Lenders shall be entitled to
                  withdraw their request if the Company, or the Administrative
                  Agent, as the case may be, receives, not later than the
                  expiration of the Offer Period, a telegram, telex, facsimile
                  transmission or letter setting forth the name of the Lender,
                  the principal amount of the Term Loans for which the Lender
                  requested repayment and a statement that such Lender is
                  withdrawing his request to have Term Loans repaid; and

                                       52

<PAGE>

                                    (G)      that, if the aggregate principal
                  amount of Term Loans for which repayment is requested by
                  Lenders exceeds the Offer Amount, the Administrative shall
                  select the Term Loans to be purchased on a pro rata basis.

                           (iii)    On or before the Repayment Date, the Company
                                    shall, to the extent lawful, accept for
                                    payment, on a pro rata basis to the extent
                                    necessary, the Offer Amount of Term Loans or
                                    portions thereof for which repayment is
                                    requested pursuant to the Asset Sale Offer,
                                    or if repayment for Term Loans in an
                                    aggregate amount less than the Offer Amount
                                    have been requested, all Term Loans for
                                    which repayment is requested, and shall
                                    deliver to the Administrative Agent (for
                                    delivery to the Lenders) an Officers'
                                    Certificate stating that such Term Loans or
                                    portions thereof were accepted for payment
                                    by the Company in accordance with the terms
                                    of this Section 2.11. The Company shall
                                    promptly (but in any case not later than
                                    five days after the Repayment Date) deliver
                                    to the Administrative Agent for the account
                                    of each Lender for which repayment is
                                    requested an amount equal to all outstanding
                                    amounts under the Term Loans for which
                                    repayment is requested by all Lenders that
                                    were accepted by the Company for repayment.
                                    The Administrative Agent shall promptly
                                    forward the appropriate amount to each
                                    Lender being repaid.

SECTION 2.12.     Application of Prepayments. Any prepayment of Term Loans shall
be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which minimizes
the amount of any payments required to be made by the Company pursuant to
Section 2.15(c).

SECTION 2.13.     General Provisions Regarding Payments.

                  (a)      All payments by the Company of principal, interest,
         fees and other Term Loan Obligations shall be made in Dollars in same
         day funds, without defense, setoff or counterclaim, free of any
         restriction or condition, and delivered to the Administrative Agent not
         later than 1:00 p.m. (New York City time) on the date due at the
         Administrative Agent's Principal Office for the account of Lenders.
         Funds received by the Administrative Agent after that time on such due
         date shall be deemed to have been paid by the Company on the next
         succeeding Business Day.

                  (b)      All payments in respect of the principal amount of
         any Term Loan shall include payment of accrued interest on the
         principal amount being repaid or prepaid, and all such payments (and,
         in any event, any payments in respect of any Term Loan on a date when
         interest is due and payable with respect to such Term Loan) shall be
         applied to the payment of interest before application to principal.

                                       53

<PAGE>

                  (c)      The Administrative Agent shall promptly distribute to
         each Lender at such address as such Lender shall indicate in writing,
         such Lender's applicable Pro Rata Share of all payments and prepayments
         of principal and interest due hereunder, except that prepayment offers
         accepted by Lenders pursuant to Section 5.10 or 5.15 shall be allocated
         to the accepting Lenders ratably in proportion to the principal amount
         of Term Loans outstanding to each accepting Lender (and not to all
         Lenders based on Pro Rata Shares), together with all other amounts due
         thereto, including, without limitation, all fees payable with respect
         thereto, to the extent received by the Administrative Agent.

                  (d)      Notwithstanding the foregoing provisions hereof, if
         any Conversion/Continuation Notice is withdrawn as to any Affected
         Lender or if any Affected Lender makes Base Rate Loans in lieu of its
         Pro Rata Share of any Eurodollar Rate Loans, the Administrative Agent
         shall give effect thereto in apportioning payments received thereafter.

                  (e)      Subject to the provisos set forth in the definition
         of "Interest Period", whenever any payment to be made hereunder shall
         be stated to be due on a day that is not a Business Day, such payment
         shall be made on the next succeeding Business Day and such extension of
         time shall be included in the computation of the payment of interest
         hereunder.

                  (f)      The Company hereby authorizes the Administrative
         Agent to charge the Company's accounts with the Administrative Agent in
         order to cause timely payment to be made to the Administrative Agent of
         all principal, interest, fees and expenses due hereunder (subject to
         sufficient funds being available in its accounts for that purpose) upon
         the occurrence of any Event of Default in respect of its payment
         obligations hereunder.

                  (g)      The Administrative Agent shall deem any payment by or
         on behalf of the Company hereunder that is not made in same day funds
         prior to 1:00 p.m. (New York City time) to be a non-conforming payment.
         Any such payment shall not be deemed to have been received by the
         Administrative Agent until the later of (i) the time such funds become
         available funds, and (ii) the applicable next Business Day. The
         Administrative Agent shall give prompt telephonic notice to the Company
         and each applicable Lender (confirmed in writing) if any payment is
         non-conforming. Any non-conforming payment may constitute or become a
         Default or Event of Default in accordance with the terms of Section
         7.01. Interest shall continue to accrue on any principal as to which a
         non-conforming payment is made until such funds become available funds
         (but in no event less than the period from the date of such payment to
         the next succeeding applicable Business Day) at the rate determined
         pursuant to Section 2.07 from the date such amount was due and payable
         until the date such amount is paid in full.

SECTION 2.14.     Ratable Sharing. The Lenders hereby agree among themselves
that, except in the case of prepayments offered to and accepted by any Lender
pursuant to Sections 5.10 or 5.15, if any of them shall, whether by voluntary
payment (other than a voluntary

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<PAGE>

prepayment of Term Loans made and applied in accordance with the terms hereof),
through the exercise of any right of set-off or banker's lien, by counterclaim
or cross action or by the enforcement of any right under the Term Loan Documents
or otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, fees and other amounts then due and
owing to such Lender hereunder or under the other Term Loan Documents
(collectively, the "Aggregate Amounts Due" to such Lender) which is greater than
the proportion received by any other Lender in respect of the Aggregate Amounts
Due to such other Lender, then the Lender receiving such proportionately greater
payment shall (a) notify the Administrative Agent and each other Lender of the
receipt of such payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of a
participation simultaneously upon the receipt by such seller of its portion of
such payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided, if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of the Company
or otherwise, those purchases shall be rescinded and the purchase prices paid
for such participations shall be returned to such purchasing Lender ratably to
the extent of such recovery, but without interest. The Company expressly
consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by the Company
to that holder with respect thereto as fully as if that holder were owed the
amount of the participation held by that holder.

SECTION 2.15.     Making or Maintaining Eurodollar Rate Loans.

                  (a)      Inability to Determine Applicable Interest Rate. In
         the event that the Administrative Agent shall have determined (which
         determination shall be final and conclusive and binding upon all
         parties hereto), on any Interest Rate Determination Date with respect
         to any Eurodollar Rate Loans, that by reason of circumstances affecting
         the London interbank market adequate and fair means do not exist for
         ascertaining the interest rate applicable to such Term Loans on the
         basis provided for in the definition of Adjusted Eurodollar Rate, the
         Administrative Agent shall on such date give notice (by telefacsimile
         or by telephone confirmed in writing) to the Company and each Lender of
         such determination, whereupon (i) no Term Loans may be made as, or
         converted to, Eurodollar Rate Loans until such time as the
         Administrative Agent notifies the Company and Lenders that the
         circumstances giving rise to such notice no longer exist, and (ii) any
         Funding Notice or Conversion/Continuation Notice given by the Company
         with respect to the Term Loans in respect of which such determination
         was made shall be deemed to be rescinded by the Company.

                  (b)      Illegality or Impracticability of Eurodollar Rate
         Loans. In the event that on any date any Lender shall have determined
         (which determination shall be final and conclusive and binding upon all
         parties hereto but shall be made only after consultation with the
         Company and the Administrative Agent) that the making, maintaining or

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<PAGE>

         continuation of its Eurodollar Rate Loans (i) has become unlawful as a
         result of compliance by such Lender in good faith with any law, treaty,
         governmental rule, regulation, guideline or order (or would conflict
         with any such treaty, governmental rule, regulation, guideline or order
         not having the force of law even though the failure to comply therewith
         would not be unlawful), or (ii) has become impracticable, as a result
         of contingencies occurring after the date hereof which materially and
         adversely affect the London interbank market or the position of such
         Lender in that market, then, and in any such event, such Lender shall
         be an "Affected Lender" and it shall on that day give notice (by
         telefacsimile or by telephone confirmed in writing) to the Company and
         the Administrative Agent of such determination (which notice the
         Administrative Agent shall promptly transmit to each other Lender).
         Thereafter (1) the obligation of the Affected Lender to make Term Loans
         as, or to convert Term Loans to, Eurodollar Rate Loans shall be
         suspended until such notice shall be withdrawn by the Affected Lender,
         (2) to the extent such determination by the Affected Lender relates to
         a Eurodollar Rate Loan then being requested by the Company pursuant to
         a Funding Notice or a Conversion/Continuation Notice, the Affected
         Lender shall make such Term Loan as (or continue such Term Loan as or
         convert such Term Loan to, as the case may be) a Base Rate Loan, (3)
         the Affected Lender's obligation to maintain its outstanding Eurodollar
         Rate Loans (the "Affected Loans") shall be terminated at the earlier to
         occur of the expiration of the Interest Period then in effect with
         respect to the Affected Loans or when required by law, and (4) the
         Affected Loans shall automatically convert into Base Rate Loans on the
         date of such termination. Notwithstanding the foregoing, to the extent
         a determination by an Affected Lender as described above relates to a
         Eurodollar Rate Loan then being requested by the Company pursuant to a
         Funding Notice or a Conversion/Continuation Notice, the Company shall
         have the option, subject to the provisions of Section 2.15(c), to
         rescind such Funding Notice or Conversion/Continuation Notice as to all
         Lenders by giving notice (by telefacsimile or by telephone confirmed in
         writing) to the Administrative Agent of such rescission on the date on
         which the Affected Lender gives notice of its determination as
         described above (which notice of rescission the Administrative Agent
         shall promptly transmit to each other Lender). Except as provided in
         the immediately preceding sentence, nothing in this Section 2.15(b)
         shall affect the obligation of any Lender other than an Affected Lender
         to make or maintain Term Loans as, or to convert Term Loans to,
         Eurodollar Rate Loans in accordance with the terms hereof.

                  (c)      Compensation for Breakage or Non-Commencement of
         Interest Periods. The Company shall compensate each Lender, upon
         written request by such Lender (which request shall set forth the basis
         for requesting such amounts), for all reasonable losses, expenses and
         liabilities (including any interest paid by such Lender to lenders of
         funds borrowed by it to make or carry its Eurodollar Rate Loans and any
         loss, expense or liability sustained by such Lender in connection with
         the liquidation or re-employment of such funds but excluding loss of
         anticipated profits) which such Lender may sustain: (i) if for any
         reason (other than a default by such Lender) a borrowing of any
         Eurodollar Rate Loan

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<PAGE>

         does not occur on a date specified therefor in a Funding Notice or a
         telephonic request for borrowing, or a conversion to or continuation of
         any Eurodollar Rate Loan does not occur on a date specified therefor in
         a Conversion/Continuation Notice or a telephonic request for conversion
         or continuation; (ii) if any prepayment or other principal payment or
         any conversion of any of its Eurodollar Rate Loans occurs on a date
         prior to the last day of an Interest Period applicable to that Term
         Loan (including, without limitation, pursuant to Section 2.10, 2.11,
         5.10 and 5.15 hereof); or (iii) if any prepayment of any of its
         Eurodollar Rate Loans is not made on any date specified in a notice of
         prepayment given by the Company.

                  (d)      Booking of Eurodollar Rate Loans. Any Lender may
         make, carry or transfer Eurodollar Rate Loans at, to, or for the
         account of any of its branch offices or the office of an Affiliate of
         such Lender.

                  (e)      Assumptions Concerning Funding of Eurodollar Rate
         Loans. Calculation of all amounts payable to a Lender under this
         Section 2.15 and under Section 2.16 shall be made as though such Lender
         had actually funded each of its relevant Eurodollar Rate Loans through
         the purchase of a Eurodollar deposit bearing interest at the rate
         obtained pursuant to clause (i) of the definition of Adjusted
         Eurodollar Rate in an amount equal to the amount of such Eurodollar
         Rate Loan and having a maturity comparable to the relevant Interest
         Period and through the transfer of such Eurodollar deposit from an
         offshore office of such Lender to a domestic office of such Lender in
         the United States of America; provided, however, each Lender may fund
         each of its Eurodollar Rate Loans in any manner it sees fit and the
         foregoing assumptions shall be utilized only for the purposes of
         calculating amounts payable under this Section 2.15 and under Section
         2.16.

SECTION 2.16.     Increased Costs; Capital Adequacy.

                  (a)      Compensation For Increased Costs and Taxes. Subject
         to the provisions of Section 2.17 (which shall be controlling with
         respect to the matters covered thereby), in the event that any Lender
         shall determine (which determination shall, absent manifest error, be
         final and conclusive and binding upon all parties hereto) that any law,
         treaty or governmental rule, regulation or order, or any change therein
         or in the interpretation, administration or application thereof
         (including the introduction of any new law, treaty or governmental
         rule, regulation or order), or any determination of a court or
         governmental authority, in each case that becomes effective after the
         date hereof, or compliance by such Lender with any guideline, request
         or directive issued or made after the date hereof by any central bank
         or other governmental or quasi-governmental authority (whether or not
         having the force of law):

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<PAGE>

                           (i)      subjects such Lender (or its applicable
                                    lending office) to any additional Tax (other
                                    than any Tax on the overall net income of
                                    such Lender) with respect to this Agreement
                                    or any of the other Term Loan Documents or
                                    any of its obligations hereunder or
                                    thereunder or any payments to such Lender
                                    (or its applicable lending office) of
                                    principal, interest, fees or any other
                                    amount payable hereunder;

                           (ii)     imposes, modifies or holds applicable any
                                    reserve (including any marginal, emergency,
                                    supplemental, special or other reserve),
                                    special deposit, compulsory loan, FDIC
                                    insurance or similar requirement against
                                    assets held by, or deposits or other
                                    liabilities in or for the account of, or
                                    advances or loans by, or other credit
                                    extended by, or any other acquisition of
                                    funds by, any office of such Lender (other
                                    than any such reserve or other requirements
                                    with respect to Eurodollar Rate Loans that
                                    are reflected in the definition of Adjusted
                                    Eurodollar Rate); or

                           (iii)    imposes any other condition (other than with
                                    respect to a Tax matter) on or affecting
                                    such Lender (or its applicable lending
                                    office) or its obligations hereunder or the
                                    London interbank market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Term Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, the Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the Company (with a copy to the
Administrative Agent) a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Lender under this
Section 2.16(a), which statement shall be conclusive and binding upon all
parties hereto absent manifest error.

                  (b)      Capital Adequacy Adjustment. In the event that any
         Lender shall have determined that the adoption, effectiveness, phase-in
         or applicability after the Closing Date of any law, rule or regulation
         (or any provision thereof) regarding capital adequacy, or any change
         therein or in the interpretation or administration thereof by any
         Governmental Authority, central bank or comparable agency charged with
         the interpretation or administration thereof, or compliance by any
         Lender (or its applicable lending office) with any guideline, request
         or directive regarding capital adequacy (whether or not having the
         force of law) of any such Governmental Authority, central bank or
         comparable agency, has or would have the effect of reducing the rate of
         return on the capital of such Lender or any corporation controlling
         such Lender as a consequence of, or with reference to, such Lender's
         Term Loans, or participations therein or other

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<PAGE>

         obligations hereunder with respect to the Term Loans to a level below
         that which such Lender or such controlling corporation could have
         achieved but for such adoption, effectiveness, phase-in, applicability,
         change or compliance (taking into consideration the policies of such
         Lender or such controlling corporation with regard to capital
         adequacy), then from time to time, within five Business Days after
         receipt by the Company from such Lender of the statement referred to in
         the next sentence, the Company shall pay to such Lender such additional
         amount or amounts as shall compensate such Lender or such controlling
         corporation on an after-tax basis for such reduction. Such Lender shall
         deliver to the Company (with a copy to the Administrative Agent) a
         written statement, setting forth in reasonable detail the basis for
         calculating the additional amounts owed to Lender under this Section
         2.16(b), which statement shall be conclusive and binding upon all
         parties hereto absent manifest error.

SECTION 2.17.     Taxes; Withholding, etc.

                  (a)      Payments to Be Free and Clear. All sums payable by
         any Obligor hereunder and under the other Term Loan Documents shall
         (except to the extent required by law) be paid free and clear of, and
         without any deduction or withholding on account of, any Tax (other than
         a Tax on the overall net income of any Lender) imposed, levied,
         collected, withheld or assessed by or within the United States of
         America or any political subdivision in or of the United States of
         America or any other jurisdiction from or to which a payment is made by
         or on behalf of any Obligor or by any federation or organization of
         which the United States of America or any such jurisdiction is a member
         at the time of payment.

                  (b)      Withholding of Taxes. If any Obligor or any other
         Person is required by law to make any deduction or withholding on
         account of any such Tax from any sum paid or payable by any Obligor to
         the Administrative Agent or any Lender under any of the Term Loan
         Documents:

                           (i)      the Company shall notify the Administrative
                                    Agent of any such requirement or any change
                                    in any such requirement as soon as the
                                    Company becomes aware of it;

                           (ii)     the Company shall pay any such Tax before
                                    the date on which penalties attach thereto,
                                    such payment to be made (if the liability to
                                    pay is imposed on any Obligor) for its own
                                    account or (if that liability is imposed on
                                    the Administrative Agent or such Lender, as
                                    the case may be) on behalf of and in the
                                    name of the Administrative Agent or such
                                    Lender;

                           (iii)    the sum payable by such Obligor in respect
                                    of which the relevant deduction, withholding
                                    or payment is required shall be increased to
                                    the extent necessary to ensure that, after
                                    the making of that deduction, withholding or
                                    payment, the Administrative Agent or

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<PAGE>

                                    such Lender, as the case may be, receives on
                                    the due date a net sum equal to what it
                                    would have received had no such deduction,
                                    withholding or payment been required or
                                    made; and

                           (iv)     within thirty (30) days after paying any sum
                                    from which it is required by law to make any
                                    deduction or withholding, and within thirty
                                    (30) days after the due date of payment of
                                    any tax which it is required by clause (ii)
                                    above to pay, the Company shall deliver to
                                    the Administrative Agent evidence
                                    satisfactory to the other affected parties
                                    of such deduction, withholding or payment
                                    and of the remittance thereof to the
                                    relevant taxing or other authority;

provided, no such additional amount shall be required to be paid to any Lender
under clause (iii) above except to the extent that any change after the date
hereof (in the case of each Lender listed on the signature pages hereof on the
Closing Date) or after the effective date of the Assignment Agreement pursuant
to which such Lender became a Lender (in the case of each other Lender) in any
such requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date hereof or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.

                  (c)      Evidence of Exemption From U.S. Withholding Tax. Each
         Lender that is not a United States Person (as such term is defined in
         Section 7701(a)(30) of the Code) for U.S. federal income tax purposes
         (a "Non-US Lender") shall deliver to the Administrative Agent for
         transmission to the Company, on or prior to the Closing Date (in the
         case of each Lender listed on the signature pages hereof on the Closing
         Date) or on or prior to the date of the Assignment Agreement pursuant
         to which it becomes a Lender (in the case of each other Lender), and at
         such other times as may be necessary in the determination of the
         Company or the Administrative Agent (each in the reasonable exercise of
         its discretion):

                           (i)      two original copies of Internal Revenue
                                    Service Form W-8BEN or W-8ECI (or any
                                    successor forms), properly completed and
                                    duly executed by such Lender, and such other
                                    documentation required under the Code and
                                    reasonably requested by the Company to
                                    establish that such Lender is not subject to
                                    deduction or withholding of United States
                                    federal income tax with respect to any
                                    payments to such Lender of principal,
                                    interest, fees or other amounts payable
                                    under any of the Term Loan Documents; or

                           (ii)     if such Lender is not a "bank" or other
                                    Person described in Section 881(c)(3) of the
                                    Code and cannot deliver either Internal
                                    Revenue Service Form W-8BEN or W-8ECI
                                    pursuant to clause (i) above, a Certificate
                                    re Non-Bank Status together with two
                                    original copies of Internal Revenue Service
                                    Form W-8 (or any successor form), properly
                                    completed and duly executed by such Lender,
                                    and

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<PAGE>

                                    such other documentation required under the
                                    Code and reasonably requested by the Company
                                    to establish that such Lender is not subject
                                    to deduction or withholding of United States
                                    federal income tax with respect to any
                                    payments to such Lender of interest payable
                                    under any of the Term Loan Documents.

Each Lender required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to this
Section 2.17(c) hereby agrees, from time to time after the initial delivery by
such Lender of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such Lender shall
promptly deliver to the Administrative Agent for transmission to the Company two
new original copies of Internal Revenue Service Form W-8BEN or W-8ECI , or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed by
such Lender, and such other documentation required under the Code and reasonably
requested by the Company to confirm or establish that such Lender is not subject
to deduction or withholding of United States federal income tax with respect to
payments to such Lender under the Term Loan Documents, or notify the
Administrative Agent and the Company of its inability to deliver any such forms,
certificates or other evidence. The Company shall not be required to pay any
additional amount to any Non-US Lender under Section 2.17(b)(iii) if such Lender
shall have failed (1) to deliver the forms, certificates or other evidence
referred to in the second sentence of this Section 2.17(c), or (2) to notify the
Administrative Agent and the Company of its inability to deliver any such forms,
certificates or other evidence, as the case may be; provided, if such Lender
shall have satisfied the requirements of the first sentence of this Section
2.17(c) on the Closing Date or on the date of the Assignment Agreement pursuant
to which it became a Lender, as applicable, nothing in this last sentence of
Section 2.17(c) shall relieve the Company of its obligation to pay any
additional amounts pursuant to Section 2.16(a) in the event that, as a result of
any change in any applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the fact that
such Lender is not subject to withholding as described herein.

SECTION 2.18.     Removal or Replacement of a Lender. Anything contained herein
to the contrary notwithstanding, in the event that:

                  (a)      (i) any Lender (an "Increased-Cost Lender") shall
         give notice to the Company that such Lender is an Affected Lender or
         that such Lender is entitled to receive payments under Section 2.15,
         2.16 or 2.17, (ii) the circumstances which have caused such Lender to
         be an Affected Lender or which entitle such Lender to receive such
         payments shall remain in effect, and (iii) such Lender shall fail to
         withdraw such notice within five Business Days after the Company's
         request for such withdrawal; or

                  (b)      in connection with any proposed amendment,
         modification, termination, waiver or consent with respect to any of the
         provisions hereof as contemplated by Section 13.05(b), the consent of
         Requisite Lenders shall have been obtained but the consent of

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<PAGE>

         one or more of such other Lenders (each a "Non-Consenting Lender")
         whose consent is required shall not have been obtained;

then, with respect to each such Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender"), the Company may, by giving written notice to the
Administrative Agent and any Terminated Lender of its election to do so, elect
to cause such Terminated Lender (and such Terminated Lender hereby irrevocably
agrees) to assign its outstanding Term Loans in full to one or more Eligible
Assignees (each a "Replacement Lender") in accordance with the provisions of
Section 13.06 and Terminated Lender shall pay any fees payable thereunder in
connection with such assignment; provided,

                           (i)      on the date of such assignment, the
                                    Replacement Lender shall pay to Terminated
                                    Lender an amount equal to
                                    the sum of (A) an amount equal to the
                                    principal of, and all accrued interest on,
                                    all outstanding Term Loans of the Terminated
                                    Lender, and (B) an amount equal to all
                                    accrued, but theretofore unpaid fees owing
                                    to such Terminated Lender pursuant to
                                    Section 2.11;

                           (ii)     on the date of such assignment, the Company
                                    shall pay any amounts payable to such
                                    Terminated Lender pursuant to Section
                                    2.15(c), 2.16 or 2.17 or otherwise as if it
                                    were a prepayment; and

                           (iii)    in the event such Terminated Lender is a
                                    Non-Consenting Lender, each Replacement
                                    Lender shall consent, at the time of such
                                    assignment, to each matter in respect of
                                    which such Terminated Lender was a
                                    Non-Consenting Lender.

Upon the prepayment of all amounts owing to any Terminated Lender, such
Terminated Lender shall no longer constitute a "Lender" for purposes hereof;
provided, any rights of such Terminated Lender to indemnification hereunder
shall survive as to such Terminated Lender.

SECTION 2.19.     Additional Term Loans. With the consent of the Administrative
Agent, the Company from time to time after the Closing Date may solicit
commitments ("Additional Term Loan Commitments") for additional Term Loans
("Additional Term Loans") which may become committed and shall be funded on the
following terms:

                  (a)      Additional Term Loans shall be committed and funded
         on the terms and conditions set forth in this Agreement applicable to
         Term Loans (other than those expressly applicable only to Initial Term
         Loans), except that the margins at which interest accrues pursuant to
         Section 2.05(a) in excess of the Base Rate on Base Rate Loans and in
         excess of the Adjusted Eurodollar Rate on Eurodollar Rate Loans may be
         changed with the consent of the Company as set forth in the Additional
         Term Loan Commitments. Without limiting the generality of the
         foregoing, Additional Term Loans shall be payable in full on the
         Maturity Date and shall be secured Equally and Ratably with the Initial
         Term Loans and all other Parity Lien Obligations by all security
         interests granted to the Collateral Trustee pursuant to the Security
         Documents.

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<PAGE>

                  (b)      On each occasion on which Additional Term Loan
         Commitments are solicited, Additional Term Loan Commitments shall be
         solicited and delivered for simultaneous funding in a single drawdown
         on a single Business Day (an "Additional Term Loan Borrowing Date") in
         a minimum amount of $25,000,000. Additional Term Loans that are repaid
         may not be reborrowed.

                  (c)      With the consent of the Company and the
         Administrative Agent, Additional Term Loans may be funded at a discount
         or premium to the stated principal amount thereof, and the compensation
         paid or promised by the Company or any Subsidiary or Affiliate of the
         Company for the arrangement, solicitation, delivery or funding of
         Additional Term Loans shall not be restricted.

                  (d)      Additional Term Loan Commitments shall not be
         solicited, delivered or funded:

                           (i)      in an amount which the Company is not then
                                    permitted to incur under Section 5.09;

                           (ii)     in a stated principal amount which would,
                                    after giving effect to any simultaneous
                                    issuance of Additional Notes under the
                                    Indentures and any simultaneous incurrence
                                    of any other Parity Lien Debt and any
                                    simultaneous use of the proceeds of any such
                                    funding or issuance, result in a violation
                                    of clause (2) of the definition of
                                    "Permitted Liens"; or

                           (iii)    unless the Company and Guarantors deliver to
                                    the Administrative Agent, for the benefit of
                                    the Collateral Trustee, the Administrative
                                    Agent and the Lenders:

                                    (A)      an Officers' Certificate to the
                  effect that, on the Additional Term Loan Borrowing Date for
                  such Additional Term Loans, (1) no Default or Event of Default
                  has occurred and is continuing or resulted from the funding of
                  such Additional Term Loans; (2) no "Default" or "Event of
                  Default", as defined in each of the Parity Lien Debt
                  Documents, has occurred and is continuing and (3) the
                  requirements set forth in Section 2.19(d)(i) and (ii) are
                  satisfied (and each Lender funding an Additional Term Loan
                  shall be entitled to rely conclusively upon such Officers'
                  Certificate as to all of the matters therein set forth for all
                  purposes, including the right of such Additional Term Loan to
                  share Equally and Ratably in the Collateral and all benefits
                  thereof); and

                                    (B)      such representations and
                  warranties, Opinions of Counsel, confirmations and
                  certificates as may reasonably be requested by the
                  Administrative Agent.

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<PAGE>

                  (e)      Neither of the Administrative Agent nor any Lender
         shall have any obligation whatsoever to arrange, commit to make, or
         fund any Additional Term Loan Commitment.

                  (f)      If and whenever it wishes to solicit Additional Term
         Loan Commitments, the Company shall, in consultation with the
         Administrative Agent, offer the opportunity to deliver such Additional
         Term Loan Commitments first to the then existing Lenders, which shall
         have five Business Days to accept such offer, with any such acceptances
         allocated ratably to accepting Lenders. To the extent such Additional
         Term Loan Commitments are not fully subscribed by accepting Lenders
         within the five Business Day period, the Company may solicit and accept
         such Additional Term Loan Commitments, in compliance with all
         applicable laws and legal requirements, from any Eligible Assignee
         reasonably satisfactory to the Administrative Agent.

                  (g)      All Additional Term Loan Commitments shall be
         delivered to the Administrative Agent prior to the relevant Additional
         Term Loan Borrowing Date. Each Eligible Assignee that delivers an
         Additional Term Loan Commitment shall also deliver to the
         Administrative Agent, prior to the relevant Additional Term Loan
         Borrowing Date, the duly executed Lender Joinder Agreement of such
         Eligible Assignee to be bound by and to perform, in respect of the
         Additional Term Loans funded by it, all of the obligations of a Lender
         under this Agreement; and thereupon, but only if and when such
         Additional Term Loans are funded by such Eligible Assignee, such
         Eligible Assignee shall become entitled to enjoy the rights of a Lender
         under this Agreement and such Additional Term Loans shall constitute
         Term Loans for all purposes of this Agreement.

                  (h)      Additional Term Loans shall be Base Rate Loans until
         the last day of the first Interest Period for any Eurodollar Rate Loans
         expiring after the relevant Additional Term Loan Borrowing Date, at
         which time the outstanding Base Rate Loans and Eurodollar Rate Loans
         shall be adjusted so that all Base Rate Loans and all Eurodollar Rate
         Loans are allocated to the Lenders ratably to their Pro Rata Shares. If
         so requested by the Company, the Administrative Agent may make such
         adjustment on any earlier Business Day, by resetting any Interest
         Period that has not then expired, and the Company shall pay
         compensation pursuant to Section 2.15(c) as if such reset constituted a
         prepayment of the affected Eurodollar Rate Loans.

                  (i)      Subject to the foregoing provisions of this Section
         2.19, Additional Term Loans may be solicited, committed to and funded
         without need for any amendment or supplement to this Agreement and
         without need for consent from any other Lenders.

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                                   ARTICLE III

                              CONDITIONS PRECEDENT

SECTION 3.01.              Closing Date. The obligation of any Lender to make a
Term Loan on the Closing Date is subject to the accuracy of the representations
and warranties on the part of the Company herein on the Closing Date, to the
accuracy of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and the satisfaction, or waiver in accordance with Section 13.05, of
the following additional conditions precedent on or before the Closing Date:

                  (a)      [Intentionally Omitted.]

                  (b)      The Chief Financial Officer of the Company shall have
         furnished a certificate, dated the Closing Date, in form and substance
         satisfactory to the Administrative Agent, stating to the effect that:

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<PAGE>

                           (i)      The Company does not intend to or believe
                                    that it has incurred or shall incur debts
                                    that will be beyond its ability to pay as
                                    they mature;

                           (ii)     No Pledged Subsidiary intends to or believes
                                    that it has incurred or shall incur debts
                                    that will be beyond its ability to pay as
                                    they mature;

                           (iii)    No Guarantor intends to or believes that it
                                    has incurred or shall incur debts that will
                                    be beyond its ability to pay as they mature;

                           (iv)     The present fair saleable value of the
                                    assets of the Company exceeds the amount
                                    that will be required to pay the probable
                                    liability on its existing debts (whether
                                    matured or unmatured, liquidated or
                                    unliquidated, absolute, fixed or contingent)
                                    as they become absolute and matured;

                           (v)      The present fair saleable value of the
                                    assets of each Pledged Subsidiary exceeds
                                    the amount that will be required to pay the
                                    probable liability on its existing debts
                                    (whether matured or unmatured, liquidated or
                                    unliquidated, absolute, fixed or contingent)
                                    as they become absolute and matured;

                           (vi)     The Company does not have unreasonably small
                                    capital for it to carry on its businesses as
                                    proposed to be conducted.;

                           (vii)    No Pledged Subsidiary has unreasonably small
                                    capital for it to carry on its business as
                                    proposed to be conducted;

                           (viii)   The Company is not incurring obligations or
                                    making transfers under any evidence of
                                    indebtedness with the intent to hinder,
                                    delay or defraud any entity to which it is
                                    or will become indebted; and

                           (ix)     No Pledged Subsidiary is incurring
                                    obligations or making transfers under any
                                    evidence of indebtedness with the intent to
                                    hinder, delay or defraud any entity to which
                                    it is or will become indebted.

                  (c)      The Collateral Trustee shall have received (with a
         copy for the Lenders) at the Closing Date:

                           (i)      appropriately completed copies, which have
                                    been duly authorized for filing by the
                                    appropriate Person, of Uniform Commercial
                                    Code Financing Statements naming the Company
                                    as a debtor and the Collateral Trustee as
                                    the secured party, or other similar
                                    instruments or documents to be filed under
                                    the UCC of all jurisdictions as may be
                                    necessary or, in the reasonable opinion of
                                    the Administrative

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<PAGE>

                                    Agent and its counsel, desirable to perfect
                                    the security interests of the Collateral
                                    Trustee pursuant to the Security Documents;

                           (ii)     appropriately completed copies, which have
                                    been duly authorized for filing by the
                                    appropriate Person, of Uniform Commercial
                                    Code Form UCC-3 termination statements, if
                                    any, necessary to release all Liens (other
                                    than Permitted Prior Liens) of any Person in
                                    any Collateral described in the Security
                                    Documents previously granted by any Person;

                           (iii)    certified copies of Uniform Commercial Code
                                    Requests for Information or Copies (Form
                                    UCC-11), or a similar search report
                                    certified by a party acceptable to the
                                    Administrative Agent, dated a date
                                    reasonably near to the Closing Date, listing
                                    all effective Financing Statements which
                                    name the Company (under its present name and
                                    any previous names) as the debtor, together
                                    with copies of such Financing Statements
                                    (none of which shall cover any Collateral
                                    described in the Security Documents, other
                                    than such Financing Statements that evidence
                                    Permitted Prior Liens);

                           (iv)     such releases, reconveyances, satisfactions
                                    or other instruments as it may request to
                                    confirm the release, satisfaction and
                                    discharge in full of all mortgages and deeds
                                    of trust at any time delivered by the
                                    Company to secure any Obligations in respect
                                    of the Existing Senior Secured Credit
                                    Facilities, duly executed, delivered and
                                    acknowledged in recordable form by the
                                    grantee named therein or its of record
                                    successors or assigns;

                           (v)      evidence reasonably satisfactory to the
                                    Lenders that (i) the 2000 Credit Agreement
                                    and all commitments thereunder shall have
                                    been terminated and all commitments
                                    thereunder shall have been paid in full and
                                    (ii) except to the extent continued under
                                    the New Credit Facility, all amounts
                                    outstanding under the 2002 Credit Agreement
                                    shall have been paid in full;

                           (vi)     evidence that all liens granted to the agent
                                    under the 2002 Credit Agreement have been
                                    assigned in a manner reasonably satisfactory
                                    to the Lenders and the Collateral Trustee;

                           (vii)    a copy of the Collateral Trust Agreement
                                    executed by the Credit Agreement Agent under
                                    the New Credit Facility;

                           (viii)   a certificate of insurance satisfactory to
                                    the Lenders confirming that all insurance
                                    requirements of the Guarantee and Collateral
                                    Agreement are satisfied; and

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<PAGE>

                           (ix)     such other approvals, opinions or documents
                                    as the Administrative Agent, Lenders or the
                                    Collateral Trustee may reasonably request in
                                    form and substance satisfactory to each of
                                    them.

                  (d)      All Uniform Commercial Code Financing Statements or
         other similar Financing Statements and Uniform Commercial Code Form
         UCC-3 termination statements required pursuant to clauses (c)(i) and
         (ii) above (collectively, the "Financing Statements") shall have been
         delivered to CT Corporation System or another similar filing service
         company acceptable to the Administrative Agent (the "Filing Agent").
         The Filing Agent shall have acknowledged in a writing reasonably
         satisfactory to the Administrative Agent and its counsel (i) the Filing
         Agent's receipt of all Financing Statements, (ii) that the Financing
         Statements have either been submitted for filing in the appropriate
         filing offices or shall be submitted for filing in the appropriate
         offices within ten days following the Closing Date and (iii) that the
         Filing Agent shall notify the Administrative Agent and its counsel of
         the results of such submissions within 30 days following the Closing
         Date.

                  (e)      The Company shall have (i) consummated the New Credit
         Facility, and such New Credit Facility shall have been funded prior to,
         or shall be funded simultaneously with, the Closing Date on
         substantially the terms described in the Final Offering Circular and
         other terms satisfactory to the Administrative Agent, and the
         Administrative Agent shall have received counterparts, conformed as
         executed, of the Credit Agreement and such other documentation as they
         deem necessary to evidence the consummation thereof and (ii)
         consummated the offering of the Notes, and such Notes shall have been
         issued prior to, or shall be issued simultaneously with, the Closing
         Date on substantially the terms described in the Final Offering
         Circular and other terms satisfactory to the Administrative Agent, and
         the Administrative Agent shall have received counterparts, conformed as
         executed, of the Indentures and such other documentation as they deem
         necessary to evidence the consummation thereof.

                  (f)      Prior to or simultaneously with the Closing Date, the
         Company shall have received cash proceeds from borrowings under the New
         Credit Facility and this Agreement in an amount sufficient, when added
         to the cash proceeds from the sale of the Notes (net of underwriting
         discounts and commissions), to pay in full in cash the payout amounts
         and all other fees, costs and expenses payable by the Company in
         connection with the closing of the financing transaction and shall have
         authorized disbursement of such cash proceeds directly to pay the
         payout amounts and such fees, costs and expenses pursuant to a
         disbursement authorization letter (in form and substance reasonably
         satisfactory to the Adminstrative Agent) executed and delivered by the
         Company, and the Administrative Agent shall have received such other
         confirmation as any of them may reasonably request as to the amendment
         and restatement of the Existing Senior Secured Credit Facilities in the
         form of the New Credit Facility.

                  (g)      Subsequent to the execution and delivery of this
         Agreement, there shall not have occurred (i) any change, or any
         development or event involving a prospective

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<PAGE>

         change, in the condition (financial or other), business, properties or
         results of operations of the Company and its subsidiaries taken as a
         whole which, in the judgment of the Administrative Agent, is material
         and adverse and makes it impractical or inadvisable to proceed with the
         borrowing of the Term Loans hereunder; (ii) any downgrading in the
         rating of any debt securities or preferred stock of the Company to CCC+
         or below by S&P or Caa1 or below by Moody's; (iii) any suspension or
         material limitation of trading in securities generally on the New York
         Stock Exchange, or any setting of minimum prices for trading on such
         exchange, or any suspension of trading of any securities of the Company
         on any exchange or in the over-the-counter market; (iv) a general
         moratorium on commercial banking activities declared by either Federal
         or New York State authorities or a material disruption in commercial
         banking or securities settlement or clearance services in the United
         States which, in the judgment of the Administrative Agent, makes it
         impracticable or inadvisable to proceed with the borrowing of the Term
         Loans hereunder; or (vi) any outbreak or escalation of major
         hostilities in which the United States is involved, any declaration of
         war by Congress or any other substantial national or international
         calamity or emergency if, in the judgment the Administrative Agent, the
         effect of any such outbreak, escalation, declaration, calamity or
         emergency makes it impractical or inadvisable to proceed with the
         completion of the borrowing of the Term Loans hereunder.

                  (h)      The Lenders shall have received an opinion, in form
         and substance reasonably satisfactory to the Lenders and their counsel,
         dated such Closing Date, of Covington & Burling, counsel for the
         Company, including those matters described in Section 6(i) of the
         Purchase Agreement, as appropriately modified to reflect the borrowing
         of the Term Loans hereunder.

The Lenders shall have received an opinion, in form and substance reasonably
satisfactory to the Lenders and their counsel, dated such Closing Date, of Lisa
Bodensteiner, Vice President and General Counsel of the Company, including those
matters described in Section 6(j) of the Purchase Agreement, as appropriately
modified to reflect the borrowing of the Term Loans hereunder.

                  (i)      [Intentionally Omitted.]

                  (j)      The Administrative Agent shall have received a
         certificate, dated the Closing Date, of the President or any Vice
         President and a principal financial or accounting officer of the
         Company in which such officers, to the best of their knowledge after
         reasonable investigation, shall state that the representations and
         warranties of the Company in this Agreement are true and correct; the
         Company has complied with all agreements and satisfied all conditions
         on their part to be performed or satisfied hereunder at or prior to the
         Closing Date; and, subsequent to the date of the most recent financial
         statements in the Offering Documents (as defined below), there has been
         no material adverse change, nor any development or event involving a
         prospective material adverse change, in the condition (financial or
         other), business, properties or results of

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<PAGE>

         operations of the Company and its subsidiaries taken as a whole except
         as set forth in or contemplated by the Offering Document or as
         described in such certificate.

                  (k)      [Intentionally Omitted.]

                  (l)      Local counsel to the Company in California, Colorado,
         Louisiana, New Mexico and Texas shall have furnished to the Lenders
         their written opinions, dated the Closing Date, in form and substance
         reasonably satisfactory to the Lenders and their counsel as agreed as
         of the date hereof, as to such matters under the laws of their
         respective states as the Lenders may reasonably request, it being
         understood that such opinions shall be substantively similar to the
         opinions provided in connection with the closing of the Existing Senior
         Secured Credit Facilities.

The Company shall furnish the Lenders with conformed copies of such other
opinions, certificates, letters and documents as the Lenders reasonably request.
The Lenders may in their sole discretion waive compliance with any conditions to
the obligations of the Lenders hereunder.

SECTION 3.02.              Conditions to Each Term Loan.

                  (a)      Conditions Precedent. The obligation of each Lender
         to make any Term Loan on any Credit Date, including the Closing Date,
         are subject to the satisfaction, or waiver in accordance with Section
         13.05, of the following conditions precedent:

                           (i)      the Administrative Agent shall have received
                                    a fully executed and delivered Funding
                                    Notice; and

                           (ii)     as of such Credit Date, no event shall have
                                    occurred and be continuing or would result
                                    from the consummation of the applicable Term
                                    Loan that would constitute an Event of
                                    Default or a Default.

The Administrative Agent is entitled, but not obligated to, request and receive,
prior to the making of any Term Loan, additional information reasonably
satisfactory to the requesting party confirming the satisfaction of any of the
foregoing if, in the good faith judgment of the Administrative Agent such
request is warranted under the circumstances.

                  (b)      Notices. Any Notice shall be executed by an Officer
         in a writing delivered to the Administrative Agent. In lieu of
         delivering a Notice, the Company may give the Administrative Agent
         telephonic notice by the required time of any proposed borrowing or
         conversion/continuation; provided each such notice shall be promptly
         confirmed in writing by delivery of the applicable Notice to the
         Administrative Agent on or before the applicable date of borrowing or
         continuation/conversion. Neither the Administrative Agent nor any
         Lender shall incur any liability to the Company in acting upon any
         telephonic notice referred to above that the Administrative Agent
         believes in good faith to have been given by a duly authorized officer
         or other Person authorized on behalf of the Company or for otherwise
         acting in good faith.

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<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders to enter into this Agreement and to make the
Initial Term Loans to be made hereby, the Company represents and warrants to,
and agrees with, each Lender that:

                  (a)      A preliminary offering circular dated July 3, 2003
         (such offering circular, as amended or supplemented, and including all
         material incorporated by reference therein, the "Preliminary Offering
         Circular") and a Final Offering Circular relating to the Notes to be
         offered by the Initial Purchasers have been prepared by the Company and
         delivered to the Initial Purchasers at such place or places as they may
         direct, at or prior to such time as the Initial Purchasers request.
         Such Preliminary Offering Circular and Final Offering Circular,
         together with any other document approved by the Company for use in
         connection with the contemplated resale of the Notes, are hereinafter
         collectively referred to as the "Offering Documents." The Offering
         Documents did not and shall not, as of their respective dates, include
         any untrue statement of a material fact or omit to state any material
         fact necessary in order to make the statements therein, in the light of
         the circumstances under which they were made, not misleading. The
         preceding sentence does not apply to statements in or omissions from
         the Offering Document based upon written information furnished to the
         Company by the Initial Purchasers specifically for use therein. Except
         as disclosed in the Offering Documents, on the date of this Agreement,
         the Company's Annual Report on Form 10-K (the "10-K") most recently
         filed with the SEC and all subsequent reports (collectively, the
         "Exchange Act Reports") which have been filed by the Company with the
         Commission or sent to stockholders pursuant to the Securities Exchange
         Act of 1934 (the "Exchange Act") do not include any untrue statement of
         a material fact or omit to state any material fact necessary to make
         the statements therein, in the light of the circumstances under which
         they were made, not misleading. Such documents, when they were filed
         with the Commission, conformed in all material respects to the
         requirements of the Exchange Act and the rules and regulations of the
         Commission thereunder.

                  (b)      The Company has been duly incorporated and is an
         existing corporation in good standing under the laws of the State of
         Delaware, with power and authority (corporate and other) to own its
         properties and conduct its business as described in the Offering
         Documents; and the Company is duly qualified to do business as a
         foreign corporation in good standing in all other jurisdictions in
         which its ownership or lease of property or the conduct of its business
         requires such qualification.

                  (c)      Each subsidiary of the Company (x) other than those
         subsidiaries specified in clause (y) of this subparagraph has been duly
         incorporated and is an existing corporation in good standing under the
         laws of the jurisdiction of its incorporation, with power and authority
         (corporate and other) to own its properties and conduct its business as
         described in the Offering Documents; or (y) that is not a corporation
         is a limited

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<PAGE>

         partnership, a limited liability company or business trust, has been
         duly formed and is validly existing as a limited partnership, a limited
         liability company or a business trust, as the case may be, in good
         standing under the laws of the jurisdiction of its formation, and has
         full power and authority to own its properties and conduct its business
         as described in the Offering Documents; each subsidiary of the Company
         is duly qualified to do business as a foreign corporation, limited
         partnership, limited liability company or business trust, as the case
         may be, in good standing in all other jurisdictions in which its
         ownership or lease of property or the conduct of its business requires
         such qualification; all of the issued and outstanding capital stock of
         each subsidiary of the Company has been duly authorized and validly
         issued and is fully paid and nonassessable; except as set forth on
         Schedule 4.01(c) hereto, the capital stock of each subsidiary owned by
         the Company, directly or through subsidiaries, is owned free from
         liens, encumbrances and defects; and the Company is not a general
         partner in any partnership.

                  (d)      The Indentures have been duly authorized and conform
         to the description thereof contained in the Final Offering Circular;
         the Notes have been duly authorized, and when the Notes are delivered
         and paid for pursuant to the Purchase Agreement on the Closing Date,
         the Indentures shall have been duly executed and delivered, such Notes
         shall have been duly executed, authenticated, issued and delivered and
         shall conform to the description thereof contained in the Final
         Offering Circular and the Indentures and such Notes shall constitute
         valid and legally binding obligations of the Company, enforceable in
         accordance with their terms, subject to bankruptcy, insolvency,
         fraudulent transfer, reorganization, moratorium and similar laws of
         general applicability relating to or affecting creditors' rights and to
         general equity principles.

                  (e)      Each of the Security Documents has been duly
         authorized by the Company and the Guarantors (as applicable), when
         executed and delivered, shall conform in all material respects to the
         description thereof contained in the Final Offering Circular. Each of
         the Security Documents, when validly executed and delivered by the
         Company and the Guarantors (as applicable), shall constitute a valid
         and legally binding obligation of the Company and shall be enforceable
         against the Company and the Guarantors (as applicable) in accordance
         with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
         reorganization, moratorium and similar laws of general applicability
         relating to or affecting creditors' rights and to general equity
         principles.

                  (f)      The Purchase Agreement has been duly authorized,
         executed and delivered by the Company and conforms in all material
         respects to the description thereof contained in the Final Offering
         Circular.

                  (g)      When executed and delivered to the Collateral Trustee
         at the Closing Date, (i) the Security Documents shall grant and create,
         in favor of the Collateral Trustee for the benefit of the Secured
         Parties as security for all of the Secured Obligations, a valid
         second-priority security interest in the personal property Collateral
         defined in each of such instruments and (ii) each Mortgage shall grant
         and create, in favor of the Collateral Trustee for the benefit of the
         Secured Parties as security for all of the Secured

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<PAGE>

         Obligations, a valid second-priority mortgage lien and/or security
         interest in the collateral defined in each of such instruments; and
         when the filings referred to in the following sentences are made, such
         second-priority security interests shall be perfected security
         interests and/or mortgage liens (subject only to Permitted Prior Liens
         and the provisions with respect to priority set forth in the Collateral
         Trust Agreement). When delivered at the Closing Date, each Mortgage
         shall be delivered, duly acknowledged and, if required for recordation,
         attested and otherwise shall be in recordable form. At the Closing
         Date, (i) all pledged Collateral shall be represented by certificated
         securities and (ii) all such certificated securities and all promissory
         notes and other instruments then evidencing or representing any
         Collateral shall be delivered to the Collateral Trustee in pledge for
         the benefit of the Secured Parties (and the lenders under the New
         Credit Facility) as security for all of the Secured Obligations, duly
         endorsed by an effective endorsement.

                  (h)      At the Closing Date, the representations and
         warranties contained in the Security Documents shall be true and
         correct in all respects.

                  (i)      Except as shall be disclosed in the Offering
         Documents, there are no contracts, agreements or understandings between
         the Company and any person that would give rise to a valid claim
         against the Company or the Initial Purchasers for a brokerage
         commission, finder's fee or other like payment in connection with the
         offering of the Notes.

                  (j)      Except as (i) set forth on Schedule 4.01(c) hereto
         and (ii) provided for in the Purchase Agreement there are no contracts,
         agreements or understandings between the Company and any person
         granting such person the right to require the Company to file a
         registration statement under the Securities Act with respect to any
         securities of the Company owned or to be owned by such person or to
         require the Company to include such securities with any other
         securities being registered pursuant to any other registration
         statement filed by the Company under the Securities Act

                  (k)      No consent, approval, authorization, or order of, or
         filing with, any governmental agency or body or any court is required
         for the consummation of the transactions contemplated by this
         Agreement, the Indentures, the Security Documents or the Purchase
         Agreement or otherwise in connection with the borrowing of the Term
         Loans by the Company or the grant and perfection of the security
         interests in the Collateral pursuant to the Security Documents, except
         (i) such consents, approvals, authorizations and orders as have already
         been obtained, (ii) filings required to perfect the Collateral
         Trustee's security interests granted pursuant to the Security Documents
         and (iii) as would not, in the aggregate, have a Material Adverse
         Effect.

                  (l)      The execution, delivery and performance of this
         Agreement, the Indentures, the Security Documents and the Purchase
         Agreement by the Company and the Guarantors (as applicable), the
         borrowing of the Term Loans by the Company, the grant and perfection of
         the security interests in the Collateral pursuant to the Security
         Documents, compliance with the terms and provisions of each of the
         foregoing by the

                                       73

<PAGE>

         Company and the consummation by the Company and the Guarantors (as
         applicable) of the transactions contemplated herein and therein shall
         not result in a breach or violation of any of the terms and provisions
         of, or conflict with or constitute a default under, or result in the
         imposition or creation of (or the obligation to create or impose) a
         Lien (other than in favor of the Secured Parties or the lenders under
         the New Credit Facility and in connection with the $150 million cash
         collateralization of certain letters of credit and liens on certain
         turbines owned directly by the Company that may arise as a result of
         the transactions contemplated hereby), any statute, any rule,
         regulation or order of any governmental agency or body or any court,
         domestic or foreign, having jurisdiction over the Company or any
         subsidiary of the Company or any of their properties, or any agreement
         or instrument to which the Company or any such subsidiary is a party or
         by which the Company or any such subsidiary is bound or to which any of
         the properties of the Company or any such subsidiary is subject, or the
         charter, by-laws or other organizational document of the Company or any
         such subsidiary, except in each case as would not have a Material
         Adverse Effect, and the Company has full power and authority to borrow
         the Term Loans as contemplated by this Agreement.

                  (m)      This Agreement has been duly authorized, executed and
         delivered by the Company and constitutes a valid and legally binding
         obligation of the Company enforceable against the Company in accordance
         with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
         reorganization, moratorium and similar laws of general applicability
         relating to or affecting creditors' rights and to general equity
         principles.

                  (n)      Except as disclosed in the Offering Documents, the
         Company and its subsidiaries have good and marketable title to all real
         properties and all other properties and assets owned by them, in each
         case free from liens, encumbrances and defects that would materially
         affect the value thereof or materially interfere with the use made or
         to be made thereof by them; and except as shall be disclosed in the
         Offering Documents, the Company and its subsidiaries hold any leased
         real or personal property under valid and enforceable leases with no
         exceptions that would materially interfere with the use made or to be
         made thereof by them. No Financing Statements (as defined below) in
         respect of any property or assets of the Company shall be on file in
         favor of any person other than those in respect of Permitted Prior
         Liens and those to be terminated with respect to existing indebtedness.

                  (o)      The Company and its subsidiaries possess adequate
         certificates, authorities or permits issued by appropriate governmental
         agencies or bodies necessary to conduct the business now operated by
         them and have not received any notice of proceedings relating to the
         revocation or modification of any such certificate, authority or permit
         that, if determined adversely to the Company or any of its
         subsidiaries, would individually or in the aggregate have a Material
         Adverse Effect.

                  (p)      No labor dispute with the employees of the Company or
         any subsidiary exists or, to the knowledge of the Company, is imminent
         that might have a Material Adverse Effect.

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<PAGE>

                  (q)      The Company and its subsidiaries own, possess or can
         acquire on reasonable terms, adequate trademarks, trade names and other
         rights to inventions, know-how, patents, copyrights, confidential
         information and other intellectual property (collectively,
         "intellectual property rights") necessary to conduct the business now
         operated by them, or presently employed by them, and have not received
         any notice of infringement of or conflict with asserted rights of
         others with respect to any intellectual property rights that, if
         determined adversely to the Company or any of its subsidiaries, would
         individually or in the aggregate have a Material Adverse Effect.

                  (r)      Except as shall be disclosed in the Final Offering
         Circular, neither the Company nor any of its subsidiaries is in
         violation of any statute, any rule, regulation, decision or order of
         any governmental agency or body or any court domestic or foreign,
         relating to the use, disposal or release of hazardous or toxic
         substances or relating to the protection or restoration of the
         environment or human exposure to hazardous or toxic substances
         (collectively, "Environmental Laws"), owns or operates any real
         property contaminated with any substance that is subject to any
         Environmental Laws, is liable for any off-site disposal or
         contamination pursuant to any Environmental Laws, or is subject to any
         claim relating to any Environmental Laws, which violation,
         contamination, liability or claim would individually or in the
         aggregate have a Material Adverse Effect; and the Company is not aware
         of any pending investigation which might lead to such a claim.

                  (s)      Except as shall be disclosed in the Final Offering
         Circular, there are no pending actions, suits or proceedings against or
         affecting the Company, any of its subsidiaries or any of their
         respective properties that, if determined adversely to the Company or
         any of its subsidiaries, would individually or in the aggregate have a
         Material Adverse Effect, or would materially and adversely affect the
         ability of the Company to perform its obligations under, or
         contemplated by, this Agreement, the Indentures, the Security Documents
         or the Purchase Agreement, or which are otherwise material in the
         context of the borrowing of the Term Loans; and no such actions, suits
         or proceedings are threatened or, to the knowledge of the Company,
         contemplated.

                  (t)      The financial information included in the Final
         Offering Circular present fairly the financial position of the Company
         and its consolidated subsidiaries as of the dates shown and their
         results of operations and cash flows for the periods shown, and, except
         as otherwise shall be disclosed in the Offering Documents, such
         financial statements shall have been prepared in conformity with the
         GAAP applied on a consistent basis; and the assumptions used in
         preparing the pro forma financial statements included in the Final
         Offering Circular shall provide a reasonable basis for presenting the
         significant effects directly attributable to the transactions or events
         described therein, the related pro forma adjustments shall give
         appropriate effect to those assumptions, and the pro forma columns
         therein shall reflect the proper application of those adjustments to
         the corresponding historical financial statement amounts.

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                  (u)      The statistical and market-related data (other than
         market-related data and statistical data provided by the Company)
         included in the Final Offering Circular shall be based on or derived
         from sources which the Company believes to be reliable and accurate, it
         being understood, however, that the Company has conducted no
         independent investigation of the accuracy thereof.

                  (v)      Except as shall be disclosed in the Final Offering
         Circular, since the date of the latest audited financial statements
         that shall be included in the Final Offering Circular there shall have
         been no material adverse change, nor any development or event involving
         a prospective material adverse change, in the condition (financial or
         other), business, properties or results of operations of the Company
         and its subsidiaries taken as a whole, and, except as disclosed in or
         contemplated by the Final Offering Circular, there has been no change
         in the capital stock or long-term debt of the Company or any of its
         subsidiaries and no dividend or distribution of any kind declared, paid
         or made by the Company on any class of its capital stock.

                  (w)      The Company is not an open-end investment company,
         unit investment trust or face-amount certificate company that is or is
         required to be registered under Section 8 of the United States
         Investment Company Act of 1940, as amended (the "Investment Company
         Act"); the Company is not and, after giving effect to the offering, the
         borrowing of the Term Loans and the application of the proceeds thereof
         as described in the Offering Documents, and the consummation of the
         transactions contemplated by this Agreement, the Indentures, the
         Security Documents and the Purchase Agreement, shall not be an
         "investment company" as defined in the Investment Company Act of 1940.

                  (x)      [Intentionally Omitted.]

                  (y)      [Intentionally Omitted.]

                  (z)      [Intentionally Omitted.]

                  (aa)     Neither the Company nor any "subsidiary company" as
         that term is defined in the Public Utility Holding Company Act of 1935
         ("PUHCA"), of the Company is, or after giving effect to the borrowing
         of the Term Loans, shall be, subject to regulation (i) as a "holding
         company," a "subsidiary company" of a holding company or a
         "public-utility company," as those terms are defined in PUHCA (except
         that Calpine Cogeneration Corporation and the other "subsidiary
         companies" of the Company listed on Schedule 4.01(aa), each of which is
         an EWG (as defined herein) or a QF (as defined herein), are "subsidiary
         companies" of holding companies); (ii) under the Federal Power Act, as
         amended ("FPA"), other than (A) as a power marketer or an "exempt
         wholesale generator" ("EWG"), as that term is defined Section 32 of
         PUHCA, that is a "public utility" with market-based rate authority
         under Section 205 of the FPA, or (B) as a "qualifying facility" ("QF")
         under the Public Utility Regulatory Policies Act of 1978, as amended
         ("PURPA"), as contemplated by 18 C.F.R. Section 292.601(c); or (iii)
         under any

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         state law or regulation with respect to rates or the financial or
         organizational regulation of electric utilities, other than, with
         respect to subsidiaries of the Company that are QFs, as contemplated by
         18 C.F.R. Section 292.602(c).

                  (bb)     Each of the power generation projects in which the
         Company or its subsidiaries has an interest which is subject to the
         requirements under PURPA and the regulations of FERC promulgated
         thereunder, as amended from time to time, necessary to be a "qualifying
         cogeneration facility" and/or a "qualifying small power production
         facility" meets such requirements.

                  (cc)     Each of the Company's subsidiaries listed on Schedule
         4.01(cc) hereto has validly-issued orders from the FERC, not subject to
         any pending challenge, investigation, or proceeding (other than the
         FERC's generic proceeding initiated in Docket No. EL01-118-000), (i)
         authorizing such subsidiary to engage in wholesale sales of
         electricity, ancillary services and, to the extent permitted under its
         market-based rate tariff, other services at market-based rates, and
         (ii) granting such waivers and blanket authorizations as are
         customarily granted to entities with market-based rate authority. With
         respect to each such subsidiary, the FERC has not imposed any rate caps
         or mitigation measures other than rate caps and mitigation measures
         generally applicable to similarly situated marketers or generators
         selling electricity, ancillary services or other services at wholesale
         in the geographic market where such subsidiary conducts its business.

                  (dd)     All of the Company's subsidiaries listed on Schedule
         4.01(dd) hereto own and/or operate Eligible Facilities within the
         meaning of Section 32 of PUHCA, and each such subsidiary has received a
         determination from FERC, not subject to any pending challenge or
         appeal, that it is an Exempt Wholesale Generator, within the meaning of
         Section 32 of PUHCA.

                  (ee)     Each of the Company's subsidiaries listed on Schedule
         4.01(ee) hereto providing retail electric service in the Electric
         Reliability Council of Texas, Inc. ("ERCOT") has validly issued orders
         from the Texas Public Utilities Commission ("TPUC"), not subject to any
         pending challenge, investigation, or proceeding, authorizing such
         subsidiary to engage in sales of electricity at retail under the laws
         of the State of Texas. Each of the Company's subsidiaries listed on
         Schedule 4.01(ee) that are participating in the Texas wholesale
         electric market has registered with the TPUC and the TPUC has not
         imposed on any such subsidiary any specific rate cap or mitigation
         measures

                  (ff)     No consent, approval, authorization, or order of, or
         filing with the applicable state public utility commission under any
         public utility law of the State or any regulation promulgated pursuant
         to such law with respect to the rates or the financial or
         organizational regulation of electric utilities is required for the
         consummation of the merger of Goldendale Energy, Inc., Otay Mesa
         Generating Company, LLC, Metcalf Energy Center, LLC, Santa Rosa Energy,
         LLC, Washington Parish Energy Center, LLC, Deer Park Energy Center, LP
         and Augusta Energy LLC into the Company.

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                  (gg)     No consent, approval, authorization, or order of, or
         filing with any governmental agency or body or any court under the FPA,
         PUHCA or PURPA, or any regulation promulgated pursuant to such laws, is
         required for the consummation of the merger of Goldendale Energy, Inc.,
         Otay Mesa Generating Company, LLC, Metcalf Energy Center, LLC, Santa
         Rosa Energy, LLC, Washington Parish Energy Center, LLC, Deer Park
         Energy Center, LP and Augusta Energy LLC into the Company, except such
         filings as could not be expected to delay or hinder such mergers.

                  (hh)     Each of the Company's subsidiaries listed on Schedule
         4.01(hh) hereto providing retail energy services has full authorization
         to provide retail energy services to retail industrial, commercial and
         residential customers in its applicable states under the applicable
         Energy Laws. "Energy Laws" shall mean any state and local energy laws
         and regulations, in each of the states, regions or other applicable
         jurisdictions in which the Company and its subsidiaries are organized
         or otherwise conduct business, applicable to: (i) the ownership,
         operation, or control of electric generation, transmission, and
         distribution facilities; (ii) the purchase, sale, transmission,
         distribution, marketing or trading of electric energy; and (iii)
         organizational, financial and rate regulation of entities engaged in
         (i) and (ii) above.

                  (ii)     Other than the proceedings listed in Schedule
         4.01(ii), there are no pending complaints filed with the FERC seeking
         abrogation or modification of a contract for the sale of power by the
         Company or any of its subsidiaries.

                  (jj)     Except as described in the Final Offering Circular
         (i) all royalties, rentals, deposits and other amounts due on the oil
         and gas properties of the Company have been properly and timely paid,
         and no proceeds from the sale or production attributable to the oil and
         gas properties of the Company are currently being held in suspense by
         any purchaser thereof, and (ii) there are no claims under take-or-pay
         contracts pursuant to which natural gas purchasers have any make-up
         rights affecting the interests of the Company in its oil and gas
         properties, except in any event under (i) or (ii) as would not have a
         Material Adverse Effect.

                  (kk)     As of the date hereof, the aggregate undiscounted
         monetary liability of the Company for oil or natural gas taken or
         received under any operating or other agreement relating to its oil and
         gas properties that permits any person to receive any portion of the
         interest of the Company in oil and natural gas or to receive cash or
         other payments to balance any disproportionate allocation of oil or
         natural gas could not have a Material Adverse Effect.

                  (ll)     To the Company's knowledge, each of the Company's and
         the Company's subsidiaries' surface and mineral leases (the "Oil and
         Gas Leases") is in full force and effect and all rentals, royalties,
         shut-in well payments, bonuses and other payments due or payable from
         or by the Company or the Company's subsidiaries under Oil and Gas
         Leases and applicable laws, rules and regulations, have been properly
         and timely paid, except where the failure to have in full force and
         effect or to pay properly and timely

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         would not have a Material Adverse Effect, and all conditions necessary
         to keep the Oil and Gas Leases in full force and effect in accordance
         with their terms as of the date hereof, except where the failure to
         satisfy such conditions would not have a Material Adverse Effect.

                  (mm)     The Company and its subsidiaries are entitled to
         receive (and are currently receiving with respect to producing Oil and
         Gas Leases), without present suspense or presently required indemnity
         against asserted or known defects or disputes regarding the Company's
         and any of the Company's subsidiaries' ownership, from each purchaser
         of its production, or from the person receiving payments from any such
         purchasers, the proceeds attributable to the net revenue interest in
         production from each of the Oil and Gas Leases, except where the
         failure to receive such proceeds would not have a Material Adverse
         Effect.

                  (nn)     All production from the wells operated by the Company
         has been properly accounted for and all proceeds attributable thereto
         have been properly paid in the ordinary course of business consistent
         with past practices.

                  (oo)     The reserve report issued by Netherland, Sewell &
         Associates, Inc. dated February 11, 2003 is accurate in all material
         respects and reflects all proved reserves and future revenues in the
         Company's oil and gas properties (the "Oil and Gas Properties") located
         in the United States, and the Mortgages shall create valid and first
         priority mortgage liens on all of the interests of the Company referred
         to in such Reserve Report. The reserve report issued by Gilbert
         Laustsen Jung Associates Ltd. dated February 26, 2003 is accurate in
         all material respects and reflects all proved reserves and future
         revenues in the Company's oil and gas properties located in Canada.

                  (pp)     At the Closing Date, the Company shall own the Oil
         and Gas Properties free and clear of all Liens (other than Permitted
         Liens), and no Financing Statements (as defined below) in respect of
         any property or assets of the Company shall be on file in favor of any
         person other than those in respect of Permitted Prior Liens and those
         to be terminated with respect to existing indebtedness.

                  (qq)     Prior to the date hereof, neither the Company nor any
         of its subsidiaries has entered into a contract pursuant to which oil
         and gas assets would be sold to any party other than subsidiaries or
         purchasers for fair market value.

                  (rr)     The Company is subject to Section 13 or 15(d) of the
         Exchange Act.

                  (ss)     None of the transactions contemplated by this
         Agreement (including, without limitation, the use of the proceeds from
         the borrowing of the Term Loans) shall violate or result in a violation
         of Section 7 of the Exchange Act, or any regulation promulgated
         thereunder, including, without limitation, Regulations G, T, U, and X
         of the Board of Governors of the Federal Reserve System

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                  (tt)     Prior to the date hereof, neither the Company nor any
         of its affiliates has taken any action which is designed to or which
         has constituted or which might have been expected to cause or result in
         stabilization or manipulation of the price of any security of the
         Company in connection with the borrowing of the Term Loans.

                  (uu)     Neither the Company nor any of its subsidiaries is in
         violation of its Certificate of Incorporation or By-laws or in default
         in the performance or observance of any material obligation, covenant
         or condition contained in any indenture, mortgage, deed of trust, loan
         agreement, lease or other material agreement or instrument to which it
         is a party or by which it or any of its properties may be bound.

                  (vv)     The statements set forth in the Final Offering
         Circular under the captions "Description of Certain Indebtedness" and
         "Description of the Notes," insofar as they purport to describe the
         provisions of the documents referred to therein, are accurate, complete
         and fair in all material respects.

                  (ww)     The description of the Collateral set forth in the
         Final Offering Circular under the caption "Description of the
         Collateral" is accurate and complete.

                  (xx)     Deloitte & Touche LLP and Pricewaterhouse Coopers
         LLP, who have certified certain financial statements of the Company and
         its subsidiaries, are each independent public accountants as required
         by the Act and the rules and regulations of the Commission thereunder.

                  (yy)     Each of Netherland, Sewell & Associates Inc. and
         Gilbert Laustsen Jung Associates Ltd. is an independent petroleum
         engineering firm and nothing has come to the Company's attention to
         cause it to believe that either such firm is not qualified to pass on
         questions relating to the reserves and production of the Company's oil
         and gas properties as set forth or incorporated by reference in the
         Final Offering Circular.

                  (zz)     The present fair saleable value of the assets of the
         Company and each of its subsidiaries exceeds the amount required to pay
         the probable liability on its and their existing debts, respectively
         (whether matured or unmatured, liquidated or unliquidated, absolute,
         fixed or contingent), as they become absolute and matured, and as a
         result of consummation of the transactions contemplated herein and in
         the Final Offering Circular, shall continue to exceed such amount.

                  (aaa)    The Company and each of its subsidiaries, does not,
         and, as a result of consummation of the transactions contemplated
         herein and in the Final Offering Circular, shall not, have unreasonably
         small capital for it to carry on its business as proposed to be
         conducted.

                  (bbb)    Neither the Company nor any of its subsidiaries are
         incurring obligations or making transfers under any evidence of
         indebtedness with the intent to hinder, delay or defraud any entity to
         which it is or shall become indebted.

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                                    ARTICLE V

                                    COVENANTS

SECTION 5.01.              [Intentionally Omitted.]

SECTION 5.02.              [Intentionally Omitted.]

SECTION 5.03.              Reports.

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

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

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

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

                  (c)      If, at any time, the Company is no longer subject to
         the periodic reporting requirements of the Exchange Act for any reason,
         the Company shall nevertheless continue filing the reports specified in
         Section 5.03(a) with the SEC within the time periods specified above
         unless the SEC shall not accept such a filing. The Company agrees that
         it shall not take any action for the purpose of causing the SEC not to
         accept any such filings. If, notwithstanding the foregoing, the SEC
         shall not accept the Company's filings for any reason, the Company
         shall post the reports referred to in Section 5.03(a) on its website
         within the time periods that would apply if the Company were required
         to file those reports with the SEC.

                  (d)      If the Company has designated any of its Subsidiaries
         as Unrestricted Subsidiaries, then the quarterly and annual financial
         information required by Section 5.03(a) shall include a reasonably
         detailed presentation, either on the face of the financial statements
         or in the footnotes thereto, and in "Management's Discussion and
         Analysis of Financial Condition and Results of Operations" in the Final
         Offering Memorandum, of

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         the financial condition and results of operations of the Company and
         its Restricted Subsidiaries separate from the financial condition and
         results of operations of the Unrestricted Subsidiaries of the Company.

                  (e)      In addition, the Company agrees that, for so long as
         any Term Loan Obligations remain outstanding, at any time it is not
         required to file the reports required by Section 5.03(a) with the
         Commission, it shall furnish to the Administrative Agent, upon its
         request, the information required to be delivered pursuant to Rule
         144A(d)(4) under the Securities Act.

SECTION 5.04.              Compliance Certificate.

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

                  (b)      So long as not contrary to the then current
         recommendations of the American Institute of Certified Public
         Accountants, the year-end financial statements delivered pursuant to
         Section 5.03(a) above shall be accompanied by a written statement of
         the Company's independent public accountants (who shall be a firm of
         established national reputation) that in making the examination
         necessary for certification of such financial statements, nothing has
         come to their attention that would lead them to believe that the
         Company has violated any provisions of Article V or Article VI hereof
         or, if any such violation has occurred, specifying the nature and
         period of existence thereof, it being understood that such accountants
         shall not be liable directly or indirectly to any Person for any
         failure to obtain knowledge of any such violation.

                  (c)      So long as any of the Term Loan Obligations are
         outstanding, the Company shall deliver to the Administrative Agent,
         forthwith upon any Officer becoming aware of any Default or Event of
         Default, an Officers' Certificate specifying such Default

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         or Event of Default and what action the Company is taking or proposes
         to take with respect thereto.

SECTION 5.05.              Taxes.

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

SECTION 5.06.              Stay, Extension and Usury Laws.

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

SECTION 5.07.              Restricted Payments.

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

                           (i)      declare or pay any dividend or make any
                                    other payment or distribution on account of
                                    the Company's or any of its Restricted
                                    Subsidiaries' Equity Interests (including
                                    any payment in connection with any merger or
                                    consolidation involving the Company or any
                                    of its Restricted Subsidiaries) or to the
                                    direct or indirect holders of the Company's
                                    or any of its Restricted Subsidiaries'
                                    Equity Interests in their capacity as such
                                    (other than dividends or distributions
                                    payable in Equity Interests (other than
                                    Disqualified Stock) of the Company or
                                    dividends or distributions payable to the
                                    Company or a Restricted Subsidiary of the
                                    Company);

                           (ii)     purchase, redeem or otherwise acquire or
                                    retire for value (including in connection
                                    with any merger or consolidation involving
                                    the Company) any Equity Interests of the
                                    Company or any direct or indirect parent of
                                    the Company;

                           (iii)    make any payment on or with respect to, or
                                    purchase, redeem, defease or otherwise
                                    acquire or retire for value any Indebtedness
                                    of the Company that is contractually
                                    subordinated to the Term Loans

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<PAGE>

                                    (excluding any intercompany Indebtedness
                                    between or among the Company and any of its
                                    Restricted Subsidiaries and excluding the
                                    purchase, repurchase or other acquisition of
                                    such subordinated Indebtedness purchased in
                                    anticipation of satisfying a sinking fund
                                    obligation, principal installment or final
                                    maturity, in each case due within one year
                                    of the date of acquisition), except a
                                    payment of interest or principal at the
                                    Stated Maturity thereof; or

                           (iv)     make any Restricted Investment

(all such payments and other actions set forth in these clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless after
giving effect to such Restricted Payment:

                           (v)      no Default or Event of Default has occurred
                                    and is continuing or would occur as a
                                    consequence of such Restricted Payment
                                    (other than any Default or Event of Default
                                    that is cured as a result of such Restricted
                                    Payment);

                           (vi)     the Company would, after giving pro forma
                                    effect thereto as if such Restricted Payment
                                    had been made at the beginning of the
                                    applicable four-quarter period, have been
                                    permitted to incur at least $1.00 of
                                    additional Indebtedness pursuant to the
                                    Fixed Charge Coverage Ratio test set forth
                                    in Section 5.09(a) herein; and

                           (vii)    such Restricted Payment, together with the
                                    aggregate amount of all other Restricted
                                    Payments made by the Company and its
                                    Restricted Subsidiaries since the date of
                                    this Agreement (excluding Restricted
                                    Payments permitted by clauses (2), (3), (4),
                                    (5), (6), and (9) of the next succeeding
                                    paragraph), is less than the sum, without
                                    duplication, of:

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

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

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                  Equity Interests (or Disqualified Stock or debt securities)
                  sold to a Subsidiary of the Company), plus

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

                                    (D)      to the extent that any Unrestricted
                  Subsidiary of the Company designated as such after the date of
                  this Agreement is redesignated as a Restricted Subsidiary
                  after the date of this Agreement, the Fair Market Value of the
                  Company's Investment in such Subsidiary as of the date of such
                  redesignation, plus

                                    (E)      100% of any payments of interest on
                  Indebtedness, dividends, repayments of loans or advances, or
                  other transfers of assets received by the Company or a
                  Restricted Subsidiary of the Company after the date of this
                  Agreement from an Unrestricted Subsidiary of the Company, to
                  the extent that such payments, dividends, repayments or
                  transfers were not otherwise included in Consolidated Net
                  Income of the Company for such period, plus

                                    (F)      $628.3 million (which is the amount
                  currently available for Restricted Payments under the
                  Company's indentures entered into prior to August 10, 2000).

         The preceding provisions shall not prohibit:

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

                  (2) the making of any Restricted Payment in exchange for, or
out of the net cash proceeds of the substantially concurrent sale (other than to
a Subsidiary of the Company) of, Equity Interests of the Company (other than
Disqualified Stock) or from the substantially concurrent contribution of common
equity capital to the Company; provided that the amount of any such net cash
proceeds that are utilized for any such Restricted Payment shall be excluded
from clause (3)(B) of the preceding paragraph;

                  (3) the defeasance, redemption, repurchase or other
acquisition of Indebtedness of the Company that is contractually subordinated to
the Term Loans with the net cash proceeds from a substantially concurrent
incurrence of Permitted Refinancing Indebtedness, so long as no Default has
occurred and is continuing or would be caused thereby;

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

                  (5) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any current or former officer, direct or
employee of the Company (or any of its Restricted Subsidiaries) pursuant to any
equity subscription agreement, stock option agreement, shareholders' agreement
or similar agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not exceed $5.0
million in any twelve-month period, so long as no Default has occurred and is
continuing or would be caused thereby;

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

                  (7) the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of the Company or any Restricted
Subsidiary of the Company issued on or after the date of this Agreement in
accordance with the Fixed Charge Coverage test described under Section 5.09
herein; provided that no Default has occurred and is continuing or would be
caused thereby (other than any Default or Event of Default that is cured as a
result of such Restricted Payment); and

                  (8) any purchase, redemption, defeasance or other acquisition
or retirement for value of subordinated Indebtedness upon a Change of Control or
an Asset Sale to the extent required by the indentures or other agreement
pursuant to which such subordinated Indebtedness was issued, but only if the
Company (a) in the case of a Change of Control, has made an offer to repay the
Term Loans as described under Section 5.15 herein or (b) in the case of an Asset
Sale, has applied the Net Proceeds from such Asset Sale in accordance with the
provisions described under Section 5.10 herein, so long as no Default has
occurred and is continuing or would be caused thereby.

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

SECTION 5.08.              Dividend and Other Payment Restrictions Affecting
Subsidiaries.

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

                           (i)      pay dividends or make any other
                                    distributions on its Capital Stock to the
                                    Company or any of its Restricted
                                    Subsidiaries, or with

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                                    respect to any other interest or
                                    participation in, or measured by, its
                                    profits, or pay any indebtedness owed to the
                                    Company or any of its Restricted
                                    Subsidiaries;

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

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

         However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:

                                    (A)      agreements governing Existing
                  Indebtedness and Credit Facilities as in effect on the date of
                  this Agreement and any amendments, modifications,
                  restatements, renewals, increases, supplements, refundings,
                  replacements or refinancings of those agreements; provided
                  that the amendments, modifications, restatements, renewals,
                  increases, supplements, refundings, replacements or
                  refinancings are no more restrictive, taken as a whole, with
                  respect to such dividend and other payment restrictions than
                  those contained in those agreements on the date of this
                  Agreement;

                                    (B)      this Agreement, any of the
                  Indentures and any of the Notes issued pursuant to the
                  Indentures or any other indenture governing letters of credit,
                  loans or debt securities issued by or on behalf of the Company
                  that are no more restrictive, taken as a whole, with respect
                  to such dividend, distribution or other payment restrictions
                  and loan or investment restrictions than those contained in
                  this Agreement, the Indentures, and the Initial Notes as in
                  effect on the date of this Agreement;

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

                                    (D)      customary non-assignment provisions
                  in leases, contracts and licenses entered into in the ordinary
                  course of business and consistent with past practices;

                                    (E)      purchase money obligations for
                  property acquired in the ordinary course of business and
                  Capital Lease Obligations that impose restrictions on the
                  property purchased or leased of the nature described in clause
                  (iii) of the preceding paragraph;

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

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                                    (G)      Permitted Refinancing Indebtedness;
                  provided that the restrictions contained in the agreements
                  governing such Permitted Refinancing Indebtedness are not
                  materially more restrictive, taken as a whole, than those
                  contained in the agreements governing the Indebtedness being
                  refinanced;

                                    (H)      Liens securing Indebtedness
                  otherwise permitted to be incurred under the provisions of the
                  covenant described above under Section 5.12 herein that limit
                  the right of the debtor to dispose of the assets subject to
                  such Liens;

                                    (I)      provisions limiting or prohibiting
                  the disposition or distribution of assets or property in joint
                  venture agreements, asset sale agreements, sale-leaseback
                  agreements, stock sale agreements and other similar agreements
                  entered into with the approval of the Company's Board of
                  Directors, which limitation or prohibition is applicable only
                  to the assets that are the subject of such agreements;

                                    (J)      any encumbrance or restriction
                  imposed pursuant to the terms of any Non-Recourse Debt
                  incurred pursuant to clause (vi) of the definition of
                  Permitted Debt described in Section 5.09(b) or any preferred
                  stock issued pursuant to clause (vii) of the definition of
                  Permitted Debt described in Section 5.09(b); provided that
                  such encumbrance or restriction, in the written opinion of the
                  President, Vice Chairman, Chief Operating Officer or Chief
                  Financial Officer of the Company, (x) is required in order to
                  obtain such financing or to place such preferred stock, (y) is
                  customary for such financings or placements and (z) applies
                  only to the assets or revenues of the applicable Restricted
                  Subsidiary;

                                    (K)      any encumbrance or restriction with
                  respect to a Restricted Subsidiary pursuant to an agreement
                  relating to any Acquired Debt incurred pursuant to clause (x)
                  of the definition of Permitted Debt described in Section
                  5.09(b); provided that such encumbrance or restriction was not
                  incurred in connection with or in contemplation of such
                  Restricted Subsidiary becoming a Restricted Subsidiary; and

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

SECTION 5.09.              Incurrence of Indebtedness and Issuance of Preferred
Stock.

                  (a)      The Company shall not, and shall not permit any of
         its Restricted Subsidiaries to, directly or indirectly, create, incur,
         issue, assume, guarantee or otherwise become directly or indirectly
         liable, contingently or otherwise, with respect to (collectively,
         "incur") any Indebtedness (including Acquired Debt), and the Company
         shall not issue any Disqualified Stock and shall not permit any of its
         Restricted Subsidiaries to issue any shares of preferred stock;
         provided, however, that the Company

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         may incur Indebtedness (including Acquired Debt) or issue Disqualified
         Stock if the Fixed Charge Coverage Ratio for the Company's most
         recently ended four full fiscal quarters for which internal financial
         statements are available immediately preceding the date on which such
         additional Indebtedness is incurred or such Disqualified Stock is
         issued would have been at least 2.0 to 1, determined on a pro forma
         basis (including a pro forma application of the net proceeds
         therefrom), as if the additional Indebtedness had been incurred or the
         Disqualified Stock had been issued, as the case may be, at the
         beginning of such four-quarter period.

                  (b)      Section 5.09(a) shall not prohibit the incurrence of
         any of the following items (collectively, "Permitted Debt"):

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                           (i)      the incurrence by the Company and the
                                    Guarantee by the Canadian Guarantors of
                                    additional Indebtedness and letters of
                                    credit under Credit Facilities in an
                                    aggregate principal amount at any one time
                                    outstanding under this clause (i) (with
                                    letters of credit being deemed to have a
                                    principal amount equal to the maximum
                                    potential liability of the Company
                                    thereunder) not to exceed on any date of
                                    incurrence the greater of (A) $500.0 million
                                    or (B) the dollar amount that is equal to
                                    50% of the Company's Consolidated Cash Flow
                                    for the then most recent four-quarter period
                                    for which financial information is
                                    available;

                           (ii)     the incurrence by the Company and its
                                    Restricted Subsidiaries of the Existing
                                    Indebtedness;

                           (iii)    the incurrence by the Company and the
                                    Canadian Guarantors of Indebtedness
                                    represented by the 2007 Notes, the 2010
                                    Notes and the 2013 Notes and the Term Loans
                                    to be issued on the date of this Agreement,
                                    and in each case the related Guarantees;

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

                           (v)      Indebtedness of the Company which is owed to
                                    and owned by a Restricted Subsidiary and
                                    Indebtedness of a Restricted Subsidiary that
                                    is owed to and owned by the Company or a
                                    Restricted Subsidiary; provided that any
                                    subsequent issuance or transfer of any
                                    Capital Stock that results in any such
                                    Restricted Subsidiary ceasing to be a
                                    Restricted Subsidiary or any transfer of
                                    such Indebtedness (other than to the Company
                                    or a Restricted Subsidiary) shall be deemed,
                                    in each case, to constitute the incurrence
                                    of such Indebtedness by the Company or by a
                                    Restricted Subsidiary, as the case may be;

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                           (vi)     the incurrence of Non-Recourse Debt by any
                                    Restricted Subsidiary of the Company (other
                                    than a Restricted Subsidiary that owns,
                                    directly or indirectly, any Material
                                    Designated Assets);

                           (vii)    the issuance of preferred stock by a
                                    Restricted Subsidiary of the Company (other
                                    than a Restricted Subsidiary that owns,
                                    directly or indirectly, any Material
                                    Designated Assets), the net proceeds of
                                    which are applied to finance the
                                    exploration, drilling, development,
                                    construction or purchase of or by, or
                                    repairs or improvements or additions to,
                                    property or assets of the Company or any
                                    Restricted Subsidiary;

                           (viii)   the incurrence by the Company of Guarantees
                                    of Indebtedness of Restricted Subsidiaries
                                    which, but for such Guarantees, would be
                                    permitted to be incurred pursuant to clause
                                    (vi) of this Section 5.09(b); provided that
                                    the aggregate principal amount of
                                    Indebtedness incurred pursuant to this
                                    clause (viii) does not exceed $100.0 million
                                    at any one time outstanding;

                           (ix)     the incurrence by the Company or any of its
                                    Restricted Subsidiaries of Permitted
                                    Refinancing Indebtedness in exchange for, or
                                    the net proceeds of which are used to
                                    refund, refinance, replace, defease or
                                    discharge Indebtedness (other than
                                    intercompany Indebtedness) that was
                                    permitted by this Agreement to be incurred
                                    under the first paragraph of this covenant
                                    or clauses (ii), (iii), (iv), (v), (vi),
                                    (viii) or (x) of this Section 5.09(b) or
                                    this clause (ix);

                           (x)      the incurrence of Acquired Debt by any
                                    Restricted Subsidiary of the Company at the
                                    time such Restricted Subsidiary becomes a
                                    Restricted Subsidiary of the Company so long
                                    as such Acquired Debt was not incurred in
                                    connection with or in contemplation of such
                                    Person becoming a Restricted Subsidiary of
                                    the Company; provided that the Company would
                                    have been able to incur such Indebtedness at
                                    the time of incurrence thereof by the
                                    Restricted Subsidiary pursuant to Section
                                    5.09(a);

                           (xi)     the incurrence of Indebtedness pursuant to
                                    Hedging Obligations incurred in the ordinary
                                    course of business and not for speculative
                                    purposes;

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

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

                           (xiv)    the incurrence by any Restricted Subsidiary
                                    of Indebtedness represented by letters of
                                    credit (or Guarantees thereof) entered into
                                    in the ordinary course of business to the
                                    extent that such letters of credit are not
                                    drawn upon or, if and to the extent drawn
                                    upon, such drawing is reimbursed no later
                                    than the tenth Business Day following a
                                    demand for reimbursement following payment
                                    on the letter of credit; provided that such
                                    letters of credit shall not constitute
                                    Permitted Debt pursuant to this clause (xiv)
                                    if they are issued in support of
                                    Indebtedness;

                           (xv)     the incurrence of Indebtedness by the
                                    Company represented by letters of credit
                                    cash collateralized with the proceeds of
                                    Priority Lien Debt; and

                           (xvi)    the incurrence by the Company or any of its
                                    Restricted Subsidiaries of additional
                                    Indebtedness in an aggregate principal
                                    amount (or accreted value, as applicable) at
                                    any time outstanding, including all
                                    Permitted Refinancing Indebtedness incurred
                                    to extend, refinance, renew, replace,
                                    defease or refund any Indebtedness incurred
                                    pursuant to this clause (xvi), not to exceed
                                    $100.0 million.

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

SECTION 5.10.              Asset Sales.

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

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

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

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

                                    (B)      any securities, notes or other
                  obligations received by the Company or any such Restricted
                  Subsidiary from such transferee that are promptly, subject to
                  ordinary settlement periods, converted by the Company or such
                  Restricted Subsidiary into cash, to the extent of the cash
                  received in that conversion; and

                                    (C)      except in the case of a Sale of
                  Designated Assets, any stock or assets of the kind referred to
                  in clauses (iv) or (vi) of Section 5.10(b); and

                           (iii)    in the case of a Sale of Designated Assets
                                    other than Canadian Gas Assets, the Company
                                    (or the Restricted Subsidiary, as the case
                                    may be) shall deposit the Net Proceeds as
                                    cash collateral in a segregated account (a
                                    "Designated Asset Sale Proceeds Account")
                                    held by the Collateral Trustee or its agent
                                    to secure the Secured Obligations; provided,
                                    that for so long as the terms of any of the
                                    Company's senior unsecured notes that were
                                    issued prior to August 10, 2000 would
                                    prevent such a pledge by a Restricted
                                    Subsidiary, the Company shall deposit with
                                    the Collateral Trustee or its agent an
                                    amount of cash equal to the Net Proceeds as
                                    cash collateral to secure the Secured
                                    Obligations, and the applicable Restricted
                                    Subsidiary shall not be obligated to do so.

                  (b)      Within 365 days after the receipt of any Net Proceeds
         from an Asset Sale, other than a Sale of Designated Assets that are not
         Canadian Gas Assets, the Company (or the applicable Restricted
         Subsidiary, as the case may be) may apply those Net Proceeds:

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                           (i)      to repay Priority Lien Debt and/or cash
                                    collateralize letters of credit constituting
                                    Priority Lien Debt;

                           (ii)     in the case of an Asset Sale by a Restricted
                                    Subsidiary, to repay or repurchase
                                    Indebtedness of Calpine Canada Energy
                                    Finance ULC and/or Calpine Canada Energy
                                    Finance II ULC existing on the date of this
                                    Agreement;

                           (iii)    in the case of an Asset Sale by a Restricted
                                    Subsidiary, to repay or repurchase
                                    Indebtedness of any Restricted Subsidiary
                                    and, if such Indebtedness is revolving
                                    credit Indebtedness, to correspondingly
                                    reduce commitments with respect thereto;

                           (iv)     to acquire all or substantially all of the
                                    assets of, or any Capital Stock of, another
                                    Permitted Business, if, after giving effect
                                    to any such acquisition of Capital Stock,
                                    the Permitted Business is or becomes a
                                    Restricted Subsidiary of the Company;

                           (v)      to make a capital expenditure; or

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

                  (c)      Within 180 days after the receipt of any Net Proceeds
         from an Asset Sale that constitutes a Sale of Designated Assets other
         than Canadian Gas Assets, the Company (or the Restricted Subsidiary
         that disposed of those Designated Assets, as the case may be) may apply
         those Net Proceeds to purchase other assets that would constitute
         Designated Assets or to repay Priority Lien Debt and/or cash
         collateralize letters of credit constituting Priority Lien Debt and, if
         such Priority Lien Debt is revolving credit Indebtedness, to
         correspondingly reduce commitments with respect thereto.

                  (d)      Any Net Proceeds from Asset Sales (including Sales of
         Designated Assets) that are not applied or invested as provided in the
         preceding clauses of this Section 5.10 shall constitute "Excess
         Proceeds." When the aggregate amount of Excess Proceeds exceeds $50.0
         million, or at such earlier point as may be elected by the Company, the
         Company shall make an offer to all Lenders and all holders of other
         Indebtedness that is pari passu with the Term Loans Equally and Ratably
         secured with the Term Loans containing provisions similar to those set
         forth in this Agreement with respect to offers to prepay, purchase or
         redeem with the proceeds of sales of assets, including the Notes and
         each series of Existing Indebtedness that contains similar asset sale
         provisions, when applicable, to prepay the maximum principal amount of
         Term Loans and such other pari passu Indebtedness that may be prepaid,
         purchased or redeemed out of the Excess Proceeds (including each series
         of Existing Indebtedness that contains similar asset sale provisions).
         The offer price in any Asset Sale Offer shall be equal to 100% of
         principal amount plus accrued and unpaid interest, if any, to the date
         of prepayment or purchase, and shall be payable in cash in accordance
         with the procedures

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         set forth in Section 2.11 hereof. If any Excess Proceeds remain after
         consummation of an Asset Sale Offer, the Company may use those Excess
         Proceeds for any purpose not otherwise prohibited by this Agreement. If
         the aggregate principal amount of Term Loans and other pari passu
         Indebtedness tendered into such Asset Sale Offer exceeds the amount of
         Excess Proceeds, the Company shall select the Term Loans and such other
         pari passu Indebtedness to be purchased on a pro rata basis. Upon
         completion of each Asset Sale Offer, the amount of Excess Proceeds
         shall be reset at zero.

                  (e)      Notwithstanding the foregoing, to the extent that any
         or all of the Net Proceeds of any Foreign Asset Sale is prohibited or
         delayed by applicable local law from being repatriated to the United
         States, the portion of such Net Proceeds so affected shall not be
         required to be applied at the time provided above, but may be retained
         by the applicable Restricted Subsidiary so long, but only so long, as
         the applicable local law shall not permit repatriation to the United
         States. The Company shall promptly take or cause the applicable
         Restricted Subsidiary to promptly take all actions required by the
         applicable local law to permit such repatriation. Once such
         repatriation of any of the affected Net Proceeds is permitted under the
         applicable local law, the repatriation shall be immediately effected
         and the repatriated Net Proceeds shall be applied in the manner set
         forth in this Section 5.10 as if the Asset Sale had occurred on the
         date of such repatriation.

                  (f)      Notwithstanding the foregoing, to the extent that the
         Board of Directors determines, in good faith, that repatriation of any
         or all of the Net Proceeds of any Foreign Asset Sale would have a
         material adverse tax consequence to the Company, the Net Proceeds so
         affected may be retained outside of the United States by the applicable
         Restricted Subsidiary for so long as such material adverse tax
         consequence would continue.

SECTION 5.11.              Transactions with Affiliates.

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

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

                           (ii)     the Company delivers to the Administrative
                                    Agent:

                                    (A)      with respect to any Affiliate
                  Transaction or series of related Affiliate Transactions
                  involving aggregate consideration in excess of $2.5 million,
                  an Officers' Certificate certifying that such Affiliate
                  Transaction complies with this covenant; and

                                    (B)      with respect to any Affiliate
                  Transaction or series of related Affiliate Transactions
                  involving aggregate consideration in excess of $10.0 million,
                  a resolution of the Board of Directors set forth in an
                  Officers' Certificate certifying that such Affiliate
                  Transaction complies with this covenant and that such
                  Affiliate Transaction has been approved by a majority of the
                  disinterested members of the Board of Directors or, if there
                  are no disinterested members of the Board of Directors, the
                  Board of Directors shall have received a written opinion of an
                  accounting, appraisal or investment banking firm of national
                  standing stating that such Affiliate Transaction or series of
                  Affiliate Transactions is fair to the Company or such
                  Restricted Subsidiary from a financial point of view.

                  (b)      The following items shall not be deemed to be
         Affiliate Transactions and, therefore, shall not be subject to the
         provisions of Section 5.11(a):

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                           (i)      any employment agreement, employee benefit
                                    plan, stock option plan, officer and
                                    director indemnification agreement or any
                                    similar arrangement entered into by the
                                    Company or any of its Restricted
                                    Subsidiaries in the ordinary course of
                                    business;

                           (ii)     transactions between or among the Company
                                    and its Restricted Subsidiaries and between
                                    or among the Company's Restricted
                                    Subsidiaries;

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

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

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

                           (vi)     Restricted Payments that do not violate the
                                    provisions of this Agreement as described in
                                    Section 5.07 hereof;

                           (vii)    loans or advances to employees in the
                                    ordinary course of business;

                           (viii)   any repurchase, redemption or other
                                    retirement of Capital Stock of the Company
                                    held by employees of the Company or any of
                                    its Subsidiaries upon death, disability or
                                    termination of employment at a price not in
                                    excess of the Fair Market Value thereof
                                    approved by the Board of Directors;

                           (ix)     any transaction between or among the Company
                                    and any of its Subsidiaries in the ordinary
                                    course of business and consistent with past
                                    practices of the Company and its
                                    Subsidiaries; and

                           (x)      any agreement to do any of the foregoing.

                  (c)      Any transaction which has been determined, in the
         written opinion of an independent nationally recognized investment
         banking firm, to be fair, from a financial point of view, to the
         Company or the applicable Restricted Subsidiary shall be deemed to be
         in compliance with this Section 5.11.

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SECTION 5.12.              Liens.

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

                  (b)      The Company shall not, and shall not permit any of
         its Restricted Subsidiaries to, grant or permit to exist a Lien upon
         any property (whether then held by it or to be acquired by it at a
         future time) as security for any Priority Lien Debt, unless (1) such
         Lien secures all Priority Lien Debt on an equal and ratable basis and
         (2) the Collateral Trustee holds an enforceable and perfected Lien upon
         such property as security Equally and Ratably for all Parity Lien
         Obligations in second priority to Priority Lien Debt.

SECTION 5.13.              Limitation on Changes in the Nature of Business.

         The Company and its Restricted Subsidiaries shall engage only in
Permitted Businesses, except to such extent as would not be material to the
Company and its Restricted Subsidiaries taken as a whole. In addition, the
Company shall, and shall cause its Subsidiaries, to conduct their respective
businesses in a manner so as to maintain the exemption of the Company and its
Subsidiaries from treatment as a public utility holding company under PUHCA or
an electric utility or public utility under any federal, state or local law;
provided to the extent that any such law is amended following the date of this
Agreement in such a manner that would (absent application of this proviso) make
non-compliance with this Section 5.13 not result in a material adverse effect on
the Company's results of operations or financial condition, then the Company
shall not be required to comply with this Section 5.13, but only to the extent
of actions or failures to act that would (absent application of this Section
5.13) constitute violations of this Section 5.13 solely as a result of such
amendment.

SECTION 5.14.              Corporate Existence.

Subject to Article 6 hereof, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect:

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

                           (ii)     the rights (charter and statutory), licenses
                                    and franchises of the Company and its
                                    Subsidiaries; provided, however, that the
                                    Company shall not be required to preserve
                                    any such right, license or franchise, or the
                                    corporate, partnership or other existence of
                                    any of its Subsidiaries, if the Board of
                                    Directors shall determine that the
                                    preservation thereof is no longer desirable
                                    in the conduct of the business of the
                                    Company and its Subsidiaries, taken as a
                                    whole,

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                                    and that the loss thereof is not adverse in
                                    any material respect to the Lenders.

SECTION 5.15.              Offer to Repurchase Upon Change of Control.

                  (a)      If a Change of Control occurs, each Lender shall have
         the right to require the Company to repay all or any part (equal to
         $1,000 or an integral multiple of $1,000) of that Lender's Term Loans
         pursuant to the offer described below (the "Change of Control Offer")
         on the terms set forth in this Agreement. In the Change of Control
         Offer, the Company shall offer a payment in cash equal to 101% of the
         aggregate principal amount thereof plus accrued and unpaid interest,
         (the "Change of Control Payment"), to but excluding the date of
         repayment. Within 30 days following any Change of Control, the Company
         shall mail a notice to the Administrative Agent (for delivery to each
         Lender) describing the transaction or transactions that constitute the
         Change of Control and offering to repay all Term Loans on the change of
         control payment date (the "Change of Control Payment Date") specified
         in the notice, which date shall be no earlier than 30 days and no later
         than 60 days from the date such notice is mailed, pursuant to the
         procedures required by this Agreement and described in such notice.

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

                           (i)      transfer to the Administrative Agent in
                                    immediately available funds an amount equal
                                    to the Change of Control Payment in respect
                                    of all Term Loans or portions thereof for
                                    which repayment has been requested; and

                           (ii)     deliver or cause to be delivered to the
                                    Adminstrative Agent an Officers' Certificate
                                    stating the aggregate principal amount of
                                    Term Loans or portions thereof being repaid
                                    by the Company.

                  (c)      The Administrative Agent shall promptly mail to each
         Lender so requesting the Change of Control Payment for such Term Loans.

                  (d)      The Company shall publicly announce the results of
         the Change of Control Offer on or as soon as practicable after the
         Change of Control Payment Date.

                  (e)      The provisions described above that require the
         Company to make a Change of Control Offer following a Change of Control
         shall be applicable whether or not any other provisions of this
         Agreement are applicable.

                  (f)      The Company shall not be required to make a Change of
         Control Offer upon a Change of Control if (i) a third party makes the
         Change of Control Offer in the manner, at the times and otherwise in
         compliance with the requirements set forth in this Agreement applicable
         to a Change of Control Offer made by the Company and repays all Term
         Loans not withdrawn under the Change of Control Offer or (ii) notice of
         voluntary

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         prepayment has been given in accordancy with Section 2.10 unless and
         until there is a default in payment of the applicable prepayment price.

SECTION 5.16.              Limitation on Sale and Leaseback Transactions.

                  (a)      The Company shall not enter into any sale and
         leaseback transaction; provided that the Company may enter into a sale
         and leaseback transaction if:

                           (i)      the Company could have (a) incurred
                                    Indebtedness in an amount equal to the
                                    Attributable Debt relating to such sale and
                                    leaseback transaction under the Fixed Charge
                                    Coverage Ratio test in Section 5.09 (a)
                                    herein and (b) incurred a Lien to secure
                                    such Indebtedness pursuant to Section 5.12
                                    herein;

                           (ii)     the gross cash proceeds of that sale and
                                    leaseback transaction are at least equal to
                                    the Fair Market Value, as determined in good
                                    faith by the Board of Directors and set
                                    forth in an Officers' Certificate delivered
                                    to the Administrative Agent, of the property
                                    that is the subject of that sale and
                                    leaseback transaction; and

                           (iii)    the transfer of assets in that sale and
                                    leaseback transaction is permitted by, and
                                    the Company applies the proceeds of such
                                    transaction in compliance with, Section 5.10
                                    herein.

                  (b)      This Section 5.16 shall not apply to the Company's
         Subsidiaries.

SECTION 5.17.              [Intentionally Omitted.]

SECTION 5.18.              [Intentionally Omitted.]

SECTION 5.19.              Limitation on Issuances of Guarantees of
Indebtedness.

The Company shall not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company (other than the Existing Guarantees by the Canadian
Guarantors) unless such Restricted Subsidiary simultaneously executes and
delivers (1) supplemental agreements providing for the Guarantees of the payment
of the Term Loans by such Restricted Subsidiary, which Guarantees shall be
senior to such Restricted Subsidiary's Guarantee of or pledge to secure such
other Indebtedness unless the Indebtedness of the Company so Guaranteed or
secured is senior Indebtedness of the Company, in which case the Guarantees of
the Term Loans may be pari passu with such Restricted Subsidiary's Guarantee of
or pledge to secure such other Indebtedness of the Company, and (2) a pledge or
security agreement providing for a pledge of such assets to secure the Term
Loans and all other Parity Lien Debt on an Equal and Ratable basis (subject only
to Permitted Prior Liens).

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SECTION 5.20.              [Intentionally Omitted.]

SECTION 5.21.              Payments for Consent.

The Company shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Lender for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of this
Agreement or any other Term Loan Document unless such consideration is offered
to be paid or agreed to be paid to all Lenders that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.

SECTION 5.22.              Designation of Restricted and Unrestricted
Subsidiaries.

         The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
Fair Market Value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary designated as Unrestricted shall be
deemed to be an Investment made as of the time of the designation and shall
reduce the remaining amount available for Restricted Payments under Section 5.07
herein or under one or more clauses of the definition of Permitted Investments,
as determined by the Company. That designation shall only be permitted if the
Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if that redesignation would not cause a Default.

SECTION 5.23.              Suspension of Covenants.

                  (a)      If on any date following the date of this Agreement:

                           (i)      the Term Loans are rated Baa3 or better by
                                    Moody's and BBB--or better by S&P; and

                           (ii)     no Default or Event of Default shall have
                                    occurred and be continuing, then, beginning
                                    on that day and subject to the provisions of
                                    the following paragraph, the Company and its
                                    Restricted Subsidiaries shall no longer be
                                    subject to Sections 5.07, 5.08, 5.09, 5.10
                                    (provided that the provisions of Section
                                    5.10 relating to the Sale of Designated
                                    Assets and the application of the proceeds
                                    therefrom shall remain in full force and
                                    effect and shall not be suspended), 5.11,
                                    5.13, 5.22 and 6.01(iv) hereof (the
                                    "Suspended Covenants"); provided that all
                                    other provisions of this Agreement shall
                                    continue to be in full force and effect.

         Notwithstanding the foregoing, if the rating assigned by either such
rating agency should subsequently decline to below Baa3 or BBB--, respectively,
the Suspended Covenants shall be

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reinstituted as of and from the date of such rating decline. Calculations under
the reinstated Section 5.07 shall be made as if the covenant set forth in
Section 5.07 had been in effect since the date of this Agreement except that no
Default shall be deemed to have occurred solely by reason of a Restricted
Payment made while Section 5.07 was suspended. The covenant suspension
provisions of this Section 5.23 shall continue to be applicable following any
such reinstatement.

                                   ARTICLE VI

                                   SUCCESSORS

SECTION 6.01.              Merger, Consolidation, or Sale of Assets.

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

                           (i)      either:

                                    (A)      the Company is the surviving
                  corporation; or

                                    (B)      the Person formed by or surviving
                  any such consolidation or merger (if other than the Company)
                  or to which such sale, assignment, transfer, conveyance or
                  other disposition has been made is a corporation organized or
                  existing under the laws of the United States, any state of the
                  United States or the District of Columbia;

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                           (ii)     the Person formed by or surviving any such
                                    consolidation or merger (if other than the
                                    Company) or the Person to which such sale,
                                    assignment, transfer, conveyance or other
                                    disposition has been made assumes all the
                                    obligations of the Company under this
                                    Agreement and the other Term Loan Documents
                                    pursuant to agreements reasonably
                                    satisfactory to the Administrative Agent and
                                    the Collateral Trustee;

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

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

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

                                    (B)      shall, on the date of such
                  transaction after giving pro forma effect thereto and any
                  related financing transactions as if the same had occurred at
                  the beginning of the applicable four-quarter period, be
                  permitted to incur at least $1.00 of additional Indebtedness
                  pursuant to the Fixed Charge Coverage Ratio test set forth in
                  Section 5.09(a) herein; and

                           (v)      such transaction shall not impair the
                                    ability of the Company or any of its
                                    Subsidiaries to conduct their respective
                                    businesses in a manner so as to maintain the
                                    exemption of the Company and its
                                    Subsidiaries from treatment as a public
                                    utility holding company under PUHCA or an
                                    electric utility or public utility under any
                                    federal, state or local law, unless such
                                    exemption is no longer material to the
                                    Company and its Restricted Subsidiaries
                                    taken as a whole or to the Person formed by
                                    or surviving any such consolidation or
                                    merger (if other then the Company) and its
                                    Restricted Subsidiaries taken as a whole.

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

         Notwithstanding the foregoing:

                                    (A)      the Company may merge with an
                  Affiliate solely for the purpose of reincorporating the
                  Company in another jurisdiction; and

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                                    (B)      the Company and its Restricted
                  Subsidiaries may sell, assign, transfer, lease, convey or
                  otherwise dispose of assets between or among each other
                  (including by way of merger).

SECTION 6.02.              Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in a transaction that is subject to, and that complies with the
provisions of, Section 6.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Agreement referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Agreement with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Term Loans except in the case of a sale of all
of the Company's assets in a transaction that is subject to, and that complies
with the provisions of, Section 6.01 hereof.

                                   ARTICLE VII

                              DEFAULTS AND REMEDIES

SECTION 7.01.              Events of Default.

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

                           (i)      default for 30 days in the payment when due
                                    of interest on the Term Loans;

                           (ii)     default in payment when due of the principal
                                    of, or premium, if any, on the Term Loans;

                           (iii)    failure to comply with Section 5.10 or 5.15;

                           (iv)     failure by the Company or any of its
                                    Restricted Subsidiaries for 30 days after
                                    written notice from the Administrative Agent
                                    or Lenders holding at least 25% in
                                    outstanding aggregate principal amount of
                                    the Term Loans then outstanding to comply
                                    with any of the other agreements in this
                                    Agreement or the other Term Loan Documents;

                           (v)      default under any mortgage, indenture or
                                    instrument under which there may be issued
                                    or by which there may be secured or

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                                    evidenced any Indebtedness for money
                                    borrowed by the Company or any of its
                                    Restricted Subsidiaries (or the payment of
                                    which is guaranteed by the Company or any of
                                    its Restricted Subsidiaries) whether such
                                    Indebtedness or guarantee now exists, or is
                                    created after the date of this Agreement, if
                                    that default:

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

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

         and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $50.0 million or more, and such default shall not have
been cured or waived or any such acceleration rescinded, or such Indebtedness
repaid, within 20 days of the Company or such Restricted Subsidiary becoming
aware of such default; provided that the provisions of this clause (v) shall not
apply to any default on Non-Recourse Debt;

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                           (vi)     failure by the Company or any of its
                                    Significant Subsidiaries to pay final
                                    judgments (not covered by insurance)
                                    aggregating in excess of $50.0 million,
                                    which judgments are not paid, discharged or
                                    stayed for a period of 30 days;

                           (vii)    the repudiation by the Company or any of its
                                    Restricted Subsidiaries of any of its
                                    obligations under the Security Documents or
                                    the unenforceability of the Security
                                    Documents against the Company or any of its
                                    Restricted Subsidiaries for any reason;
                                    provided that such breach, repudiation or
                                    unenforceability relates to Collateral
                                    having an aggregate Fair Market Value of
                                    $50.0 million or more;

                           (viii)   except as permitted by this Agreement, any
                                    Guarantee of the Term Loan Obligations shall
                                    be held in any judicial proceeding to be
                                    unenforceable or invalid or shall cease for
                                    any reason to be in full force and effect or
                                    any Canadian Guarantor, or any Person acting
                                    on behalf of any Canadian Guarantor, shall
                                    deny or disaffirm its obligations under its
                                    Guarantee of the Term Loan Obligations and
                                    such condition shall not have been cured
                                    within 30 days of written notice from the
                                    Administrative Agent or Lenders holding at
                                    least 25% in outstanding aggregate principal
                                    amount of the Term Loans then outstanding;
                                    and

                           (ix)     (a) the Company or any of its Significant
                                    Subsidiaries or any group of Subsidiaries
                                    that, when take together, would consitute a
                                    Significant Subsidiary pursuant to or within
                                    the meaning of the Bankruptcy Code: (1)
                                    commences a voluntary case, (2) consents to
                                    the entry of an order for relief against it
                                    in an involuntary case, (3) consents to the
                                    appointment of a custodian of it or for all
                                    or substantially all of its property, (4)
                                    makes a general assignment for the benefit
                                    of its creditors or (5) generally is not
                                    paying its debts as they become due or (b) a
                                    court of competent jurisdiction enters an
                                    order or decree under the Bankruptcy Code
                                    that: (1) is for relief against the Company
                                    or any of its Significant Subsidiaries or
                                    any group of Subsidiaries that, when taken
                                    together, would constitute a Significant
                                    Subsidiary, in an involuntary case, (2)
                                    appoints a custodian of the Company or any
                                    of its Significant Subsidiaries or any group
                                    of Subsidiaries that, when taken together,
                                    would constitute a Significant Subsidiary,
                                    or for all or substantially all of the
                                    property of the Company or any of its
                                    Significant Subsidiaries or any group of
                                    Subsidiaries that, when taken together,
                                    would constitute a Significant Subsidiary or
                                    (3) orders the liquidation of the Company or
                                    any of its Significant Subsidiaries or any
                                    group of Subsidiaries that, when taken
                                    together, would constitute a

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                                    Significant Subsidiary, and in any case
                                    under this clause (b) the order or decree
                                    remains unstayed and in effect for 60
                                    consecutive days.

SECTION 7.02.              Acceleration.

                  (a)      In the case of an Event of Default specified in
          clause (ix) of Section 7.01 hereof, with respect to the Company or any
         of its Significant Subsidiaries or any group of Subsidiaries that,
         taken as a whole, would constitute a Significant Subsidiary, all
         outstanding Term Loans shall become due and payable immediately without
         further action or notice. If any other Event of Default occurs and is
         continuing, the Administrative Agent or Lenders holding at least 25% in
         outstanding aggregate principal amount of the Term Loans then
         outstanding may declare all the Term Loans to be due and payable
         immediately.

                  (b)      Upon any such declaration, the Term Loans shall
         become due and payable immediately. Notwithstanding the foregoing, if
         an Event of Default specified in clause (ix) of Section 7.01 hereof
         occurs with respect to the Company, any of its Significant Subsidiaries
         or any group of Subsidiaries that, taken as a whole, would constitute a
         Significant Subsidiary, all outstanding Term Loans shall be due and
         payable immediately without further action or notice. Lenders holding
         at least 25% in outstanding aggregate principal amount of the Term
         Loans then outstanding by written notice to the Administrative Agent
         may on behalf of all of the Lenders rescind an acceleration and its
         consequences if the rescission would not conflict with any judgment or
         decree and if all existing Events of Default (except nonpayment of
         principal, interest or premium that has become due solely because of
         the acceleration) have been cured or waived.

SECTION 7.03.              Other Remedies.

                  (a)      If an Event of Default occurs and is continuing, the
         Administrative Agent may pursue any available remedy to collect the
         payment of principal, premium, if any, and interest on the Term Loans
         or to enforce the performance of this Agreement.

                  (b)      The Administrative Agent may maintain a proceeding
         even if it does not possess any of the Term Loans. A delay or omission
         by the Administrative Agent or any Lender in exercising any right or
         remedy accruing upon an Event of Default shall not impair the right or
         remedy or constitute a waiver of or acquiescence in the Event of
         Default. All remedies are cumulative to the extent permitted by law.

SECTION 7.04.              Waiver of Past Defaults.

The Requisite Lenders by notice to the Administrative Agent may on behalf of the
Lenders waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of the
principal of, premium, if any, or interest on, the Term Loans (including in
connection with an offer to purchase); provided, however, that the Requisite
Lenders may rescind an acceleration and its consequences, including

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any related payment default that resulted from such acceleration. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agremeent; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.

SECTION 7.05.              Control by Majority.

The Requisite Lenders may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Administrative Agent or
exercising any trust or power conferred on it. However, the Administrative Agent
may refuse to follow any direction that conflicts with law or this Agreement
that the Administrative Agent determines may be unduly prejudicial to the rights
of other Lenders or that may involve the Administrative Agent in personal
liability.

SECTION 7.06.              [Intentionally Omitted.]

SECTION 7.07.              [Intentionally Omitted.]

SECTION 7.08.              Collection Suit by Administrative Agent.

If an Event of Default specified in Section 7.01(1) or (2) occurs and is
continuing, the Administrative Agent is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Term Loans and interest on overdue principal and, to the extent lawful, interest
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Administrative Agent, its agents and counsel.

SECTION 7.09.              Priorities.

If the Administrative Agent collects any money pursuant to this Article 7, it
shall pay out the money in the following order:

First: to the Administrative Agent, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Administrative Agent and the
costs and expenses of collection;

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

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

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The Administrative Agent may fix a record date and payment date for any payment
to Lenders pursuant to this Section 7.10.

                                  ARTICLE VIII

                                     AGENTS

SECTION 8.01.              Appointment of Agents. The Company and the Lenders
acknowledge and agree that GSCP has acted and shall be credited as sole lead
arranger and sole bookrunner of the Initial Term Loans and that GSCP is hereby
appointed Administrative Agent hereunder and under the other Term Loan
Documents. Each Lender hereby authorizes the Sole Lead Arranger and the
Administrative Agent to act as its agent in accordance with the terms hereof and
the other Term Loan Documents. The Administrative Agent hereby agrees to act
upon the express conditions contained herein and the other Term Loan Documents,
as applicable. The provisions of this Article VIII are solely for the benefit of
Agents and Lenders and no Obligor shall have any rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties hereunder, the Administrative Agent shall act solely as an agent of
Lenders and no Agent does or shall assume or be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Company or
any of its Restricted Subsidiaries. The Sole Lead Arranger, without consent of
or notice to any party hereto, may assign any and all of its rights or
obligations hereunder to any of its Affiliates. GSCP in its capacity as the Sole
Lead Arranger shall not have any duties, liabilities or obligations under the
Term Loan Documents but shall be entitled to all benefits of this Article VIII.

SECTION 8.02.              Powers and Duties. Each Lender irrevocably authorizes
each Agent to take such action on such Lender's behalf and to exercise such
powers, rights and remedies hereunder and under the other Term Loan Documents as
are specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified herein and the other Term Loan Documents. Each
Agent may exercise such powers, rights and remedies and perform such duties by
or through its agents or employees. No Agent shall have, by reason hereof or any
of the other Term Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing herein or any of the other Term Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon any Agent any
obligations in respect hereof or any of the other Term Loan Documents except as
expressly set forth herein or therein.

SECTION 8.03.              General Immunity.

                  (a)      No Responsibility for Certain Matters. No Agent shall
         be responsible to any Lender for the execution, effectiveness,
         genuineness, validity, enforceability, collectibility or sufficiency
         hereof or any other Term Loan Document or for any representations,
         warranties, recitals or statements made herein or therein or made in
         any

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         written or oral statements or in any financial or other statements,
         instruments, reports or certificates or any other documents furnished
         or made by any Agent to Lenders or by or on behalf of any Obligor to
         any Agent or any Lender in connection with the Term Loan Documents and
         the transactions contemplated thereby or for the financial condition or
         business affairs of any Obligor or any other Person liable for the
         payment of any Term Loan Obligations, nor shall any Agent be required
         to ascertain or inquire as to the performance or observance of any of
         the terms, conditions, provisions, covenants or agreements contained in
         any of the Term Loan Documents or as to the use of the proceeds of the
         Term Loans or as to the existence or possible existence of any Event of
         Default or Default or to make any disclosures with respect to the
         foregoing. Anything contained herein to the contrary notwithstanding,
         the Administrative Agent shall not have any liability arising from
         confirmations of the amount of outstanding Term Loans or the component
         amounts thereof.

                  (b)      Exculpatory Provisions. No Agent nor any of its
         officers, partners, directors, employees or agents shall be liable to
         Lenders for any action taken or omitted by any Agent under or in
         connection with any of the Term Loan Documents except to the extent
         caused by such Agent's gross negligence or willful misconduct. Each
         Agent shall be entitled to refrain from any act or the taking of any
         action (including the failure to take an action) in connection herewith
         or any of the other Term Loan Documents or from the exercise of any
         power, discretion or authority vested in it hereunder or thereunder
         unless and until such Agent shall have received instructions in respect
         thereof from Requisite Lenders (or such other Lenders as may be
         required to give such instructions under Section 13.05) and, upon
         receipt of such instructions from Requisite Lenders (or such other
         Lenders, as the case may be), such Agent shall be entitled to act or
         (where so instructed) refrain from acting, or to exercise such power,
         discretion or authority, in accordance with such instructions. Without
         prejudice to the generality of the foregoing, (i) each Agent shall be
         entitled to rely, and shall be fully protected in relying, upon any
         communication, instrument or document believed by it to be genuine and
         correct and to have been signed or sent by the proper Person or
         Persons, and shall be entitled to rely and shall be protected in
         relying on opinions and judgments of attorneys (who may be attorneys
         for the Company and its Restricted Subsidiaries), accountants, experts
         and other professional advisors selected by it; and (ii) no Lender
         shall have any right of action whatsoever against any Agent as a result
         of such Agent acting or (where so instructed) refraining from acting
         hereunder or any of the other Term Loan Documents in accordance with
         the instructions of Requisite Lenders (or such other Lenders as may be
         required to give such instructions under Section 13.05).

SECTION 8.04.              Agents Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, any Agent in its individual capacity as a
Lender hereunder. With respect to its participation in the Term Loans, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as if it were not performing the duties and functions
delegated to it hereunder, and the term "Lender" shall, unless the context
clearly otherwise indicates, include each Agent in its individual capacity. Any
Agent and its Affiliates may accept deposits

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from, lend money to, own securities of, and generally engage in any kind of
banking, trust, financial advisory or other business with the Company or any of
its Affiliates as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Company for services in connection
herewith and otherwise without having to account for the same to Lenders.

SECTION 8.05.              Lenders' Representations, Warranties and
Acknowledgment.

                  (a)      Each Lender represents and warrants that it has made
         its own independent investigation of the financial condition and
         affairs of the Company and its Restricted Subsidiaries in connection
         with its Term Loans hereunder and that it has made and shall continue
         to make its own appraisal of the creditworthiness of the Company and
         its Restricted Subsidiaries. No Agent shall have any duty or
         responsibility, either initially or on a continuing basis, to make any
         such investigation or any such appraisal on behalf of Lenders or to
         provide any Lender with any credit or other information with respect
         thereto, whether coming into its possession before the making of the
         Term Loans or at any time or times thereafter, and no Agent shall have
         any responsibility with respect to the accuracy of or the completeness
         of any information provided to Lenders.

                  (b)      Each Lender, by delivering its signature page to this
         Agreement and funding its Initial Term Loan on the Closing Date, shall
         be deemed to have acknowledged receipt of, and consented to and
         approved, each Term Loan Document and each other document required to
         be approved by any Agent, Requisite Lenders or Lenders, as applicable
         on the Closing Date.

SECTION 8.06.              Right to Indemnity. Each Lender, in proportion to its
Pro Rata Share, severally agrees to indemnify each Agent, to the extent that
such Agent shall not have been reimbursed by any Obligor, for and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against such Agent in exercising its powers, rights and remedies
or performing its duties hereunder or under the other Term Loan Documents or
otherwise in its capacity as such Agent in any way relating to or arising out of
this Agreement or the other Term Loan Documents; provided, 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 Agent's gross negligence or willful misconduct. If any indemnity
furnished to any Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, such Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished; provided, in no event shall this sentence
require any Lender to indemnify any Agent against any liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in
excess of such Lender's Pro Rata Share thereof; and provided further, this
sentence shall not be deemed to require any Lender to indemnify any Agent
against any liability, obligation, loss, damage, penalty, action, judgment,
suit, cost, expense or disbursement described in the proviso in the immediately
preceding sentence.

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SECTION 8.07.              Successor Administrative Agent. The Administrative
Agent may resign at any time by giving thirty (30) days' prior written notice
thereof to Lenders and the Company, and the Administrative Agent may be removed
at any time with or without cause by an instrument or concurrent instruments in
writing delivered to the Company and the Administrative Agent and signed by the
Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to the
Company, to appoint a successor Administrative Agent. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Administrative Agent and the retiring or removed Administrative Agent
shall promptly transfer to such successor Administrative Agent all sums,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Administrative
Agent under the Term Loan Documents, whereupon such retiring or removed
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Article VIII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent hereunder.

                                   ARTICLE IX

                             COLLATERAL AND SECURITY

         The Collateral Trustee's Liens upon the Collateral shall no longer
secure the Term Loan Obligations outstanding under this Agreement, and the right
of Lenders to the benefits and proceeds of the Collateral Trustee's Liens on
Collateral shall terminate and be discharged:

         (1) upon payment in full and discharge of all outstanding Term Loans
    and all other Term Loan Obligations that are outstanding, due and payable at
    the timeall of the Term Loans are paid in full and discharged; or

         (2) with the prior written consent of each Lender.

                                    ARTICLE X

                                RANKING OF LIENS

         Notwithstanding: (i) anything to the contrary contained in the Security
Documents; (ii) the time of incurrence of any Series of Secured Debt; (iii) the
order or method of attachment or perfection of any Liens securing any Series of
Secured Debt; (iv) the time or order of filing or recording of financing
statements, mortgages or other documents filed or recorded to perfect any Lien
upon any Collateral; (v) the time of taking possession or control over any
Collateral or (vi)

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the rules for determining priority under any law governing relative priorities
of Liens, all Liens at any time granted by the Company or any other Obligor to
secure any of the Parity Lien Debt shall be subject and subordinate to Priority
Liens securing Priority Lien Obligations up to the Priority Lien Cap.

         The foregoing provision is intended for the benefit of, and shall be
enforceable as a third party beneficiary by, each present and future holder of
Priority Lien Obligations, each present and future Priority Lien Agent and the
Collateral Trustee as holder of Priority Liens. No other Person shall be
entitled to rely on, have the benefit of or enforce this provision.

         In addition, the foregoing provision is intended solely to set forth
the relative ranking, as Liens, of the Liens securing Parity Lien Debt as
against the Priority Liens. Neither the Notes nor the Term Loans nor any other
Parity Lien Obligations nor the exercise or enforcement of any right or remedy
for the payment or collection thereof are intended to be, or shall ever be by
reason of the foregoing provision, in any respect subordinated, deferred,
postponed, restricted or prejudiced.

                                   ARTICLE XI

                               COLLATERAL SHARING

SECTION 11.01.             Equal and Ratable Lien Sharing by holders of Parity
Lien Debt.

Notwithstanding (i) anything to the contrary contained in the Security
Documents; (ii) the time of incurrence of any Series of Parity Lien Debt; (iii)
the order or method of attachment or perfection of any Liens securing any Series
of Parity Lien Debt; (iv) the time or order of filing or recording of financing
statements, mortgages or other documents filed or recorded to perfect any Lien
upon any Collateral; (v) the time of taking possession or control over any
Collateral or (vi) the rules for determining priority under any law governing
relative priorities of Liens:

                  (a)      all Liens at any time granted by the Company or any
         other Obligor to secure any Parity Lien Obligations shall secure
         Equally and Ratably all present and future Parity Lien Obligations and

                  (b)      all proceeds of all Liens at any time granted by the
         Company or any Obligor to secure any of the Parity Lien Debt and other
         Parity Lien Obligations shall be allocated and distributed Equally and
         Ratably on account of the Parity Lien Debt and other Parity Lien
         Obligations; provided that, for the avoidance of doubt, in the absence
         of an Event of Default, the Company shall be entitled to utilize cash
         proceeds of Collateral in the ordinary course of its business.

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SECTION 11.02.             Enforcement.

The provisions of Section 11.01 are binding upon and intended for the benefit of
the Collateral Trustee and each present and future holder of Parity Lien
Obligations, each of whom shall be entitled to enforce such provisions as a
third party beneficiary thereof.

SECTION 11.03.             Amendment.

                  (a)      No amendment or supplement to the provisions of this
         Article XI that adversely affects the right of any holder of Parity
         Lien Obligations to share in the Collateral Equally and Ratably shall
         become effective without the consent of each such holder.

                  (b)      Any such amendment or supplement that imposes any
         obligation upon the Collateral Trustee or adversely affects the rights
         of the Collateral Trustee in its individual capacity shall become
         effective only with the consent of the Collateral Trustee.

                  (c)      No waiver of the provisions of this Article XI shall
         in any event be effective unless set forth in a writing signed and
         consented to, as required for an amendment under this Section 11.03, by
         the party to be bound thereby.

                                  ARTICLE XII

                              INTENTIONALLY OMITTED

                                  ARTICLE XIII

                                  MISCELLANEOUS

SECTION 13.01.             Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given to any Obligor, the Sole Lead Arranger, the Collateral Trustee or the
Administrative Agent shall be sent to such Person's address as set forth on
Appendix B or in the other relevant Term Loan Document, and in the case of any
Lender, the address as indicated on Appendix B or otherwise indicated to the
Administrative Agent in writing. Each notice hereunder shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service and signed for against receipt thereof, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed; provided, no
notice to any Agent shall be effective until received by such Agent. Documents,
notices or reports required to be delivered to the Lenders pursuant to Sections
2.11, 5.03(a), 5.04 and 5.15 may be delivered electronically and posted
electronically on IntraLinks/IntraAgency or other relevant website to which the
Lenders have access (whether a commercial, third-party website or whether
sponsored by Administrative Agent), if any; provided that (i) the Administrative
Agent shall deliver paper copies of such reports to any Lender upon written
request therefor; and (ii) the Administrative Agent shall notify (which may be
by facsimile or electronic mail) each Lender of

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the posting of any such reports and provide to each Lender by email electronic
versions (i.e. soft copies) of such reports.

SECTION 13.02.             Expenses. Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to pay promptly:

                  (a)      all expenses associated with the creation and
         perfection of security interests and associated documents, including,
         without limitation, the Security Documents and all Financing
         Statements, including filing fees and the reasonable fees and
         disbursements of Latham & Watkins LLP, counsel to the Sole Lead
         Arranger, incurred in connection therewith and the fees and
         disbursements of local counsel incurred in connection therewith, in
         each case, prior to the Closing Date;

                  (b)      all the actual and reasonable costs and expenses
         incurred after the Closing Date of preparation of the Term Loan
         Documents and any consents, amendments, waivers or other modifications
         thereto;

                  (c)      all the costs incurred after the Closing Date of
         furnishing all opinions by counsel for the Company and the other
         Obligors;

                  (d)      after the Closing Date, the reasonable fees, expenses
         and disbursements of counsel to Agents in connection with the
         negotiation, preparation, execution and administration of the Term Loan
         Documents and any consents, amendments, waivers or other modifications
         thereto and any other documents or matters requested by the Company;

                  (e)      all the actual costs and reasonable expenses of
         creating and perfecting Liens in favor of Collateral Trustee, for the
         benefit of Lenders pursuant hereto, including filing and recording
         fees, expenses and taxes, stamp or documentary taxes, search fees,
         title insurance premiums and reasonable fees, expenses and
         disbursements of counsel to each Agent and of counsel providing any
         opinions that any Agent or Requisite Lenders may request in respect of
         the Collateral or the Liens created pursuant to the Security Documents;

                  (f)      all the actual costs and reasonable fees, expenses
         and disbursements of any auditors, accountants, consultants or
         appraisers;

                  (g)      all the actual costs and reasonable expenses
         (including the reasonable fees, expenses and disbursements of any
         appraisers, consultants, advisors and agents employed or retained by
         Collateral Trustee and its counsel) in connection with the custody or
         preservation of any of the Collateral;

                  (h)      all other actual and reasonable costs and expenses
         incurred by each Agent in connection with the syndication of the Term
         Loans and Term Loan Commitments and the negotiation, preparation and
         execution of the Term Loan Documents and any

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         consents, amendments, waivers or other modifications thereto and the
         transactions contemplated thereby; and

                  (i)      after the occurrence of a Default or an Event of
         Default, all costs and expenses, including reasonable attorneys' fees
         and costs of settlement, incurred by any Agent and Lenders in enforcing
         any Term Loan Obligations of or in collecting any payments due from any
         Obligor hereunder or under the other Term Loan Documents by reason of
         such Default or Event of Default (including in connection with the sale
         of, collection from, or other realization upon any of the Collateral or
         the enforcement of the Term Loan Guarantee) or in connection with any
         refinancing or restructuring of the credit arrangements provided
         hereunder in the nature of a "work-out" or pursuant to any insolvency
         or bankruptcy cases or proceedings.

SECTION 13.03.             Indemnity.

                  (a)      In addition to the payment of costs and expenses
         pursuant to Section 13.02, whether or not the transactions contemplated
         hereby shall be consummated, the Company agrees to defend (subject to
         Indemnitees' selection of counsel), indemnify, pay and hold harmless
         the Administrative Agent and Lender and each of their respective
         Affiliates and each and all of the directors, officers, partners,
         trustees, employees, attorneys and agents, and (in each case) their
         respective heirs, representatives, successors and assigns (each of the
         foregoing, an "Indemnitee") from and against any and all Indemnified
         Liabilities; provided, no Indemnitee shall be entitled to
         indemnification hereunder with respect to any Indemnified Liability to
         the extent such Indemnified Liability is found by a final and
         nonappealable decision of a court of competent jurisdiction to have
         resulted directly and primarily from the gross negligence or willful
         misconduct of such Indemnitee.

                  (b)      All amounts due under Section 13.03(a) shall be
         payable not later than 10 days after written demand therefor.

                  (c)      To the extent that the undertakings to defend,
         indemnify, pay and hold harmless set forth in Section 13.03(a) may be
         unenforceable in whole or in part because they are violative of any law
         or public policy, the Company shall contribute the maximum portion that
         it is permitted to pay and satisfy under applicable law to the payment
         and satisfaction of all Indemnified Liabilities incurred by Indemnitees
         or any of them.

                  (d)      The Company shall not assert any claim against any
         Indemnitee, on any theory of liability, for any lost profits or
         special, indirect or consequential damages or (to the fullest extent
         lawful) any punitive damages arising out of, in connection with, or as
         a result of, this Agreement or any other Term Loan Document or any
         agreement or instrument or transaction contemplated hereby or relating
         in any respect to any Indemnified Liability, and the Company hereby
         forever waives, releases and agrees not to sue upon any claim for any
         such lost profits or special, indirect, consequential or (to the

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

                  (e)      The agreements in this Section 13.03 shall survive
         repayment of the Term Loans and all other amounts payable hereunder.

SECTION 13.04.             Set-Off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of any Event of Default each Lender is hereby authorized by
each Obligor at any time or from time to time subject to the consent of the
Administrative Agent, without prior written notice to any Obligor or to any
other Person (other than the Administrative Agent), any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by such Lender to or for the
credit or the account of any Obligor against and on account of the obligations
and liabilities of any Obligor to such Lender hereunder, and under the other
Term Loan Documents, including all claims of any nature or description arising
out of or connected hereto, or with any other Term Loan Document, irrespective
of whether or not (a) such Lender shall have made any demand hereunder or (b)
the principal of or the interest on the Term Loans or any other amounts due
hereunder shall have become due and payable pursuant to Article II and although
such obligations and liabilities, or any of them, may be contingent or
unmatured. Each Obligor hereby further grants to the Administrative Agent and
each Lender a security interest in all deposit accounts maintained with the
Administrative Agent or such Lender as security for the Term Loan Obligations.

SECTION 13.05.             Amendments and Waivers.

                  (a)      Requisite Lenders' Consent. Subject to Section
         13.05(e), no amendment, modification, termination or waiver of any
         provision of the Term Loan Documents, or consent to any departure by
         any Obligor therefrom, shall in any event be effective without the
         written concurrence of the Requisite Lenders and any additional
         consents required by Sections 13.05(b) and (c).

                  (b)      Affected Lenders' Consent. No amendment,
         modification, termination, or consent shall be effective if the effect
         thereof would:

                           (i)      extend the scheduled final maturity of any
                                    Term Loan or Term Loan Note outstanding to
                                    any Lender without the prior written consent
                                    of that Lender;

                           (ii)     waive, reduce or postpone any scheduled
                                    repayment (but not prepayment) due to any
                                    Lender without the prior written consent of
                                    that Lender;

                           (iii)    reduce the rate of interest on any Term Loan
                                    (other than any waiver of any increase in
                                    the interest rate applicable to any Term

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                                    Loan pursuant to Section 2.07) payable to
                                    any Lender or reduce or extend any fee
                                    payable hereunder to any Lender without the
                                    prior written consent of that Lender;

                           (iv)     reduce the principal amount of any Term Loan
                                    outstanding to any Lender without the prior
                                    written consent of that Lender;

                           (v)      amend, modify, terminate or waive any
                                    provision of this Section 13.05(b), as it
                                    applies to any Lender without the prior
                                    written consent of that Lender;

                           (vi)     amend the definition of "Requisite Lenders"
                                    or "Pro Rata Share"; provided, without the
                                    consent of the Requisite Lenders as set
                                    forth in Section 2.19 hereof and otherwise
                                    with the consent of the Requisite Lenders
                                    additional extensions of credit pursuant
                                    hereto may be included in the determination
                                    of "Requisite Lenders" or "Pro Rata Share"
                                    on substantially the same basis as the
                                    Initial Term Loan Commitments and the
                                    Initial Term Loans are included on the
                                    Closing Date;

                           (vii)    (x) release all or substantially all of the
                                    Collateral or all or substantially all of
                                    the Guarantors from the Guarantee under the
                                    Guarantee and Collateral Agreement without
                                    the prior written consent of all Lenders or
                                    (y) release any Collateral from the Liens
                                    created by the Security Documents except as
                                    specifically provided for in this Agreement
                                    and the Security Documents; or

                           (viii)   consent to the assignment or transfer by any
                                    Obligor of any of its rights and obligations
                                    under any Term Loan Document without the
                                    prior written consent of all Lenders.

                  (c)      Other Consents. No amendment, modification,
         termination or waiver of any provision of the Term Loan Documents, or
         consent to any departure by any Obligor therefrom, shall amend, modify,
         terminate or waive any provision of Article VIII as the same applies to
         the Administrative Agent, or any other provision hereof as the same
         applies to the rights or obligations of any Agent, in each case without
         the consent of the Administrative Agent.

                  (d)      Execution of Amendments, etc. The Administrative
         Agent may, but shall have no obligation to, with the concurrence of any
         Lender, execute amendments, modifications, waivers or consents on
         behalf of such Lender. Any waiver or consent shall be effective only in
         the specific instance and for the specific purpose for which it was
         given. No notice to or demand on any Obligor in any case shall entitle
         any Obligor to any other or further notice or demand in similar or
         other circumstances. Any amendment, modification, termination, waiver
         or consent effected in accordance with this

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         Section 13.05 shall be binding upon each Lender at the time
         outstanding, each future Lender and, if signed by a Obligor, on such
         Obligor.

                  (e)      Certain Amendments. Notwithstanding the preceding
         provisions of this Section 13.05, the Company and the Administrative
         Agent may amend or supplement the Term Loan Documents without the
         consent of any Lender:

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

                           (ii)     to provide for the assumption of the
                                    Company's obligations to the Lenders by a
                                    successor to the Company pursuant to Article
                                    V hereof;

                           (iii)    to make any change that would provide any
                                    additional rights or benefits to the Lenders
                                    or that does not adversely affect the legal
                                    rights hereunder of any Lender;

                           (iv)     to allow any Guarantor to execute a
                                    supplemental Guarantee with respect to the
                                    Term Loans;

                           (v)      to make, complete or confirm any grant of
                                    Collateral permitted or required by this
                                    Agreement or any of the Security Documents
                                    or any release of Collateral that becomes
                                    effective as set forth in this Agreement or
                                    any of the Security Documents;

                           (vi)     to conform the text of this Agreement, the
                                    Term Loan Notes or the Security Documents to
                                    any provision of the Description of the
                                    Notes section of the Offering Circular to
                                    the extent that such provision of the
                                    Description of the Notes section of the
                                    Offering Circular was intended to be a
                                    verbatim recitation of a provision of this
                                    Agreement, the Term Loan Notes or the
                                    Security Documents; or

                           (vii)    to reflect any waiver or termination of any
                                    right arising under the provisions of this
                                    Agreement that otherwise would be
                                    enforceable by any holder of the Initial
                                    Notes, if such waiver or termination is set
                                    forth in the indentures governing such
                                    Initial Notes, provided that no such waiver
                                    or amendment shall adversely affect the
                                    rights of the Lenders.

SECTION 13.06.             Successors and Assigns; Participations.

                  (a)      Generally. This Agreement shall be binding upon the
         parties hereto and their respective successors and assigns and shall
         inure to the benefit of the parties hereto and the successors and
         assigns of Lenders and the other parties hereto. No Obligor's rights or
         obligations hereunder nor any interest therein may be assigned or
         delegated by

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         any Obligor without the prior written consent of all Lenders. Nothing
         in this Agreement, expressed or implied, shall be construed to confer
         upon any Person (other than the parties hereto, their respective
         successors and assigns permitted hereby and, to the extent expressly
         contemplated hereby, Affiliates of each of the Agents and the Lenders)
         any legal or equitable right, remedy or claim under or by reason of
         this Agreement.

                  (b)      Register. The Company, the Administrative Agent and
         Lenders shall deem and treat the Persons listed as Lenders in the
         Register as the holders and owners of the corresponding Term Loan
         Commitments and Term Loans listed therein for all purposes hereof, and
         no assignment or transfer of any such Term Loan Commitment or Term Loan
         shall be effective, in each case, unless and until an Assignment
         Agreement effecting the assignment or transfer thereof shall have been
         delivered to and accepted by the Administrative Agent and recorded in
         the Register as provided in Section 13.06(e). Prior to such
         recordation, all amounts owed with respect to the applicable Term Loan
         Commitment or Term Loan shall be owed to the Lender listed in the
         Register as the owner thereof, and any request, authority or consent of
         any Person who, at the time of making such request or giving such
         authority or consent, is listed in the Register as a Lender shall be
         conclusive and binding on any subsequent holder, assignee or transferee
         of the corresponding Term Loan Commitments or Term Loans.

                  (c)      Right to Assign. Each Lender shall have the right at
         any time to sell, assign or transfer all or a portion of its rights and
         obligations under this Agreement, including, without limitation, all or
         a portion of its Term Loan Commitment or Term Loans owing to it or
         other Term Loan Obligation (provided, however, that each such
         assignment shall be of a uniform, and not varying, percentage of all
         rights and obligations under and in respect of any Term Loan and any
         related Term Loan Commitments):

                           (i)      to any Person meeting the criteria of clause
                                    (i) of the definition of the term of
                                    "Eligible Assignee" upon the giving of
                                    notice to the Company and the Administrative
                                    Agent; and

                           (ii)     to any Person meeting the criteria of clause
                                    (ii) of the definition of the term of
                                    "Eligible Assignee";

provided, further each such assignment pursuant to this Section 13.06(c) shall
be in an aggregate amount of not less than $1,000,000 (or such lesser amount as
may be agreed to by the Company and the Administrative Agent or as shall
constitute the aggregate amount of the Term Loan Commitments and Term Loans
outstanding to the assigning Lender).

                  (d)      Mechanics. The assigning Lender and the assignee
         thereof shall execute and deliver to the Administrative Agent an
         Assignment Agreement, together with such forms, certificates or other
         evidence, if any, with respect to United States federal income tax
         withholding matters as the assignee under such Assignment Agreement may
         be required to deliver to the Administrative Agent pursuant to Section
         2.17(c).

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                  (e)      Notice of Assignment. Upon its receipt of a duly
         executed and completed Assignment Agreement (and any forms,
         certificates or other evidence required by this Agreement in connection
         therewith), the Administrative Agent shall record the information
         contained in such Assignment Agreement in the Register, shall give
         prompt notice thereof to the Company and shall maintain a copy of such
         Assignment Agreement.

                  (f)      Representations and Warranties of Assignee. Each
         Lender, upon execution and delivery hereof or upon executing and
         delivering an Assignment Agreement, as the case may be, represents and
         warrants as of the Closing Date or as of the applicable Effective Date
         (as defined in the applicable Assignment Agreement) that (i) it is an
         Eligible Assignee; (ii) it has experience and expertise in the making
         of or investing in commitments or loans such as the applicable Term
         Loan Commitments or Term Loans, as the case may be; and (iii) it shall
         make or invest in, as the case may be, its Term Loan Commitments or
         Term Loans for its own account in the ordinary course of its business
         and without a view to distribution of such Term Loan Commitments or
         Term Loans within the meaning of the Securities Act or the Exchange Act
         or other federal securities laws (it being understood that, subject to
         the provisions of this Section 13.06, the disposition of such Term Loan
         Commitments or Term Loans or any interests therein shall at all times
         remain within its exclusive control).

                  (g)      Effect of Assignment. Subject to the terms and
         conditions of this Section 13.06, as of the "Effective Date" specified
         in the applicable Assignment Agreement:

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                           (i)      the assignee thereunder shall have the
                                    rights and obligations of a "Lender"
                                    hereunder to the extent such rights and
                                    obligations hereunder have been assigned to
                                    it pursuant to such Assignment Agreement and
                                    shall thereafter be a party hereto and a
                                    "Lender" for all purposes hereof;

                           (ii)     the assigning Lender thereunder shall, to
                                    the extent that rights and obligations
                                    hereunder have been assigned thereby
                                    pursuant to such Assignment Agreement,
                                    relinquish its rights (other than any rights
                                    which survive the termination hereof under
                                    Section 13.08 and be released from its
                                    obligations hereunder (and, in the case of
                                    an Assignment Agreement covering all or the
                                    remaining portion of an assigning Lender's
                                    rights and obligations hereunder, such
                                    Lender shall cease to be a party hereto;
                                    provided, anything contained in any of the
                                    Term Loan Documents to the contrary
                                    notwithstanding, such assigning Lender shall
                                    continue to be entitled to the benefit of
                                    all indemnities hereunder as specified
                                    herein with respect to matters arising out
                                    of the prior involvement of such assigning
                                    Lender as a Lender hereunder);

                           (iii)    the Term Loan Commitments shall be modified
                                    to reflect the Term Loan Commitment of such
                                    assignee; and

                           (iv)     if any such assignment occurs after the
                                    issuance of any Term Loan Note hereunder,
                                    the assigning Lender shall, upon the
                                    effectiveness of such assignment or as
                                    promptly thereafter as practicable,
                                    surrender its applicable Term Loan Notes to
                                    the Administrative Agent for cancellation,
                                    and thereupon the Company shall issue and
                                    deliver new Term Loan Notes, if so requested
                                    by the assignee and/or assigning Lender, to
                                    such assignee and/or to such assigning
                                    Lender, with appropriate insertions, to
                                    reflect the new outstanding Term Loans of
                                    the assignee and/or the assigning Lender.

                  (h)      Participations. Each Lender shall have the right at
         any time to sell one or more participations to any Person (other than
         the Company, any of its Restricted Subsidiaries or any of its
         Affiliates) in all or any part of its Term Loan Commitments, Term Loans
         or in any other Term Loan Obligation. The holder of any such
         participation, other than an Affiliate of the Lender granting such
         participation, shall not be entitled to require such Lender to take or
         omit to take any action hereunder except with respect to any amendment,
         modification or waiver that would:

                           (i)      extend the final scheduled maturity of any
                                    Term Loan or Term Loan Note in which such
                                    participant is participating, or reduce the
                                    rate or extend the time of payment of
                                    interest or fees thereon (except in
                                    connection with a waiver of applicability of
                                    any post-

                                      122

<PAGE>

                                    default increase in interest rates) or
                                    reduce the principal amount thereof, or
                                    increase the amount of the participant's
                                    participation over the amount thereof then
                                    in effect (it being understood that a waiver
                                    of any Default or Event of Default or of a
                                    mandatory reduction in the Term Loan
                                    Commitment shall not constitute a change in
                                    the terms of such participation, and that an
                                    increase in any Term Loan Commitment or Term
                                    Loan shall be permitted without the consent
                                    of any participant if the participant's
                                    participation is not increased as a result
                                    thereof);

                           (ii)     consent to the assignment or transfer by any
                                    Obligor of any of its rights and obligations
                                    under this Agreement; or

                           (iii)    release all or substantially all of the
                                    Collateral under the Security Documents
                                    (except as expressly provided in the Term
                                    Loan Documents) supporting the Term Loans
                                    hereunder in which such participant is
                                    participating.

The Company agrees that each participant shall be entitled to the benefits of
Sections 2.15(c), 2.16 and 2.17 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to paragraph (c) of this
Section; provided, (i) a participant shall not be entitled to receive any
greater payment under Section 2.16 or 2.17 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 Company's prior written consent and (ii) a participant that would be a
Non-US Lender if it were a Lender shall not be entitled to the benefits of
Section 2.17 unless the Company is notified of the participation sold to such
participant and such participant agrees, for the benefit of the Company, to
comply with Section 2.17 as though it were a Lender. To the extent permitted by
law, each participant also shall be entitled to the benefits of Section 13.04 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.14 as though it were a Lender.

                  (i)      Certain Other Assignments. In addition to any other
         assignment permitted pursuant to this Section 13.06, any Lender may
         assign and/or pledge all or any portion of its Term Loans, the other
         Term Loan Obligations owed by or to such Lender, and its Term Loan
         Notes, if any, to secure obligations of such Lender including, without
         limitation, (i) to any Federal Reserve Bank as collateral security
         pursuant to Regulation A of the Board of Governors of the Federal
         Reserve System and any operating circular issued by such Federal
         Reserve Bank and (ii) with respect to any Lender that is a fund that
         invests in bank loans, to any trustee or holder of obligations owed, or
         securities issued by, such fund as security for such obligations or
         securities or to any other representative of such holders; provided, no
         Lender, as between the Company and such Lender, shall be relieved of
         any of its obligations hereunder as a result of any such assignment and
         pledge, and provided further, in no event shall the applicable Federal
         Reserve Bank, trustee or such holder of obligations be considered to be
         a "Lender" or be entitled to require the assigning Lender to take or
         omit to take any action hereunder.

                                      123

<PAGE>

                  (j)      Delivery of Lender Addenda. Each initial Lender shall
         become a party to this Agreement by delivering to the Administrative
         Agent a Lender Addendum duly executed by such Lender, the Borrower and
         the Administrative Agent.

SECTION 13.07.             Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or would otherwise be within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.

SECTION 13.08.             Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements made herein shall
survive the execution and delivery hereof and the making of any Term Loan.
Notwithstanding anything herein or implied by law to the contrary, the
agreements of each Obligor set forth in Sections 2.15(c), 2.16, 2.17, 13.02,
13.03, 13.04, 13.15, 13.16 and 13.17 and the agreements of Lenders set forth in
Sections 2.14, 8.03(b) and 8.06 shall survive the payment of the Term Loans and
the termination hereof.

SECTION 13.09.             No Waiver; Remedies Cumulative. No failure or delay
on the part of any Agent or any Lender in the exercise of any power, right or
privilege hereunder or under any other Term Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege. The rights, powers and remedies given to each
Agent and each Lender hereby are cumulative and shall be in addition to and
independent of all rights, powers and remedies existing by virtue of any statute
or rule of law or in any of the other Term Loan Documents. Any forbearance or
failure to exercise, and any delay in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be
a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.

SECTION 13.10.             Marshalling; Payments Set Aside. Neither any Agent
nor any Lender shall be under any obligation to marshal any assets in favor of
any Obligor or any other Person or against or in payment of any or all of the
Term Loan Obligations. To the extent that any Obligor makes a payment or
payments to the Administrative Agent or Lenders (or to the Administrative Agent,
on behalf of Lenders), or the Administrative Agent or Lenders enforce any
security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.

SECTION 13.11.             Severability. In case any provision in or obligation
under any Term Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and

                                      124

<PAGE>

enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

SECTION 13.12.             Term Loan Obligations Several; Independent Nature of
Lenders' Rights. The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Term Loan Commitment of any other
Lender hereunder. Nothing contained herein or in any other Term Loan Document,
and no action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out hereof and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.

SECTION 13.13.             Headings. Section headings herein are included
herein for convenience of reference only and shall not constitute a part hereof
for any other purpose or be given any substantive effect.

SECTION 13.14.             Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of New York
without regard to conflict of laws principles thereof.

SECTION 13.15.             Consent to Jurisdiction. All judicial proceedings
brought against any party hereto arising out of or relating hereto or any other
Term Loan Document, or any of the Term Loan Obligations, may be brought in any
state or federal court of competent jurisdiction in the State, County and City
of New York. By executing and delivering this agreement, each party hereto, for
itself and in connection with its properties, irrevocably (a) accepts generally
and unconditionally the nonexclusive jurisdiction and venue of such courts; (b)
waives any defense of forum non conveniens; (c) agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to the applicable Obligor at its
address provided in accordance with Section 13.01; (d) agrees that service as
provided in clause (c) above is sufficient to confer personal jurisdiction over
the applicable Obligor in any such proceeding in any such court, and otherwise
constitutes effective and binding service in every respect; and (e) agrees
Agents and Lenders retain the right to serve process in any other manner
permitted by law or to bring proceedings against any Obligor in the courts of
any other jurisdiction.

SECTION 13.16.             Waiver Of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER TERM
LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT

                                      125

<PAGE>

CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER
IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS
WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 13.16 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER TERM LOAN DOCUMENTS OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

SECTION 13.17.             Confidentiality. Each Lender shall hold all non-
public information regarding the Company and its business identified as such by
the Company and obtained by such Lender pursuant to the requirements hereof in
accordance with such Lender's customary procedures for handling confidential
information of such nature, it being understood and agreed by the Company that,
in any event, a Lender may make:

                  (i)      disclosures of such information to Affiliates of such
                           Lender and to their agents and advisors (and to other
                           Persons authorized by a Lender or Agent to organize,
                           present or disseminate such information in connection
                           with disclosures otherwise made in accordance with
                           this Section 13.17);

                  (ii)     disclosures of such information reasonably required
                           by any bona fide or potential assignee, transferee or
                           participant in connection with the contemplated
                           assignment, transfer or participation by such Lender
                           of any Term Loans or any participations therein or by
                           any direct or indirect contractual counterparties (or
                           the professional advisors thereto) in Commodity Hedge
                           Agreements and Financial Hedge Agreements (provided,
                           such assignee, transferee, participant,
                           counterparties and advisors are advised of and agree
                           to be bound by the provisions of this Section 13.17);

                  (iii)    disclosure to any rating agency when required by it,
                           provided that, prior to any disclosure, such rating
                           agency shall undertake in writing to preserve the
                           confidentiality of any confidential

                                      126

<PAGE>

                           information relating to the Obligors received by it
                           from any of the Agents or any Lender, and

                  (iv)     disclosures required or requested by any governmental
                           agency or representative thereof or by the NAIC or
                           pursuant to legal or judicial process; provided,
                           unless specifically prohibited by applicable law or
                           court order, each Lender shall make reasonable
                           efforts to notify the Company of any request by any
                           governmental agency or representative thereof (other
                           than any such request in connection with any
                           examination of the financial condition or other
                           routine examination of such Lender by such
                           governmental agency) for disclosure of any such
                           non-public information prior to disclosure of such
                           information.

Notwithstanding anything to the contrary set forth herein or in any other
written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, the parties acknowledge and agree that (i)
any obligations of confidentiality contained herein and therein do not apply and
have not applied from the commencement of discussions between the parties to the
tax treatment and tax structure of this Agreement, the Indentures, the Credit
Agreement and the transactions contemplated hereby or thereby (and any related
transactions or arrangements), and (ii) each party (and each of its employees,
representatives, or other agents) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of this Agreement,
the Indentures, the Credit Agreement and the transactions contemplated hereby or
thereby and all materials of any kind (including opinions or other tax analyses)
that are provided to such party relating to such tax treatment and tax
structure, all within the meaning of Treasury Regulations Section 1.6011-4;
provided, however, that each party recognizes that the privilege each has to
maintain, in its sole discretion, the confidentiality of a communication
relating to this Agreement, the Indentures, the Credit Agreement and the
transactions contemplated hereby or thereby, including a confidential
communication with its attorney or a confidential communication with a federally
authorized tax practitioner under Section 7525 of the Code, is not intended to
be affected by the foregoing.

SECTION 13.18.             Usury Savings Clause. Notwithstanding any other
provision herein, the aggregate interest rate charged with respect to any of the
Term Loan Obligations, including all charges or fees in connection therewith
deemed in the nature of interest under applicable law shall not exceed the
Highest Lawful Rate. If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate, the outstanding amount of the Term Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the Term Loans made hereunder are repaid in full
the total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the Company shall pay
to the Administrative Agent an amount equal to the difference between the amount
of interest paid and the amount of interest which would have been paid if the
Highest Lawful Rate

                                      127

<PAGE>

had at all times been in effect. Notwithstanding the foregoing, it is the
intention of Lenders and the Company to conform strictly to any applicable usury
laws. Accordingly, if any Lender contracts for, charges, or receives any
consideration which constitutes interest in excess of the Highest Lawful Rate,
then any such excess shall be cancelled automatically and, if previously paid,
shall at such Lender's option be applied to the outstanding amount of the Term
Loans made hereunder or be refunded to the Company.

SECTION 13.19.             Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. The delivery of an executed signature page of this
Agreement, or any Joinder Agreement in connection herewith, by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.

SECTION 13.20.             Effectiveness. This Agreement shall become effective
upon the execution of a counterpart hereof by each of the parties hereto and
receipt by the Company and the Administrative Agent of written or telephonic
notification of such execution and authorization of delivery thereof.

SECTION 13.21.             Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement must include:

                           (i)      a statement that the Person making such
                                    certificate or opinion has read such
                                    covenant or condition;

                           (ii)     a brief statement as to the nature and scope
                                    of the examination or investigation upon
                                    which the statements or opinions contained
                                    in such certificate or opinion are based;

                           (iii)    a statement that, in the opinion of such
                                    Person, he or she has made such examination
                                    or investigation as is necessary to enable
                                    him or her to express an informed opinion as
                                    to whether or not such covenant or condition
                                    has been satisfied; and

                           (iv)     a statement as to whether or not, in the
                                    opinion of such Person, such condition or
                                    covenant has been satisfied.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      128

<PAGE>

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

                                  CALPINE CORPORATION

                                  By:  /s/ Michael Thomas
                                       -------------------------
                                       Name:  Michael Thomas
                                       Title:  SVP and Treasurer

                                      S-1

<PAGE>

                                  GOLDMAN SACHS CREDIT PARTNERS L.P.,
                                  as Administrative Agent, Sole Lead Arranger
                                  and a Lender

                                  By: /s/ RT Wagner
                                      ---------------------------------------
                                             Authorized Signatory

                                             ROBERT WAGNER
                                             Authorized Signatory

                                      S-2

<PAGE>

                                                                      APPENDIX A
                                                          TO TERM LOAN AGREEMENT

                          INITIAL TERM LOAN COMMITMENTS

<TABLE>
<CAPTION>
===========================================================================================
                                                                                    Pro
            Lender                            Term Loan Commitment               Rata Share
===========================================================================================
<S>                                           <C>                                <C>
Goldman Sachs Credit Partners L.P.                $750,000,000.00                  100%
-------------------------------------------------------------------------------------------
Total                                             $750,000,000.00                  100%
===========================================================================================
</TABLE>

<PAGE>

                                                                      APPENDIX B
                                                          to Term Loan Agreement

                                NOTICE ADDRESSES

Administrative Agent's
Principal Office:                           Goldman Sachs Credit Partners L.P.
                                            85 Broad Street
                                            New York, NY 10004
                                            Attention: Pedro Ramirez

Sole Lead Arranger:                         Goldman Sachs Credit Partners L.P.
                                            85 Broad Street
                                            New York, NY 10004
                                            Attention: Pedro Ramirez

Obligors:                                   Calpine Corporation
                                            50 West San Fernando Street
                                            San Jose, CA 95113
                                            Attention: General Counsel

Collateral Trustee:                         The Bank of New York
                                            101 Barclay Street
                                            Floor 8 West
                                            New York, NY 10286
                                            Attention: Corporate Trust
                                            Administration

                                       4

<PAGE>

                                                                SCHEDULE 1.01(a)

                              MORTGAGED PROPERTIES

                                       5

<PAGE>

                                                                SCHEDULE 1.01(b)

                              PLEDGED SUBSIDIARIES

                                       6

<PAGE>

                                                                SCHEDULE 4.01(c)

                              CAPITAL STOCK MATTERS

                                       7

<PAGE>

                                                               SCHEDULE 4.01(aa)

                    SUBSIDIARY COMPANIES OF HOLDING COMPANIES

                                       8

<PAGE>

                                                               SCHEDULE 4.01(cc)

                     FIRST-TIER PUBLIC UTILITY SUBSIDIARIES

                                       9

<PAGE>

                                                               SCHEDULE 4.01(dd)

                           EXEMPT WHOLESALE GENERATORS

                                       10

<PAGE>

                                                               SCHEDULE 4.01(ee)

                        TEXAS RETAIL SERVICE SUBSIDIARIES

                                       11

<PAGE>

                                                               SCHEDULE 4.01(hh)

                           RETAIL SERVICE SUBSIDIARIES

                                       12

<PAGE>

                                                               SCHEDULE 4.01(ii)

                                 FERC COMPLAINTS

                                       13

<PAGE>

                                                                       EXHIBIT A
                                                      TO THE TERM LOAN AGREEMENT

                                     FORM OF
                              ASSIGNMENT AGREEMENT

                                                          Date: _______ __, ____

Goldman Sachs Credit Partners L.P.,
as the Administrative Agent
85 Broad Street
New York, New York 10004
Attention: Pedro Ramirez

Calpine Corporation
50 West San Fernando Avenue
San Jose, CA 95113
Attention: Senior Vice President-Finance

Re: Assignment Agreement

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of July 16, 2003 (as
amended, supplemented, replaced or otherwise modified from time to time, the
"Term Loan Agreement"), among Calpine Corporation, a Delaware corporation (the
"Company"), the lenders from time to time parties thereto, Goldman Sachs Credit
Partners L.P., as sole lead arranger and solebook runner, and Goldman Sachs
Credit Partners L.P., as administrative agent. Unless otherwise defined herein,
terms defined in the Term Loan Agreement and used herein shall have the meanings
given to them in the Term Loan Agreement.

As of [INSERT EFFECTIVE DATE OF ASSIGNMENT] (the "Effective Date"), [INSERT NAME
OF ASSIGNOR] (the "Assignor") irrevocably sells, transfers, conveys and assigns,
without recourse, representation or warranty (except as expressly set forth
herein), to [INSERT NAME OF ASSIGNEE] (the "Assignee"), and the Assignee
irrevocably purchases from the Assignor and assumes (as more particularly
described in Schedule I hereto), [INSERT PERCENTAGE OF TERM LOANS TO BE
ASSIGNED]% of (a) the Term Loans under the Term Loan Agreement and (b) all
related rights,

                                       14

<PAGE>

benefits, obligations, liabilities, and indemnities under and in connection with
the Term Loan Agreement and the other Term Loan Documents (the "Assigned
Portion") (which represents $[INSERT AMOUNT TO BE ASSIGNED WHICH AGGREGATE
AMOUNT MUST BE NOT LESS THAN $1,000,000] (OR SUCH LESSER AMOUNT AS SHALL BE
AGREED BY THE COMPANY AND THE ADMINISTRATIVE AGENT OR AS SHALL CONSTITUTE THE
AGGREGATE AMOUNT OF THE ASSIGNOR'S TERM LOANS AND OTHER OBLIGATIONS OWED TO THE
ASSIGNOR)]). After giving effect to the foregoing assignment and delegation, the
Assignor's and the Assignee's outstanding Term Loans for the purposes of the
Term Loan Agreement and each other Term Loan Document will be as set forth in
Schedule I hereto.

In addition, this Agreement constitutes notice to the Administrative Agent,
pursuant to Section 13.06 of the Term Loan Agreement, of the assignment and
delegation to the Assignee of the Assigned Portion of the Term Loans of the
Assignor outstanding under the Term Loan Agreement as of the Effective Date,
subject to its written consents (as evidenced by your execution of this
Agreement).

All accrued and unpaid interest, fees and other amounts payable with respect to
the Assigned Portion for any period of time prior to the Effective Date shall be
payable to the Assignor, and all accrued and unpaid interest, fees and other
amounts payable with respect to the Assigned Portion for any period from and
after the Effective Date shall be payable to the Assignee. The Assignor and
Assignee each agree to hold in trust for the other any such amounts that it
receives pursuant to any Term Loan Document and to which the other party is
entitled.

The Assignee confirms and agrees that in becoming a Lender and in making its
Term Loans under the Term Loan Agreement, such actions have and will be made
without recourse to, or representation or warranty by, the Administrative Agent,
except for the representations expressly set forth below.

The Assignor represents and warrants that it is legally authorized to enter into
and deliver this Agreement, that its existing aggregate Term Loans is as set
forth on Schedule I hereto, that it is the legal and beneficial owner of the
Assigned Portion and that it has not created any adverse claim on its interest
in the Assigned Portion. Except as set forth in the previous sentence, the
Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made pursuant to or in
connection with this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the Term
Loan Agreement, any other Term Loan Document or any other instrument or document
furnished pursuant hereto or thereto, including the financial condition of the
Company or any of their Subsidiaries or the performance or observance by any
Lender or any of the Agents of any of its obligations under the Term Loan
Agreement, any other Term Loan Document or any other instrument or document
furnished pursuant hereto or thereto.

The Assignee (a) represents and warrants that (i) it is an Eligible Assignee and
that it is legally authorized to enter into and deliver this Agreement, (ii) it
has experience and expertise in the making of or investing in commitments or
loans such as the applicable Term Loan Commitments

                                       15

<PAGE>

or Term Loans, as the case may be and (iii) it will make or invest in, as the
case may be, its Term Loan Commitments or Term Loans for its own account in the
ordinary course of business and without a view to the distribution of such Term
Loan Commitments or Term Loans within the meaning of the Securities Act or the
Exchange Act or other federal securities laws, (b) confirms that it has received
a copy of the Term Loan Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.03 of the Term Loan
Agreement and copies of the documents which were required to be delivered under
the Term Loan Agreement as a condition to the making of Term Loans thereunder
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Agreement, (c) agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Term Loan Agreement and the other Term Loan Documents are
required to be performed by it as a Lender, and (d) attaches the forms
prescribed by applicable Governmental Authorities as to the Assignee's status
for purposes of determining exemption from withholding taxes with respect to all
payments to be made to the Assignee under any of the Term Loan Documents or such
other documents as are necessary to indicate that all such payments are subject
to such rates at a rate reduced by an applicable tax treaty. In addition, the
Assignee, independently and without reliance upon the Assignor, the
Administrative Agent, any other Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, shall
continue to make its own credit decisions in taking or not taking action under
the Term Loan Agreement, the other Term Loan Documents and the other instruments
and documents delivered in connection therewith.

Following the execution of this Agreement, it will be delivered to the
Administrative Agent for recording by the Administrative Agent pursuant to
Section 13.06 of the Term Loan Agreement, effective as of the Effective Date.
The Assignor attaches hereto the Term Note held by it, if any, evidencing the
Assigned Portion and (i) upon request by the Assignee, will request that the
Administrative Agent exchange the attached Note for a new Note payable to the
Assignee and (ii) if the Assignor has retained any interest, may request that
the Administrative Agent exchange the attached Note for a new Note payable to
the Assignor, in each case in amounts which reflect the assignment being made
hereby and after giving effect to any other assignments which have become
effective on the Effective Date.

Except as otherwise provided in the Term Loan Agreement, effective as of the
Effective Date:

         (a)      the Assignee:

                  (i)      shall be deemed automatically to have become a party
to the Term Loan Agreement, have all the rights and obligations of a "Lender"
under the Term Loan Agreement and the other Term Loan Documents as if it were an
original signatory thereto to the extent specified in the second paragraph of
this Agreement, and hereby expressly confirms its undertakings regarding its
appointments and indemnity obligations provided for in Article XIII of the Term
Loan Agreement; and

                  (ii)     agrees to be bound by the terms and conditions set
forth in the Term Loan Agreement and the other Term Loan Documents as if it were
an original signatory thereto; and

                                       16

<PAGE>

         (b)      the Assignor shall be released from its obligations and shall
     relinquish its rights under the Term Loan Agreement and the other Term Loan
     Documents to the extent specified in the second paragraph of this
     Agreement, except with regard to those provisions that expressly survive
     the termination of the Term Loan Agreement to the extent such provisions
     relate to the time prior to the Effective Date.

The Assignee hereby advises each of you of the following administrative details
with respect to the assigned Term Loan Commitments and Term Loans:

         (A)      Address                       for              Notices:
                  -------------------------------------------------------

         Institution                                               Name:
         Attention:
         Domestic                                                  Office:
         Telephone:
         Facsimile:

(B)      Payment Instructions:

The Assignee has attached hereto the forms, certificates or other evidence
required by Section 2.17(c) of the Term Loan Agreement no later than the date of
acceptance hereof by the Administrative Agent. The Assignee has also attached
hereto any powers of attorney or other public or private documents requested by
the Collateral Agent which are necessary to enable the Collateral Agent to
enforce any of the Security Documents on behalf of the Secured Parties.

The Administrative Agent shall notify the Company of any such assignments.

This Agreement may be executed by the Assignor and Assignee in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same agreement. The delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. The parties hereto hereby agree to execute and deliver such
other documents or instruments as shall be necessary to effect the purposes of
this Agreement.

This agreement shall be governed by the laws of the state of New York without
regard to the conflicts of law provisions thereof, other than sections 5-1401
and 5-1402 of the General Obligations Law of the State of New York.

                            (Signature Page Follows)

                                       17

<PAGE>

IN WITNESS WHEREOF, each of the undersigned has executed and delivered this
Assignment and Acceptance Agreement as of the date first written above.

                            [INSERT NAME OF ASSIGNOR]

                            By:____________________________
                               Name:
                               Title:

                            [INSERT NAME OF ASSIGNEE]

                             By:___________________
                                Name:
                                Title:

Accepted and acknowledged
for recording in the Register
this ____ day of ________, ___

                                      S-1

<PAGE>

[INCLUDE THE FOLLOWING ACKNOWLEDGEMENTS AND AGREEMENTS IN RESPECT OF ASSIGNMENTS
FOR LESS THAN $1,000,000 IF SUCH ASSIGNMENT IS FOR AN AMOUNT DOES NOT CONSTITUTE
THE AGGREGATE AMOUNT OF THE TERM LOAN COMMITMENTS AND TERM LOANS OUTSTANDING TO
THE ASSIGNING LENDER]

Acknowledged and Agreed

GOLDMAN SACHS CREDIT PARTNERS L.P.

By: __________________________________
         Name:
         Title:

CALPINE CORPORATION

By: __________________________________

         Name:
         Title:

<PAGE>

                                                                      SCHEDULE I
                                                         to Assignment Agreement

<TABLE>
<S>                                                                                           <C>
A.  Assigned Portion:

    Term Loans and Applicable Percentage with respect thereto                                 $________
                                                                                               ________%
B.  Assignor's Adjusted Total Term Loans (after giving effect to the assignment
    contemplated hereby):

    Term Loans and Applicable Percentage with respect thereto                                 $________
                                                                                               ________%

C.  Assignee's Adjusted Total Term Loans (after giving effect to the assignment
    contemplated hereby):

    Term Loans and Applicable Percentage with respect thereto                                 $________
                                                                                               ________%
</TABLE>

                                       3

<PAGE>

                                                                       EXHIBIT B
                                                      to the Term Loan Agreement

                          [LETTERHEAD OF NON-US LENDER]

                     FORM OF CERTIFICATE RE: NON-BANK STATUS

                                              Certificate Date: _______ __, ____

Goldman Sachs Credit Partners L.P.
as the Administrative Agent
85 Broad Street
New York, New York 10004
Attention: Pedro Ramirez

Re: Non-Bank Status

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of July 16, 2003 (as
amended, supplemented, replaced or otherwise modified from time to time, the
"Term Loan Agreement"), by and among Calpine Corporation, a Delaware corporation
(the "Company"), the Lenders party hereto from time to time, Goldman Sachs
Credit Partners L.P., as sole lead arranger and sole bookrunner, and Goldman
Sachs Credit Partners L.P., as Administrative Agent (together with its
successors in such capacity, the "Administrative Agent). Unless otherwise
defined herein, terms defined in the Term Loan Agreement and used herein shall
have the meanings given to them in the Term Loan Agreement.

[INSERT NAME OF NON-U.S. LENDER] (the "Non-U.S. Lender") is providing this
certificate pursuant to Section 2.17(c) of the Term Loan Agreement. The Non-U.S.
Lender hereby represents and warrants as follows:

                  (c)      The Non-U.S. Lender is the sole record and beneficial
         owner of the Term Loans or the obligations evidenced by Term Loan Note
         in respect of which it is providing this certificate.

                  (d)      The Non-U.S. Lender is not a "bank" for purposes of
         Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended
         (the "Code"). In this regard, the Non-U.S. Lender further represents
         and warrants that:

         (1) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and

                                       4

<PAGE>

         (2) the Non-U.S. Lender has not been treated as a bank for purposes of
any tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements.

                  (e)      The Non-U.S. Lender is not a 10 percent shareholder
         of the Company within the meaning of Section 881(c)(3)(B) of the Code.

                  (f)      The Non-U.S. Lender is not a controlled foreign
         corporation receiving interest from a related person within the meaning
         of Section 881(c) (3)(C) of the Code.

                            (Signature Page Follows)

                                       5

<PAGE>

IN WITNESS WHEREOF, the undersigned has duly executed this certificate by its
respective authorized representative as of the day and year first above written.

                           [INSERT NAME OF NON-U.S. LENDER]

                           By: ________________________________________________
                               Name:
                               Title:

<PAGE>

                                                                       EXHIBIT C
                                                      to the Term Loan Agreement

                             [LETTERHEAD OF COMPANY]

                                     FORM OF
                         CONVERSION/CONTINUATION NOTICE

                                                            Date: _____ __, ____

Goldman Sachs Credit Partners L.P.
as the Administrative Agent
85 Broad Street
New York, New York 10004
Attention: Pedro Ramirez

Re: Conversion/Continuation Notice

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of July 16, 2003 (as
amended, supplemented, replaced or otherwise modified from time to time, the
"Term Loan Agreement"), by and among Calpine Corporation, a Delaware corporation
(the "Company"), the Lenders party hereto from time to time, Goldman Sachs
Credit Partners L.P., as sole lead arranger and sole bookrunner, and Goldman
Sachs Credit Partners L.P., as administrative agent (together with its
successors in such capacity, the "Administrative Agent"). Unless otherwise
defined herein, terms defined in the Term Loan Agreement and used herein shall
have the meanings given to them in the Term Loan Agreement.

 The Company hereby gives you notice, irrevocably, pursuant to Section 2.06 of
the Term Loan Agreement, that the Borrower hereby requests a [CONVERSION]
[CONTINUATION] of Term Loans under the Term Loan Agreement and, in connection
therewith, sets forth below the information relating to such [CONVERSION]
[CONTINUATION] (the "Proposed [Conversion][Continuation]") as required by
Section 2.06 of the Term Loan Agreement. The Borrower hereby requests that Term
Loans be [CONVERTED] [CONTINUED] as follows:

                  (i)      The effective date of the proposed
[CONVERSION][CONTINUATION] is ______, _______ (which is a Business Day). (ii)
$___________ of the currently outstanding principal amount of Term Loans
currently being maintained as Eurodollar Rate Loans with an Interest Period of
__________ month(s), the last day of which is the date of the Proposed
Conversion/Continuation referred to in clause (i) above, should be:

                                       2

<PAGE>

                           (A)      continued as $__________ of Eurodollar Rate
                  Loans with an Interest Period of ________ month(s); and

                           (B)      converted into $__________ of Base Rate
                  Loans.

         (iii)    $__________ of the currently outstanding principal amount of
         Term Loans currently being maintained as Base Rate Loans should be:

                           (A)      continued as $__________ of Base Rate Loans;

                           (B)      converted into $_________ of Eurodollar Rate
                  Loans with an Interest Period of ________ month(s); and

                           (C)      converted into $__________ of Eurodollar
                  Rate Loans with an Interest Period of _______ month(s).

[(b) [INCLUDE THE FOLLOWING IF THE PROPOSED CONVERSION OR CONTINUATION IS A
CONVERSION TO, OR A CONTINUATION OF, A EURODOLLAR RATE LOAN] The Company hereby
certifies that, as of the date hereof, no Default or Event of Default has
occurred or is continuing.]

                            (Signature Page Follows)

                                       3

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Continuation/Conversion Notice
to be executed and delivered by an Officer of the Company on the date first
written above.

CALPINE CORPORATION

By:
Name:
Title:

                                       1

<PAGE>

                                                                       EXHIBIT D
                                                      to the Term Loan Agreement

                           [LETTERHEAD OF THE COMPANY]

                                     FORM OF
                                 FUNDING NOTICE

                                              Certificate Date: _______ __, ____

Goldman Sachs Credit Partners L.P.
as the Administrative Agent
85 Broad Street
New York, New York 10004
Attention: Pedro Ramirez

Re: Funding Notice

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of July 16, 2003 (as
amended, supplemented, replaced or otherwise modified from time to time, the
"Term Loan Agreement"), by and among Calpine Corporation, a Delaware corporation
(the "Company"), the Lenders party hereto from time to time, Goldman Sachs
Credit Partners L.P., as Administrative Agent (together with its successors in
such capacity, the "Administrative Agent") and as Sole Lead Arranger and Sole
Bookrunner, The Bank of Nova Scotia, as Arranger and Syndication Agent, TD
Securities (USA) Inc., ING (U.S.) Capital LLC and Landesbank Hessen-Thuringen,
as Co-Arrangers, and Credit Lyonnaise New York Branch and Union Bank of
California, N.A., as Managing Agents. Unless otherwise defined herein, terms
defined in the Term Loan Agreement and used herein shall have the meanings given
to them in the Term Loan Agreement.

         The Company hereby gives you notice in accordance with Section 2.01 of
the Credit Agreement that the Company irrevocably requests that the following
Term Loans be made on July __, 2003 (which date satisfies the requirements set
forth in Section 2.01 of the Credit Agreement), in each case, as described
below:

         (a)      The Company hereby requests that a Term Loan be made in an
         aggregate principal amount of [$_________] with an initial Interest
         Period of [____] months.

         [(b)     The Company hereby requests that a Term Loan be made in an
         aggregate principal amount of [$_________] with an initial Interest
         Period of [____] months.]

                            (Signature Page Follows)

                                       2

<PAGE>

         IN WITNESS WHEREOF, on behalf of the Company, this certificate is
delivered as of the date first above written.

                                  CALPINE CORPORATION

                                  By: __________________________________________
                                      Name:
                                      Title:

                                       3

<PAGE>

                                                                       EXHIBIT E
                                                      to the Term Loan Agreement

                              [INSERT LENDER NAME]

                                 LENDER ADDENDUM

Reference is made to the Credit Agreement, dated as of July 16, 2003 (as
amended, supplemented, replaced or otherwise modified from time to time, the
"Term Loan Agreement"), among Calpine Corporation, a Delaware corporation, the
Lenders party hereto from time to time, Goldman Sachs Credit Partners L.P., as
sole lead arranger and sole bookrunner, and Goldman Sachs Credit Partners L.P.,
as administrative agent. Unless otherwise defined herein, terms defined in the
Term Loan Agreement and used herein shall have the meanings given to them in the
Term Loan Agreement.

Upon execution and delivery of this Lender Addendum by the parties hereto as
provided in Section 13.06(j) of the Term Loan Agreement, the undersigned hereby
becomes a Lender thereunder having the Commitments set forth in Schedule 1
hereto, effective as of the Closing Date.

This Lender Addendum shall be governed by, and construed and interpreted in
accordance with, the laws of the state of New York.

This Lender Addendum may be executed by one or more of the parties hereto on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an
executed signature page hereof by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.

(Signature Pages Follow)

                                       4

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to be
duly executed and delivered by their proper and duly authorized officers as of
this ____ day of July, 2003.

                                  ______________________________________________
                                  Name of Lender

                                  By: _________________________________________
                                      Name:
                                      Title:

Accepted                             and                       agreed:

CALPINE                                                       CORPORATION

By: ____________________________________________
Name:
Title:
GOLDMAN                      SACHS             CREDIT         PARTNERS     L.P.,
as                                         Administrative                 Agent

By: _________________________________
Name:
Title:

                                       5

<PAGE>

                         COMMITMENTS AND NOTICE ADDRESS

1.                                      Name of Lender:
Notice Address:

Attention:
Telephone:
Facsimile:
2.                                      Term Loan Commitment:

<PAGE>

                                                                       EXHIBIT F
                                                      to the Term Loan Agreement

Goldman Sachs Credit Partners L.P.,
85 Broad Street
New York, New York 10004
Attention: Pedro Ramirez

                            LENDER JOINDER AGREEMENT

                  The undersigned, [INSERT LENDER'S NAME] (the "New Term Loan
Lender"), hereby agrees to become party to the Credit Agreement, dated as of
July 16, 2003 (as amended, supplemented, replaced or otherwise modified from
time to time, the "Term Loan Agreement"), among Calpine Corporation, a Delaware
corporation (the "Company"), the Lenders party hereto from time to time, Goldman
Sachs Credit Partners L.P., as sole lead arranger and sole bookrunner, and
Goldman Sachs Credit Partners L.P., as administrative agent (together with its
successors in such capacity, the "Administrative Agent"). Upon the funding of
the Additional Term Loans, the New Term Loan Lender agrees to be bound by, and
to perform in respect of the Additional Term Loans, all of the Obligations of a
Lender under the Term Loan Agreement.

                  The amount of Additional Term Loan Commitment of the New Term
Loan Lender shall be $[__________]. Except as otherwise set forth herein, the
Additional Term Loans shall bear interest on the unpaid principal amount thereof
from the date made through repayment (whether by acceleration or otherwise)
thereof as follows:

                  (a)      if a Base Rate Loan, at the Base Rate plus [___]% per
annum; or

                  (b)      if a Eurodollar Rate Loan, at the Adjusted Eurodollar
Rate plus [___]% per annum.

                  The New Term Loan Lender hereby advises you of the following
administrative details with respect to the Additional Term Loan Commitments and
Additional Term Loans:

                  (a)      Address for Notices:

                           Institution Name:
                           Attention:
                           Domestic Office:
                           Telephone:
                           Facsimile:

                  (b)      Payment Instructions

<PAGE>

                  The provisions of Article XIII of said Term Loan Agreement
shall apply with like effect to this Lender Joinder Agreement.

                  IN WITNESS WHEREOF, the undersigned has executed and delivered
this Joinder as of ___________________, 20____.

                                  [__________________________________]

                                  By: ______________________________
                                      Name:
                                      Title:

<PAGE>

                                                                       EXHIBIT G
                                                      to the Term Loan Agreement

                             FORM OF TERM LOAN NOTE

$____________                           ______________________,

FOR VALUE RECEIVED, the undersigned, Calpine Corporation (the "Company"), hereby
unconditionally promises to pay to the order of [         ] (the "Lender") the
principal sum in immediately available funds, of [         ] or, if less, the
aggregate unpaid principal amount of all Term Loans made by the Lender to the
Company pursuant to Section 2.01 of the Term Loan Agreement. The Company further
agrees to pay interest in like money at the Principal Office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in Section 2.05 of the Term Loan Agreement.

The holder of this Term Loan Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Term Loan
made pursuant to the Term Loan Agreement and the date and amount of each payment
or prepayment of principal thereof, each continuation thereof, each conversion
of all or a portion thereof and, in the case of Eurodollar Rate Loans, the
length of each Interest Period with respect thereto. Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed. The
failure to make any such endorsement or any error in any such endorsement shall
not affect the obligations of the Company in respect of any Term Loan.

This Term Loan Note (a) is one of the Term Loan Notes referred to in the Credit
Agreement, dated as of July 16, 2003 (as amended, supplemented, replaced or
otherwise modified from time to time, the "Term Loan Agreement"), by and among
the Company, the Lenders party hereto from time to time, Goldman Sachs Credit
Partners L.P., as sole lead arranger and sole bookrunner, and Goldman Sachs
Credit Partners L.P., as administrative agent; (b) is subject to the provisions
of the Term Loan Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Term Loan Agreement. This Term
Loan Note is secured and guaranteed as provided in the Term Loan Documents.
Reference is hereby made to the Term Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Term Loan Note in respect thereof.

Upon the occurrence of any Event of Default, all principal and all accrued
interest then remaining unpaid on this Term Loan Note shall become, or may be
declared to be, immediately due and payable, all as provided in, and subject to,
the Term Loan Agreement.

<PAGE>

All parties now and hereafter liable with respect to this Term Loan Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.

Unless otherwise defined herein, terms defined in the Term Loan Agreement and
used herein shall have the meanings given to them in the Term Loan Agreement.

This Term Loan Note has been delivered in New York, New York and shall be deemed
to be a contract made under, governed by and construed in accordance with the
laws of the State of New York without regard to the conflict of law provisions
thereof (other than sections 5-1401 and 5-1402 of the general obligations law of
the state of New York).

                                  CALPINE CORPORATION

                                  By:______________________________
                                     Name:
                                     Title:

<PAGE>

Schedule A
to Term Loan Note

                 LOANS, CONVERSIONS AND REPAYMENTS OF TERM LOANS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                               Interest Period
    Date        Amount of Term Loans          (if applicable)   Amount of Principal Repaid
             -----------------------------                      ---------------------------
                                                                             Euro Dollar     Notation Made
             Base Rate     Euro Dollar Rate                      Base Rate       Rate             By
----------------------------------------------------------------------------------------------------------
<S>          <C>           <C>                <C>               <C>          <C>             <C>

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

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

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

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

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

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

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

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

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

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

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

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

----------------------------------------------------------------------------------------------------------
</TABLE>

                                      A-1<PAGE>

                                                                   Exhibit 10.18

                                                                  EXECUTION COPY

                           LETTER OF CREDIT AGREEMENT

                           dated as of July 16, 2003,

                                      among

                              CALPINE CORPORATION,
                                as the Borrower,

                    CERTAIN COMMERCIAL LENDING INSTITUTIONS,
                                 as the Lenders,

                                       and

                            THE BANK OF NOVA SCOTIA,
                             as Administrative Agent

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                     PAGE
<S>                                                                                                                  <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.......................................................................      1

         SECTION 1.1.   Defined Terms............................................................................      1
         SECTION 1.2.   Use of Defined Terms.....................................................................     14
         SECTION 1.3.   Cross-References.........................................................................     14
         SECTION 1.4.   Accounting and Financial Determinations..................................................     15

ARTICLE II COMMITMENTS AND LETTERS OF CREDIT PROCEDURES..........................................................     15

         SECTION 2.1.   Commitment to Issue Letters of Credit....................................................     15
         SECTION 2.2.   Reduction of Commitment Amount...........................................................     15

ARTICLE III REPAYMENTS, INTEREST AND FEES........................................................................     16

         SECTION 3.1.   Interest Provisions......................................................................     16
         SECTION 3.2.   Fees.....................................................................................     16

ARTICLE IV LETTERS OF CREDIT.....................................................................................     17

         SECTION 4.1.   Issuance Requests........................................................................     17
         SECTION 4.2.   Issuances and Extensions.................................................................     18
         SECTION 4.3.   Expenses.................................................................................     18
         SECTION 4.4.   Other Lenders' Participation.............................................................     18
         SECTION 4.5.   Disbursements............................................................................     19
         SECTION 4.6.   Reimbursement............................................................................     19
         SECTION 4.7.   Cash Collateral..........................................................................     20
         SECTION 4.8.   Nature of Reimbursement Obligations......................................................     20
         SECTION 4.9.   Increased Costs; Indemnity...............................................................     21
         SECTION 4.10.  Existing Letters of Credit...............................................................     22

ARTICLE V CERTAIN ADDITIONAL PROVISIONS..........................................................................     22

         SECTION 5.1.   Increased Capital Costs..................................................................     22
         SECTION 5.2.   Taxes....................................................................................     23
         SECTION 5.3.   Payments, Computations, etc..............................................................     24
         SECTION 5.4.   Sharing of Payments......................................................................     24
         SECTION 5.5.   Use of Proceeds..........................................................................     25

ARTICLE VI CONDITIONS PRECEDENT..................................................................................     25

         SECTION 6.1.   Effectiveness; Initial Credit Extension..................................................     25
         SECTION 6.2.   All Credit Extensions....................................................................     26
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                   <C>
ARTICLE VII REPRESENTATIONS AND WARRANTIES.......................................................................     28

         SECTION 7.1.   Organization, etc........................................................................     28
         SECTION 7.2.   Due Authorization, Non-Contravention, etc................................................     28
         SECTION 7.3.   Government Approval, Regulation, etc.....................................................     28
         SECTION 7.4.   Validity, etc............................................................................     28
         SECTION 7.5.   Financial Information....................................................................     29
         SECTION 7.6.   No Material Adverse Effect...............................................................     29
         SECTION 7.7.   Litigation, Labor Controversies, etc.....................................................     29
         SECTION 7.8.   Subsidiaries.............................................................................     29
         SECTION 7.9.   Regulations U and X......................................................................     29
         SECTION 7.10.  Accuracy of Information..................................................................     29

ARTICLE VIII COVENANTS...........................................................................................     30

         SECTION 8.1.   Covenants................................................................................     30

ARTICLE IX EVENTS OF DEFAULT.....................................................................................     32

         SECTION 9.1.   Listing of Events of Default.............................................................     32
         SECTION 9.2.   Action if Event of Default...............................................................     34

ARTICLE X THE AGENT..............................................................................................     35

         SECTION 10.1.   Actions.................................................................................     35
         SECTION 10.2.   Exculpation.............................................................................     35
         SECTION 10.3.   Successor...............................................................................     35
         SECTION 10.4.   Letters of Credit Issued by Agent or any Issuer.........................................     36
         SECTION 10.5.   Credit Decisions........................................................................     36
         SECTION 10.6.   Copies, etc.............................................................................     36
         SECTION 10.7.   Collateral Matters......................................................................     37

ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................     37

         SECTION 11.1.   Waivers, Amendments, etc................................................................     37
         SECTION 11.2.   Notices.................................................................................     38
         SECTION 11.3.   Payment of Costs and Expenses...........................................................     38
         SECTION 11.4.   Indemnification.........................................................................     39
         SECTION 11.5.   Survival................................................................................     40
         SECTION 11.6.   Severability............................................................................     40
         SECTION 11.7.   Headings................................................................................     41
         SECTION 11.8.   Execution in Counterparts, Effectiveness, etc...........................................     41
         SECTION 11.9.   Governing Law; Entire Agreement.........................................................     41
         SECTION 11.10.  Successors and Assigns..................................................................     41
         SECTION 11.11.  Sale and Transfer of Commitments; Participations in Commitments.........................     41
         SECTION 11.12.  Other Transactions......................................................................     43
         SECTION 11.13.  Forum Selection and Consent to Jurisdiction.............................................     43
         SECTION 11.14.  Waiver of Jury Trial....................................................................     44
         SECTION 11.15.  Confidentiality.........................................................................     44
</TABLE>

                                       ii
<PAGE>

SCHEDULE I       -   Disclosure Schedule

SCHEDULE II      -   Percentages

SCHEDULE 1.1     -   Organizational Chart

SCHEDULE 4.10    -   Existing Letters of Credit

EXHIBIT A        -   Form of Issuance Request

EXHIBIT B        -   Form of Lender Assignment Agreement

EXHIBIT C        -   Form of Cash Collateral Agreement

EXHIBIT D-1      -   Form of Opinion of general counsel of the Borrower

EXHIBIT D-2      -   Form of Opinion of special counsel to the Borrower

                                      iii

<PAGE>

                           LETTER OF CREDIT AGREEMENT

         THIS LETTER OF CREDIT AGREEMENT, dated as of July 16, 2003, among
CALPINE CORPORATION, a Delaware corporation (together with its successors, the
"Borrower"), the various financial institutions as are or may become parties
hereto (collectively, the "Lenders"), and THE BANK OF NOVA SCOTIA ("Scotia
Capital"), as administrative agent (in such capacity, the "Agent").

                              W I T N E S S E T H:

         WHEREAS, the Borrower has requested that the Lenders and the Agent
enter into this Agreement pursuant to which Letters of Credit will be issued at
the request of the Borrower;

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):

         "Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power

                  (a)      to vote 10% or more of the securities (on a fully
         diluted basis) having ordinary voting power for the election of
         directors or managing general partners; or

                  (b)      to direct or cause the direction of the management
         and policies of such Person whether by contract or otherwise.

         "Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 10.3.

         "Agreement" means, on any date, this Letter of Credit Agreement as
originally in effect on the Closing Date and as thereafter from time to time
amended, supplemented, amended and restated, or otherwise modified and in effect
on such date.

         "Alternate Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of

                  (a)      the rate of interest most recently established by
         Scotia Capital at its Domestic Office as its base rate; and

<PAGE>

                  (b)      the Federal Funds Rate most recently determined by
         Scotia Capital plus 1/2 of 1%.

         The Alternate Base Rate is not necessarily intended to be the lowest
rate of interest determined by the Agent in connection with extensions of
credit. Changes in the rate of interest on any L/C Advances will take effect
simultaneously with each change in the Alternate Base Rate. The Agent will give
notice promptly to the Borrower and the Lenders of changes in the Alternate Base
Rate.

         "Amended and Restated Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of July 16, 2003, among the Borrower, the
various financial institutions as are or may become parties thereto, as lenders,
various lead arrangers, and The Bank of Nova Scotia, as administrative agent and
funding agent, as amended, supplemented or otherwise modified from time to time.

         "Applicable Margin" means for any L/C Advance maintained under the
Commitment, 4.00% per annum.

         "Assignee Lender" is defined in Section 11.11.1.

         "Authorized Officer" means, relative to any Obligor, the president, any
executive vice president, any senior vice president, the vice president -
finance, the chief financial officer and the treasurer, in each case for whom a
signature and incumbency certificate has been delivered to the Agent.

         "Borrower" is defined in the preamble.

         "Business Day" means any day which is neither a Saturday nor Sunday nor
a legal holiday on which banks are authorized or required to be closed in San
Francisco or New York.

         "Capitalized Lease Liabilities" means all rental obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.

         "Cash Collateral Account" means the cash collateral account maintained
by the Agent pursuant to the Cash Collateral Agreement.

         "Cash Collateral Agreement" means the Cash Collateral Agreement to be
entered into between the Borrower and the Agent in substantially the form
attached hereto as Exhibit C, as amended, supplemented, restated or otherwise
modified from time to time, pursuant to which the Letters of Credit are cash
collateralized.

         "CCEF" means Calpine Canada Energy Finance ULC, a Nova Scotia unlimited
liability company and a direct, Wholly Owned Subsidiary of QCH.

                                       2
<PAGE>

         "CCEF Indenture" means that certain Indenture dated as of April 25,
2001, between CCEF and Wilmington Trust Company, as Trustee, as amended by the
Amended and Restated Indenture, dated as of October 16, 2001, between CCEF and
such Trustee.

         "CCEF Notes" means the $2,030,000,000 of 8 1/2% Senior Notes due 2008
and the Cdn$200,000,000 of 8 3/4% Senior Notes due 2007, in each case issued by
CCEF pursuant to the CCEF Indenture.

         "CCEFII" means Calpine Canada Energy Finance II ULC, a Nova Scotia
unlimited liability company and a direct, Wholly Owned Subsidiary of CCRC.

         "CCEFII Indenture" means that certain Indenture dated as of October 18,
2001, as supplemented by the First Supplemental Indenture, dated as of October
18, 2002, between CCEFII and Wilmington Trust Company, as Trustee.

         "CCEFII Notes" means the L200,000,000 of 8?% Senior Notes due 2011 and
the E75,000,000 of 8?% Senior Notes due 2008, in each case issued by CCEFII
pursuant to the CCEFII Indenture.

         "CCFCI" means Calpine Construction Finance Company, L.P., a Delaware
limited partnership and an indirect, Wholly Owned Subsidiary of the Borrower.

         "CCFCI Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of February 15, 2001, among CCFCI, the lenders party
thereto, Credit Suisse First Boston, as Lead Arranger, Syndication Agent and
Bookrunner, The Bank of Nova Scotia, as Lead Arranger, LC Bank and
Administrative Agent, TD Securities (USA) Inc., as Co-Arranger and
Co-Documentation Agent, and CIBC World Markets Corp., as Co-Arranger and
Co-Documentation Agent, as amended, supplemented, restated or otherwise modified
from time to time.

         "CCFCII" means Calpine Construction Finance Company II, LLC, a Delaware
limited liability company and an indirect, Wholly Owned Subsidiary of the
Borrower.

         "CCFCII Credit Agreement" means the Credit Agreement, dated as of
October 16, 2000, among CCFCII, the lenders party thereto, Credit Suisse First
Boston, as Lead Arranger and Administrative Agent, The Bank of Nova Scotia, as
Lead Arranger, Co-Syndication Agent and Bookrunner, Banc of America Securities
LLC, as Arranger and Co-Syndication Agent, ING (U.S.) Capital LLC, as Arranger
and Co-Syndication Agent, Bayerische Landesbank Girozentrale, as Arranger,
Co-Documentation Agent, and LC Bank, CIBC World Markets Corp., as Arranger and
Co-Documentation Agent, Dresdner Kleinwort Benson North America Services LLC, as
Arranger and Co-Documentation Agent, TD Securities (USA) Inc., as Arranger and
Co-Documentation Agent, as amended, supplemented, restated or otherwise modified
from time to time.

         "CCRC" means Calpine Canada Resources Company, an Alberta corporation
and an indirect, Wholly Owned Subsidiary of the Borrower.

         "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.

                                       3
<PAGE>

         "CES" means Calpine Energy Services, L.P., a Delaware limited
partnership and an indirect, Wholly Owned Subsidiary of the Borrower.

         "Closing Date" means the date specified in a written notice from the
Agent on which this Agreement becomes effective pursuant to Section 11.8 and
which is intended to be July 16, 2003.

         "CNGH" means Calpine Natural Gas Holdings, LLC, a Delaware limited
liability company, and a direct, Wholly Owned Subsidiary of the Borrower.

         "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

         "Collateral" means any property of or other items belonging to the
Borrower or certain of its Subsidiaries subject or purported to be subject from
time to time to a Lien under any Loan Document to secure any or all of the
Obligations.

         "Commitment" is defined in Section 2.1.

         "Commitment Amount" means, on any date, $200,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2.

         "Commitment Availability" means, on any date, the excess of (a) the
then Commitment Amount, over (b) the Letter of Credit Outstandings on such date.

         "Commitment Fee" is defined in Section 3.2.1.

         "Commitment Termination Date" means the earliest of

                  (a)      July 15, 2005;

                  (b)      the date on which the Commitments of the Lenders are
         terminated in full or reduced to zero pursuant to Section 2.2; and

                  (c)      the date on which any Commitment Termination Event
         occurs.

Upon the occurrence of any event described in clause (b) or (c), the Commitments
shall terminate automatically and without any further action.

         "Commitment Termination Event" means

                  (a)      the occurrence of any Default described in clauses
         (a) through (d) of Section 9.1.7 with respect to the Borrower or any
         Significant Subsidiary; or

                  (b)      the occurrence and continuance of any other Event of
         Default and the giving of notice by the Agent, acting at the direction
         of the Required Lenders, to the Borrower that the Commitments have been
         terminated.

                                       4
<PAGE>

         "Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall be
calculated on a net basis (i.e., after taking into effect agreements,
undertakings and other arrangements between the Person whose obligations are
being guaranteed and the counterparty to such Person's obligations) and shall
(subject to any limitation set forth therein) be deemed to be the outstanding
net principal amount (or maximum net principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby, or, if the principal amount is
not stated or determinable, the maximum reasonably anticipated net liability in
respect thereof as determined by the Person in good faith, provided that (y) the
amount of any Contingent Liability arising out of any indebtedness, obligation
or liability other than the items described in clauses (a), (b) and (c) of the
definition of "Indebtedness" and (z) the amount of any Contingent Liability
consisting of a "keep-well", "make well" or other similar arrangement shall be
deemed to be zero unless and until the Borrower is required to make any payment
with respect thereto (and shall thereafter be deemed to be the amount required
to be paid).

         "Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.

         "Convertible Senior Notes" means the $1,200,000,000 of 4% Convertible
Senior Notes Due 2006 issued by the Borrower pursuant to the Shelf Indenture.

         "Convertible Subordinated Debentures" means the up to $284,536,100 of
Convertible Subordinated Debentures due 2029 issued by the Borrower pursuant to
the Indenture dated November 2, 1999, the up to $371,134,100 of Convertible
Subordinated Debentures due 2030 issued by the Borrower pursuant to the
Indenture dated January 31, 2000 and the up to $535,000,000 of Convertible
Subordinated Debentures due 2030 issued by the Borrower pursuant to the
Indenture dated August 9, 2000.

         "Credit Extension" means any issuance or extension by an Issuer of a
Letter of Credit.

         "Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.

         "Disbursement" is defined in Section 4.5. "Disbursement Date" is
defined in Section 4.5.

         "Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.

                                       5
<PAGE>

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

         "Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto.

         "8 1/4% Senior Notes" means the $250,000,000 of 8 1/4% Senior Notes due
2005 issued by the Borrower pursuant to the Shelf Indenture.

          "8 1/2% Senior Notes" means the $2,000,000,000 of 8 1/2% Senior Notes
due 2011 issued by the Borrower pursuant to the Shelf Indenture.

         "8 3/4% Senior Note Indenture" means that certain Indenture dated as of
July 8, 1997, as supplemented by the First Supplemental Indenture dated as of
September 10, 1997 and the Second Supplemental Indenture dated as of July 31,
2000, between the Borrower and The Bank of New York, as Trustee.

         "8 3/4% Senior Notes" means the $275,000,000 of 8 3/4% Senior Notes due
2007 issued by the Borrower pursuant to the 8 3/4% Senior Note Indenture.

         "8 5/8% Senior Notes" means the $750,000,000 of 8?% Senior Notes due
2010 issued by the Borrower pursuant to the Shelf Indenture.

         "Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.

         "Event of Default" is defined in Section 9.1.

         "Existing Letters of Credit" means the letters of credit and bank
guarantee described in Schedule 4.10.

         "Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving duress or necessity of
either party.

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to

                  (a)      the weighted average of the rates on overnight
         federal funds transactions with members of the Federal Reserve System
         arranged by federal funds brokers, as

                                       6
<PAGE>

         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

                  (b)      if such rate is not so published for any day which is
         a Business Day, the average of the quotations for such day on such
         transactions received by Scotia Capital from three federal funds
         brokers of recognized standing selected by it.

         "Fiscal Quarter" means any period of three consecutive months ending on
March 31, June 30, September 30 or December 31 of any year.

         "Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "2003 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.

         "F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.

         "GAAP" is defined in Section 1.4.

         "Guaranteed Preferred Securities" means the preferred securities issued
by one of the Trusts, from time to time, including, without limitation the
$276,000,000 of principal amount of such securities issued in November, 1999,
the $300,000,000 of principal amount of such securities issued in January, 2000,
the $60,000,000 of principal amount of such securities issued in February, 2000,
and the $517,500,000 of principal amount of such securities issued in August,
2000.

         "Hazardous Material" means

                  (a)      any "hazardous substance", as defined by CERCLA;

                  (b)      any "hazardous waste", as defined by the Resource
         Conservation and Recovery Act, as amended;

                  (c)      any petroleum product; or

                  (d)      any pollutant or contaminant or hazardous, dangerous
         or toxic chemical, material or substance within the meaning of any
         other applicable federal, state or local law, regulation, ordinance or
         requirement (including consent decrees and administrative orders)
         relating to or imposing liability or standards of conduct concerning
         any hazardous, toxic or dangerous waste, substance or material, all as
         amended or hereafter amended.

         "Hedging Obligations" means, with respect to any Person, the net
liabilities of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, foreign exchange
contracts, currency swap agreements and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency exchange rates and (b) commodity or power swap or exchange agreements.

                                       7
<PAGE>

         "herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
section, paragraph or provision of this Agreement or such other Loan Document.

         "Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification

                  (a)      which is of a "going concern" or similar nature; or

                  (b)      which relates to the limited scope of examination of
         matters relevant to such financial statement.

         "including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.

         "Indebtedness" of any Person means, without duplication:

                  (a)      all obligations of such Person for borrowed money and
         all obligations of such Person evidenced by bonds, debentures, notes or
         other similar instruments (excluding the Convertible Subordinated
         Debentures and any other subordinated debt securities issued by the
         Borrower to a Trust and the Guaranteed Preferred Securities or any
         similar securities);

                  (b)      all obligations, contingent or otherwise, relative to
         the stated amount of all letters of credit, whether or not drawn, and
         banker's acceptances issued for the account of such Person; provided,
         however, that if a letter of credit or banker's acceptance has been
         issued to support or secure any other form of Indebtedness, only the
         greater of the stated amount of such letter of credit or banker's
         acceptance or the outstanding principal amount of Indebtedness
         supported or secured, but not both, will be considered Indebtedness
         hereunder;

                  (c)      all obligations of such Person as lessee under leases
         which have been or should be, in accordance with GAAP, recorded as
         Capitalized Lease Liabilities;

                  (d)      all other items other than deferred taxes, deferred
         revenue and deferred leases which, in accordance with GAAP, would be
         included as liabilities on the liability side of the balance sheet of
         such Person as of the date at which Indebtedness is to be determined;

                  (e)      net liabilities of such Person under all Hedging
         Obligations;

                  (f)      whether or not so included as liabilities in
         accordance with GAAP, all net obligations of such Person to pay the
         deferred purchase price of property or services

                                       8
<PAGE>

         (excluding accounts payable incurred in the ordinary course of
         business), and indebtedness (excluding prepaid interest thereon)
         secured by a Lien on property owned or being purchased by such Person
         (including indebtedness arising under conditional sales or other title
         retention agreements), whether or not such indebtedness shall have been
         assumed by such Person or is limited in recourse, but excluding any
         royalties or similar payments to be made by such Person which are based
         on production or performance; and

                  (g)      all Contingent Liabilities of such Person in respect
         of any of the foregoing.

For all purposes of this Agreement, the Indebtedness of any Person (i) shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless the indebtedness of such
partnership or joint venture is expressly nonrecourse to such Person and (ii)
shall exclude any preferred stock if, at the time of the incurrence or issuance
thereof, it would not be recorded as debt of such Person, in accordance with
GAAP.

         "Indemnified Liabilities" is defined in Section 11.4.

         "Indemnified Parties" is defined in Section 11.4.

         "Investment" means, relative to any Person, without duplication,

                  (a)      any loan or advance made by such Person to any other
         Person (excluding commission, travel and similar advances to officers
         and employees made in the ordinary course of business and prepaid
         expenses);

                  (b)      any Contingent Liability of such Person; and

                  (c)      any ownership or similar interest held by such Person
         in any other Person.

The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the Fair Market Value
of such property.

         "Issuance Request" means a request and certificate duly executed by the
chief executive, accounting or financial Authorized Officer of the Borrower, in
substantially the form of Exhibit A (with such changes thereto as may be agreed
upon from time to time by the Agent and the Borrower), together with a properly
completed application for a Letter of Credit on an Issuer's standard form,
executed by an Authorized Officer of the Borrower. In the event of a conflict
between the terms of an application for a Letter of Credit and the terms of this
Agreement, the terms of this Agreement shall prevail.

         "Issuer" means Scotia Capital or any Affiliate or unit of agency of
Scotia Capital, and any successor to any of the foregoing Persons.

                                       9
<PAGE>

         "knowledge" or "to the Borrower's knowledge" means the knowledge of or
to the knowledge of the president, any vice president, the general counsel, the
secretary, the chief financial officer, the controller or the vice
president-finance of the Borrower.

         "L/C Advances" is defined in Section 4.5.

         "Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit B.

         "Lenders" is defined in the preamble and includes the Issuer.

         "Letter of Credit" is defined in Section 4.1.

         "Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of (a) the aggregate Stated Amount at such time of all Letters of Credit
then outstanding and undrawn (as such aggregate Stated Amount shall be adjusted,
from time to time, as a result of drawings, the issuance of Letters of Credit,
or otherwise), plus (b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.

         "Lien" means any security interest, mortgage, pledge, hypothecation,
assignment for security, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.

         "Loan Document" means this Agreement, the Cash Collateral Agreement and
each other relevant agreement, document or instrument delivered in connection
therewith.

         "Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets
(including power projects), business or prospects of the Borrower and its
Subsidiaries taken as a whole; or (b) a material adverse change in the ability
of the Borrower or any other Obligor to perform under any Loan Document.

         "Nonmaterial Subsidiary Default" means any Default (excluding any Event
of Default) arising or resulting from the default or potential default by a
Subsidiary (other than a Significant Subsidiary) under any agreement, contract
or undertaking binding on such Subsidiary other than (i) the failure by such
Subsidiary to make a required payment under any Indebtedness of such Subsidiary
having a principal amount in excess of $10,000,000 and (ii) a default in the
performance or observance of any obligation or condition with respect to any
Indebtedness of such Subsidiary having a principal amount in excess of
$10,000,000 and, as a result thereof, the holder or holders of such
Indebtedness, or any trustee or agent for such holders, causes such Indebtedness
to be repaid more quickly than theretofore scheduled, whether through the
introduction of a "cash sweep," the increase of an existing "cash sweep" or
otherwise.

         "Obligations" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement and each other Loan Document.

                                       10
<PAGE>

         "Obligor" means the Borrower or any other Person (other than the Agent
or any Lender) obligated under, or otherwise a party to, any Loan Document.

         "Organic Document" means, relative to any Obligor, its certificate of
incorporation, partnership agreement, or similar organizational document, its
by-laws and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock or other ownership
interests.

         "Parity Lien Debt" means any Indebtedness incurred in compliance with
the 2003 Senior Note Indenture that is secured by the Collateral (as defined in
the Amended and Restated Credit Agreement) on a parity basis with the 2003
Senior Notes and the Second Priority B Loans.

         "Participant" is defined in Section 11.11.2.

         "PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

         "Pension Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of Section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA.

         "Percentage" means, relative to any Lender, the percentage set forth
opposite its name on Schedule II under the caption "Percentage" or as set forth
in its Lender Assignment Agreement, as such percentage may be adjusted from time
to time pursuant to Lender Assignment Agreement(s) executed by such Lender and
its Assignee Lender(s) and delivered pursuant to Section 11.11. After the
Commitment Termination Date, relative to any Lender, at any time, such Lender's
"Percentage" shall be as in effect immediately prior to the Commitment
Termination Date and after giving effect to any Lender Assignment Agreement(s)
of such Lender executed by such Lender and its Assignee Lender(s) and delivered
pursuant to Section 11.11 at or prior to such time.

         "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting in an individual, fiduciary or other capacity.

         "Plan" means any Pension Plan or Welfare Plan.

         "Pre-2000 Indentures" means the Senior Note Indentures (other than the
Shelf Indenture, the 2003 Senior Note Indenture, the Second Priority Term Loan
Agreement, any other documentation under which the Parity Lien Debt is incurred,
the CCEF Indenture and the CCEFII Indenture).

         "QCH" means Quintana Canada Holdings, LLC, a Delaware limited liability
company and indirect, Wholly Owned Subsidiary of CNGH.

                                       11
<PAGE>

         "Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.

         "Reimbursement Obligation" is defined in Section 4.6.

         "Release" means a "release", as such term is defined in CERCLA.

         "Required Lenders" means, at any time, Lenders owed or holding (a) if
the Commitments shall not have been terminated, at least 51% of the aggregate of
all Letter of Credit Outstandings and unfunded Commitments on such date or (b)
if the Commitments shall have been terminated, at least 51% of the aggregate
amount of all L/C Advances then outstanding.

         "Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
from time to time.

         "Scotia Capital" is defined in the preamble.

         "Second Priority B Loans" means the $750,000,000 of Second Priority
Secured Term B Loans incurred by the Borrower pursuant to the Second Priority
Term Loan Agreement.

         "Second Priority Term Loan Agreement" means the Credit Agreement, dated
as of July 16, 2003, among the Borrower, Goldman Sachs Credit Partners L.P., as
sole lead arranger, sole bookrunner and administrative agent, Scotia Capital, as
arranger and syndication agent, TD Securities (USA) Inc., ING (U.S.) Capital LLC
and Landesbank Hessen-Thuringen, as co-arrangers, and Credit Lyonnais New York
Branch and Union Bank of California, N.A., as managing agents.

         "Senior Note Indentures" means, collectively, the 7 3/4% Senior Note
Indenture, the 7 5/8% Senior Note Indenture, the 7 7/8% Senior Note Indenture,
the 8 3/4% Senior Note Indenture, the Shelf Indenture (to the extent relating
solely to the Senior Notes), the 10 1/2% Senior Note Indenture, the 2003 Senior
Note Indenture, the Second Priority Term Loan Agreement, any other documentation
under which the Parity Lien Debt is incurred, the CCEF Indenture and the CCEFII
Indenture.

         "Senior Notes" means, collectively, the 7 3/4% Senior Notes, the 7 5/8%
Senior Notes, the 7 1/8% Senior Notes, the 8 1/4% Senior Notes, the 8 1/2%
Senior Notes, the 8 3/4% Senior Notes, the 8?% Senior Notes, the 10 1/2% Senior
Notes, the Convertible Senior Notes, the 2003 Senior Notes, the Second Priority
B Loans, the Parity Lien Debt, the CCEF Notes and the CCEFII Notes.

         "7 5/8% Senior Note Indenture" means that certain Indenture dated as of
March 29, 1999, as supplemented by the First Supplemental Indenture dated as of
July 31, 2000, between the Borrower and The Bank of New York, as Trustee.

         "7 5/8% Senior Notes" means the $250,000,000 of 7 5/8% Senior Notes due
2006 issued by the Borrower pursuant to the 7?% Senior Note Indenture.

                                       12
<PAGE>

         "7 7/8% Senior Note Indenture" means that certain Indenture dated as of
March 31, 1998, as supplemented by the First Supplemental Indenture dated as of
July 24, 1998 and the Second Supplemental Indenture dated as of July 31, 2000,
between the Borrower and The Bank of New York, as Trustee.

         "7 7/8% Senior Notes" means the $400,000,000 of 7 7/8% Senior Notes due
2008 issued by the Borrower pursuant to the 7 7/8% Senior Note Indenture.

         "7 3/4% Senior Note Indenture" means that certain Indenture dated as of
March 29, 1999, as supplemented by the First Supplemental Indenture dated as of
July 31, 2000, between the Borrower and The Bank of New York, as Trustee.

         "7 3/4% Senior Notes" means the $350,000,000 of 7 3/4% Senior Notes due
2009 issued by the Borrower pursuant to the 7 3/4% Senior Note Indenture.

         "Shelf Indenture" means that certain Indenture dated as of August 10,
2000, as supplemented from time to time, between the Borrower and Wilmington
Trust Company, as Trustee.

         "Significant Subsidiary" means each Subsidiary of the Borrower that

                  (a)      accounted for at least 10% of consolidated revenues
         of the Borrower and its Subsidiaries or 10% of consolidated earnings of
         the Borrower and its Subsidiaries before interest and taxes, in each
         case for the last four full Fiscal Quarters immediately preceding the
         date as of which any such determination is made; or

                  (b)      has assets which represent at least 10% of the
         consolidated assets of the Borrower and its Subsidiaries as of the last
         day of the last Fiscal Quarter of the Borrower immediately preceding
         the date as of which any such determination is made,

all of which shall be as reflected on the financial statements of the Borrower
for the period, or as of the date, in question. Notwithstanding the foregoing,
(i) CCFCI shall be deemed to be a Significant Subsidiary for all purposes of
this Agreement until such date as all Indebtedness under the CCFCI Credit
Agreement shall have been repaid in full and all commitments to lend thereunder
have been terminated and, thereafter, at any time when CCFCI meets the criteria
set forth in the first sentence of this definition and (ii) CCFCII shall be
deemed to be a Significant Subsidiary for all purposes of this Agreement until
such date as all Indebtedness under the CCFCII Credit Agreement shall have been
repaid in full and all commitments to lend thereunder have been terminated and,
thereafter, at any time when CCFCII meets the criteria set forth in the first
sentence of this definition.

         "Stated Amount" of each Letter of Credit means the "Stated Amount" as
defined therein.

         "Stated Expiry Date" is defined in Section 4.1(b).

         "Subordinated Debt" means all unsecured Indebtedness of the Borrower
for money borrowed which is subordinated, upon terms satisfactory to the Agent
and the Required Lenders, in right of payment to the payment in full in cash of
all Obligations.

                                       13
<PAGE>

         "Subsidiary" means, with respect to any Person, any corporation,
partnership or other Person of which at least 50% of the outstanding capital
stock or other comparable ownership interest having ordinary voting power to
elect a majority of the board of directors of such corporation, partnership or
other Person (irrespective of whether at the time capital stock of any other
class or classes of such corporation, partnership or other Person shall or might
have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person, by such Person and one or more
other Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.

         "Taxes" is defined in Section 5.2.

         "10 1/2% Senior Note Indenture" means that certain Indenture dated as
of May 16, 1996, as supplemented by the First Supplemental Indenture dated as of
August 1, 2000, between Borrower and State Street Bank and Trust Company (as
successor trustee to Fleet National Bank), as Trustee.

         "10 1/2% Senior Notes" means the $180,000,000 of 10 1/2% Senior Notes
due 2006 issued by the Borrower pursuant to the 10 1/2% Senior Note Indenture.

         "Trust" means Calpine Capital Trust, Calpine Capital Trust II and
Calpine Capital Trust III, each a Delaware business trust.

         "2003 Senior Notes" means the $2,550,000,000 of Second Priority Senior
Secured Floating Rate Notes due 2007, 8 1/2% Second Priority Senior Secured
Notes due 2010 and 8 3/4% Second Priority Senior Secured Notes due 2013, in each
case issued by the Borrower pursuant to the 2003 Senior Note Indenture.

         "2003 Senior Note Indenture" means that certain Indenture dated as of
July 16, 2003 between the Borrower and Wilmington Trust Company, as Trustee.

         "United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.

         "Welfare Plan" means a "welfare plan", as such term is defined in
Section 3(1) of ERISA.

         "Wholly Owned Subsidiary" means a Subsidiary all the capital stock of
which (other than directors' qualifying shares) is owned by the Borrower or
another Wholly Owned Subsidiary.

         SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Issuance Request, Loan Document, notice and other communication delivered
from time to time in connection with this Agreement or any other Loan Document.

         SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and,

                                       14
<PAGE>

unless otherwise specified, references in any Article, Section or definition to
any clause are references to such clause of such Article, Section or definition.

         SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with, generally accepted
accounting principles ("GAAP") in effect in the United States from time to time.

                                   ARTICLE II

                  COMMITMENTS AND LETTERS OF CREDIT PROCEDURES

         SECTION 2.1. Commitment to Issue Letters of Credit. From time to time
on any Business Day occurring prior to the Commitment Termination Date, an
Issuer will issue, and each Lender will participate in, the Letters of Credit,
in accordance with Article IV. The Commitment of each Lender described in this
Section 2.1 to issue or participate in Letters of Credit is herein referred to
as its "Commitment".

         SECTION 2.1.1. Lenders Not Permitted or Required To Issue or
Participate in Letters of Credit Under Certain Circumstances. No Lender or
Issuer, as the case may be, shall be permitted or required to issue (in the case
of an Issuer) or participate in (in the case of each Lender) any Letter of
Credit prior to the Commitment Termination Date, if, after giving effect thereto

                           (i)      all Letter of Credit Outstandings would
                  exceed the Commitment Amount or the amount then on deposit in
                  the Cash Collateral Account (which shall have been funded with
                  the proceeds of borrowings under the Amended and Restated
                  Credit Agreement); or

                           (ii)     such Lender's Percentage of all Letter of
                  Credit Outstandings would exceed such Lender's Percentage of
                  the then Commitment Amount.

         SECTION 2.2. Reduction of Commitment Amount. The Commitment Amount is
subject to reduction from time to time pursuant to this Section 2.2.

         SECTION 2.2.1. Optional Reduction. The Borrower may, from time to time
on any Business Day voluntarily reduce the Commitment Amount; provided, however,
that all such reductions shall require at least three Business Days' prior
notice to the Agent and be permanent reductions of the Commitment Amount, and
any partial reduction of the Commitment Amount shall be in a minimum amount of
$2,000,000 and in an integral multiple of $500,000.

         SECTION 2.2.2. Additional Cash Collateral. To the extent that at any
time the aggregate amount of the Letter of Credit Outstandings exceeds the
Commitment Amount in effect at such time or the amount then on deposit in the
Cash Collateral Account, then the Borrower must immediately deposit with the
Agent in the Cash Collateral Account additional cash collateral in an amount
equal to such excess (or, as applicable, the greater of such excesses).

                                       15
<PAGE>

                                  ARTICLE III

                          REPAYMENTS, INTEREST AND FEES

         SECTION 3.1. Interest Provisions. Interest shall be payable in
accordance with this Section 3.1.

         SECTION 3.1.1. Post-Maturity Rate. After the date any monetary
Obligation of the Borrower shall have become due and payable, the Borrower shall
pay, but only to the extent permitted by law, interest (after as well as before
judgment) on such amounts at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin plus a margin of 2%.

         SECTION 3.1.2. Payment Dates. Interest accrued on monetary Obligations
arising under this Agreement or any other Loan Document after the date such
amount is due and payable shall be payable upon demand.

         SECTION 3.2. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.2. All such fees shall be non-refundable.

         SECTION 3.2.1. Commitment Fees. The Borrower agrees to pay to the Agent
for the account of each Lender, for the period (including any portion thereof
when any of its Commitments are suspended by reason of the Borrower's inability
to satisfy any condition of Article VI) commencing on the Closing Date and
continuing through the Commitment Termination Date, a commitment fee (the
"Commitment Fee") at the rate of 0.10% per annum, calculated on such Lender's
Percentage of the average daily unused portion of the Commitment Amount.
Commitment Fees shall be payable by the Borrower in arrears on each Quarterly
Payment Date, commencing with the first such day following the Closing Date, and
on the Commitment Termination Date.

         SECTION 3.2.2. Letter of Credit Fee. The Borrower agrees to pay to the
Agent, for the account of the Lenders, for each Letter of Credit for the period
from and including the date of the issuance of such Letter of Credit to (and
including) the date upon which (or on the next succeeding Business Day upon
which) such Letter of Credit expires or is returned to the Issuer, a fee, in
Dollars, on the average daily stated amount of such Letter of Credit calculated
at a per annum rate equal to 0.05%. Such fee shall be payable by the Borrower in
arrears on each Quarterly Payment Date, and on the date of termination or expiry
of the last Letter of Credit outstanding hereunder (for any period then ending
for which such fee shall not theretofore have been paid), commencing on the
first such date after the issuance of such Letter of Credit.

         SECTION 3.2.3. Letter of Credit Issuing Fee. The Borrower agrees to pay
to the Agent, for the account of each Issuer, an issuing fee, in Dollars, for
each Letter of Credit issued by such Issuer for the period from and including
the date of issuance of such Letter of Credit to (and including) the date upon
which such Letter of Credit expires or is returned to the Issuer at such rates
as may be agreed in writing by the Borrower and the Issuers from time to time.
Such fee shall be payable by the Borrower in arrears on each Quarterly Payment
Date and on the date of termination or expiry of the last Letter of Credit
outstanding hereunder for any period then

                                       16
<PAGE>

ending for which such fee shall not theretofore have been paid, commencing on
the first such date after the issuance of such Letter of Credit.

                                   ARTICLE IV

                                LETTERS OF CREDIT

         SECTION 4.1. Issuance Requests. By delivering to the Agent and an
Issuer an Issuance Request on or before 12:00 noon, New York time, the Borrower
may request, from time to time prior to the Commitment Termination Date and on
not less than three nor more than ten Business Days' notice, that such Issuer
issue an irrevocable standby letter of credit in Dollars and in such form as may
be requested by the Borrower and approved by such Issuer (each, together with
the Existing Letters of Credit, a "Letter of Credit"), in support of the general
corporate purposes of the Borrower and its Subsidiaries (including credit
support by the Borrower for gas and power contracts for CES, Calpine Energy
Services Canada Partnership and Calpine Energy Services UK Limited) and which
are described in such Issuance Request, provided that no Letter of Credit may be
used (i) to finance acquisitions (other than acquisitions of equipment, sites
and property in the ordinary course of the Borrower and its Subsidiaries'
business, but in no event may Letters of Credit be used to finance acquisitions
of power projects, reserves of geothermal steam and fluids and material gas
reserves) or make any Investments in any third parties (other than
Subsidiaries), directly or indirectly, through the Borrower or any of its
Subsidiaries or Affiliates or (ii) to defease, repurchase or prepay any
Subordinated Debt or any Senior Notes; and provided, further, that Letters of
Credit shall only be used to secure or support obligations (other than for the
deferred purchase price of property) entered into in the ordinary course of
business of the Borrower and its Subsidiaries. Upon receipt of an Issuance
Request, the Agent shall promptly notify the Lenders thereof. Each Letter of
Credit shall by its terms:

                  (a) be issued in a Stated Amount which does not exceed (or
         would not exceed) the then Commitment Availability;

                  (b) be stated to expire on a date (its "Stated Expiry Date")
         no later than one year from its date of issuance; provided, however,
         that a Letter of Credit may provide that if it is not renewed prior to
         its Stated Expiry Date, it may be drawn by the beneficiary thereof; and

                  (c) on or prior to its Stated Expiry Date

                           (i)      terminate immediately upon notice to the
                  Issuer thereof from the beneficiary thereunder that all
                  obligations covered thereby have been terminated, paid, or
                  otherwise satisfied in full and surrender by the beneficiary
                  of the Letter of Credit to such Issuer, and

                           (ii)     reduce in part immediately and to the extent
                  the beneficiary thereunder has notified the Issuer thereof
                  that the obligations covered thereby have been paid or
                  otherwise satisfied in part and that the Letter of Credit may
                  be reduced.

                                       17
<PAGE>

         SECTION 4.2. Issuances and Extensions. On the terms and subject to the
conditions of this Agreement (including Article VI), the Issuer to whom notice
was given under Section 4.1 shall issue Letters of Credit, in accordance with
the Issuance Requests made therefor. Such Issuer will make available the
original of each Letter of Credit which it issues in accordance with the
Issuance Request therefor to the beneficiary thereof (and will notify the Agent
of any issuance or amendment and such notice will be accompanied by a copy of
each Letter of Credit issued and any amendment thereto) and will notify the
beneficiary under any Letter of Credit of any extension of the Stated Expiry
Date thereof. The Agent will promptly notify the Lenders of issuances and
amendments and, if requested in writing by a Lender, will provide copies of
issuances and amendments to such requesting Lender.

         SECTION 4.3. Expenses. The Borrower agrees to pay to the Agent for the
account of each Issuer the standard charges of such Issuer in connection with
the issuance, maintenance, modification (if any) and administration by such
Issuer upon demand from time to time.

         SECTION 4.4. Other Lenders' Participation. Each Letter of Credit issued
pursuant to Section 4.2 shall, effective upon its issuance and without further
action, be issued on behalf of all Lenders (including the Issuer thereof) pro
rata according to their respective Percentages. Each Lender shall, to the extent
of its Percentage, be deemed irrevocably to have participated in the issuance of
such Letter of Credit and shall be responsible to pay promptly to the Issuer
thereof such Lender's Percentage of any unreimbursed drawings under a Letter of
Credit which have not been reimbursed by the Borrower in accordance with Section
4.5, or which have been reimbursed by the Borrower but must be returned,
restored or disgorged by the Issuer thereof for any reason, and each Lender
shall, to the extent of its Percentage, be entitled to receive from the Agent a
ratable portion of the letter of credit fees received by the Agent pursuant to
Section 3.2.3, with respect to each Letter of Credit. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this
Section 4.4 in respect of Letters of Credit issued or amended while such Lender
remains a party to this Agreement is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment of any Letter
of Credit or the occurrence and continuation of a Default or Event of Default or
reduction or termination of the Commitments, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever. In the
event that the Borrower shall fail to reimburse the Issuer thereof as provided
in Section 4.5 and Section 4.6 and in an amount equal to the amount of any
drawing honored by such Issuer under a Letter of Credit issued by it, or in the
event such Issuer must for any reason return or disgorge such reimbursement,
such Issuer shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender shall
make available to such Issuer, whether or not any Default shall have occurred
and be continuing, an amount equal to its respective participation in same day
or immediately available funds at the office of such Issuer specified in such
notice not later than 2:00 p.m., New York time, on the Business Day (under the
laws of the jurisdiction of such Issuer) after the date notified by the Issuer.
In the event that any Lender fails to make available to an Issuer the amount of
such Lender's participation in such Letter of Credit as provided herein, such
Issuer shall be entitled to recover such amount on demand from such Lender
together with interest at the daily average Federal Funds Rate for three
Business Days and thereafter at the Alternate Base Rate plus 2%. Nothing in this
Section shall be deemed to prejudice the right of any Lender to recover from any

                                       18
<PAGE>

Issuer any amounts made available by such Lender to an Issuer pursuant to this
Section in the event that it is determined by a court of competent jurisdiction
that the payment with respect to a Letter of Credit by the Issuer thereof in
respect of which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of such Issuer. Each Issuer shall distribute to
each Lender which has paid all amounts payable by it under this Section with
respect to any Letter of Credit issued by such Issuer such Lender's Percentage
of all payments received by such Issuer from the Borrower in reimbursement of
drawings honored by such Issuer under such Letter of Credit when such payments
are received.

         SECTION 4.5. Disbursements. Each Issuer will notify the Borrower and
the Agent promptly of the presentment for payment of any Letter of Credit issued
by it, together with notice of the date (a "Disbursement Date") such payment
shall be made (each such payment, a "Disbursement"). Unless otherwise agreed by
the applicable Issuer and the Borrower, drawings under any Letter of Credit
issued under Section 4.1 shall be made on sight. Subject to the terms and
provisions of such Letter of Credit, each Issuer shall make such payment to the
beneficiary (or its designee) of such Letter of Credit. Prior to 2:00 p.m., New
York time, on the Disbursement Date, the Borrower will reimburse each Issuer in
Dollars for all amounts which it has disbursed under the Letter of Credit. To
the extent an Issuer is not reimbursed in full on the date payment is made under
a Letter of Credit, the Borrower's Reimbursement Obligation shall accrue
interest at the Alternate Base Rate plus the Applicable Margin for two Business
Days and thereafter at the Post-Maturity Rate described in Section 3.1.1,
payable on demand, until reimbursed in full. In the event an Issuer is not
reimbursed by the Borrower on any Disbursement Date, or if an Issuer must for
any reason return or disgorge such reimbursement, the Lenders (including such
Issuer) shall fund the Reimbursement Obligation therefor by making, on the next
Business Day, advances ("L/C Advances") that are payable on demand and shall be
Obligations hereunder, bearing interest by reference to the Base Rate (except
that such L/C Advances shall be made upon demand by the Agent rather than upon
notice by the Borrower and shall be made, notwithstanding anything in this
Agreement to the contrary, without regard to the satisfaction of the conditions
precedent to the extension of credit set forth in Article VI of this Agreement
and notwithstanding any termination of the Commitments). Each Lender's
obligation to make L/C Advances in the amount of its Percentage of any
unreimbursed amounts outstanding under a Letter of Credit pursuant hereto is
several, and not joint or joint and several.

         SECTION 4.6. Reimbursement. The Borrower's obligation (a "Reimbursement
Obligation") under Section 4.5 to reimburse an Issuer with respect to each
disbursement (including interest thereon), and each Lender's obligation to make
participation payments in each drawing which has not been reimbursed by the
Borrower, shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim, or defense to payment which the
Borrower may have or have had against any Lender or any beneficiary of a Letter
of Credit, including any defense based upon the occurrence of any Default, any
draft, demand or certificate or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient, the failure of
any disbursement to conform to the terms of the applicable Letter of Credit (if,
in such Issuer's good faith opinion, such disbursement is determined to be
appropriate) or any non-application or misapplication by the beneficiary of the
proceeds of such disbursement, or the legality, validity, form, regularity, or
enforceability of such Letter of Credit; provided, however, that nothing herein
shall adversely affect the right of the Borrower to commence any proceeding
against an Issuer for any wrongful disbursement

                                       19
<PAGE>

made by such Issuer under a Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct on the part of such Issuer.

         SECTION 4.7. Cash Collateral. At any time when a Reimbursement
Obligation becomes due and payable, the Agent will be entitled to draw amounts
from the Cash Collateral Account to satisfy such Reimbursement Obligation.

         SECTION 4.8. Nature of Reimbursement Obligations. The Borrower shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither any Issuer (except to the extent of its own
gross negligence or willful misconduct) nor any Lender shall be responsible for:

                  (a) the form, validity, sufficiency, accuracy, genuineness, or
         legal effect of any document submitted by any party in connection with
         the application for and issuance of a Letter of Credit, even if it
         should in fact prove to be in any or all respects invalid,
         insufficient, inaccurate, fraudulent, or forged;

                  (b) the form, validity, sufficiency, accuracy, genuineness, or
         legal effect of any instrument transferring or assigning or purporting
         to transfer or assign a Letter of Credit or the rights or benefits
         thereunder or proceeds thereof in whole or in part, which may prove to
         be invalid or ineffective for any reason;

                  (c) failure of the beneficiary to comply fully with conditions
         required in order to demand payment under a Letter of Credit;

                  (d) errors, omissions, interruptions, or delays in
         transmission or delivery of any messages, by mail, cable, telegraph,
         telex, or otherwise;

                  (e) any error, omission, interruption, loss or delay in the
         transmission or delivery of any draft, notice or other communication
         under or relating to any Letter of Credit (including any document
         required in order to make a Disbursement thereunder) or of the proceeds
         thereof;

                  (f) any error in interpretation of technical terms;

                  (g) the performance of any transaction which underlies any
         Letter of Credit;

                  (h) any act or omission of any Person other than the Issuer
         and the Lenders;

                  (i) loss or destruction of any draft, demand, or document in
         transit or in the possession of others;

                  (j) lack of knowledge of any particular trade usage (other
         than standard United States and Western European banking usage as used
         in the normal course of business); or

                  (k) any consequence arising from causes beyond the control of
         the Issuer and the Lenders.

                                       20
<PAGE>

None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted any Issuer or any Lender hereunder. In furtherance and
extension, and not in limitation or derogation, of any of the foregoing, any
action taken or omitted to be taken by an Issuer in good faith and which is not
grossly negligent shall be binding upon the Borrower and shall not put such
Issuer under any resulting liability to the Borrower; provided, however, that
nothing herein shall relieve any Issuer, the Agent or any Lender for any
liability for its gross negligence or willful misconduct.

         SECTION 4.9. Increased Costs; Indemnity. If by reason of

                  (a) any change after the Closing Date in applicable law,
         regulation, rule, decree or regulatory requirement or any change after
         the Closing Date in the interpretation or application by any judicial
         or regulatory authority of any law, regulation, rule, decree or
         regulatory requirement, or

                  (b) compliance by any Issuer or any Lender with any new or
         modified (after the Closing Date) direction, request or requirement
         (whether or not having the force of law) of any governmental or
         monetary authority, including Regulation D of the F.R.S. Board:

                           (i)      any Issuer or any Lender shall be subject to
                  any tax (other than franchise taxes or taxes measured by net
                  income or receipts), levy, charge or withholding of any nature
                  or to any variation thereof or to any penalty with respect to
                  the maintenance or fulfillment of its obligations under this
                  Article IV, whether directly or by such being imposed on or
                  suffered by any Issuer or any Lender;

                           (ii)     any reserve, deposit or similar requirement
                  is or shall be applicable, imposed or modified in respect of
                  any Letters of Credit issued by any Issuer or participations
                  therein purchased by any Lender; or

                           (iii)    there shall be imposed on any Issuer or any
                  Lender any other condition regarding this Article IV, any
                  Letter of Credit or any participation therein;

and the result of the foregoing is directly or indirectly to increase the cost
to an Issuer or such Lender of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
any amount receivable in respect thereof by such Issuer or such Lender, then and
in any such case such Issuer or such Lender may, at any time after the
additional cost is incurred or the amount received is reduced, notify the
Borrower thereof and provide Borrower with data and calculations supporting such
costs, and the Borrower shall pay such amounts as such Issuer or Lender may
specify to be necessary to compensate such Issuer or Lender for such additional
cost or reduced receipt within ten (10) Business Days after receiving such
notice, together with interest on such amount from the date of receipt of such
notice until payment in full thereof at a rate equal at all times to the
Alternate Base Rate plus the Applicable Margin; provided, however, that Section
5.2, rather than this Section 4.9 shall govern Borrower's obligations with
respect to Taxes relating to payments by the Borrower described in the first
sentence of Section 5.2(a). The good faith determination by an Issuer or Lender,
as the case may

                                       21
<PAGE>

be, of any amount due pursuant to this Section 4.9, as set forth in a statement
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest error, be final and conclusive and binding on all of the
parties hereto. In addition to amounts payable as elsewhere provided in this
Article IV, the Borrower hereby agrees to protect, indemnify, pay and save the
Issuers and the Lenders harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Issuer or any Lender may incur or be subject to as a
consequence, direct or indirect, of

                  (x)      the issuance of the Letters of Credit, other than as
         a result of the gross negligence or willful misconduct of an Issuer as
         determined by a court of competent jurisdiction, or

                  (y)      the failure of an Issuer to honor a drawing under any
         Letter of Credit as a result of any act or omission, whether rightful
         or wrongful, of any present or future de jure or de facto government or
         governmental authority.

         SECTION 4.10. Existing Letters of Credit. On the Closing Date, the
Existing Letters of Credit shall continue to be deemed for all purposes to be
Letters of Credit outstanding under this Agreement and entitled to the benefits
of this Agreement and the other Loan Documents, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement. Each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuers on the Closing Date a participation in each such
Letter of Credit and each drawing thereunder in an amount equal to the product
of (i) such Lender's Percentage times (ii) the maximum amount available to be
drawn under such Letter of Credit and the amount of such drawing, respectively.
For purposes of Section 2.1, the Existing Letters of Credit shall be deemed to
utilize pro rata the Commitment of each Lender.

                                   ARTICLE V

                          CERTAIN ADDITIONAL PROVISIONS

         SECTION 5.1. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority causes the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender
attributable to or based upon the Letters of Credit or Commitments hereunder to
be increased, and such Lender determines (in its reasonable discretion) that the
rate of return on its or such controlling Person's capital as a consequence of
its Commitments, issuance of or participation in Letters of Credit is reduced to
a level below that which such Lender or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such case
upon notice from time to time by such Lender to the Borrower, the Borrower shall
immediately pay directly to such Lender additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error and if made in good faith, be conclusive and binding on the
Borrower. In determining such

                                       22
<PAGE>

amount, such Lender may use any method of averaging and attribution that it (in
its good faith discretion) shall deem applicable.

         SECTION 5.2. Taxes. (a) Subject to each Lender's compliance with this
Section 5.2, all payments by the Borrower of all amounts payable hereunder
(including interest) shall be made free and clear of and without deduction for
any present or future income, excise, stamp or franchise taxes and other taxes,
fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, but excluding franchise taxes and taxes imposed on or
measured by any Lender's net income or receipts (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower will

                  (i)      pay directly to the relevant authority the full
         amount required to be so withheld or deducted;

                  (ii)     promptly forward to the Agent an official receipt or
         other documentation satisfactory to the Agent evidencing such payment
         to such authority; and

                  (iii)    pay to the Agent for the account of the Lenders such
         additional amount or amounts as is necessary to ensure that the net
         amount actually received by each Lender will equal the full amount such
         Lender would have received had no such withholding or deduction been
         required.

         Moreover, if any Taxes are directly asserted against the Agent or any
         Lender with respect to any payment received by the Agent or such Lender
         hereunder, the Agent or such Lender may pay such Taxes and the Borrower
         will promptly pay such additional amounts (including any penalties,
         interest or expenses) as is necessary in order that the net amount
         received by such person after the payment of such Taxes (including any
         Taxes on such additional amount) shall equal the amount such person
         would have received had not such Taxes been asserted.

                  If the Borrower fails to pay any Taxes when due to the
         appropriate taxing authority or fails to remit to the Agent, for the
         account of the respective Lenders, the required receipts or other
         required documentary evidence, the Borrower shall indemnify the Lenders
         for any incremental Taxes, interest or penalties that may become
         payable by any Lender as a result of any such failure. For purposes of
         this Section 5.2, a distribution hereunder by the Agent or any Lender
         to or for the account of any Lender shall be deemed a payment by the
         Borrower.

                  (b) Upon the request of the Borrower or the Agent, each Lender
         (including, any participant or Assignee Lender) that is (a) organized
         under the laws of the United States or a state thereof shall execute
         and deliver to the Borrower and the Agent one or more (as the Borrower
         or the Agent may reasonably request) appropriately completed United
         States Internal Revenue Service Forms W-9 (or any successor forms or
         documents) and (b) organized under the laws of a jurisdiction other
         than the United States shall, prior to

                                       23
<PAGE>

         the due date of and as a condition to any payments hereunder, execute
         and deliver to the Borrower and the Agent one or more (as the Borrower
         or the Agent may reasonably request) United States Internal Revenue
         Service Forms W-8ECI or Forms W-8BEN or such other forms or documents
         (or successor forms or documents), appropriately completed, as may be
         applicable to establish that such Lender (or participant or Assignee
         Lender) is entitled to receive payments under this Agreement without
         deduction or withholding of any United States federal income taxes.

                  The Borrower shall not be required to pay any additional
         amounts to any Lender (or participant or Assignee Lender) in respect of
         Taxes pursuant to this Section 5.2 if the obligation to pay such
         additional amounts would not have arisen but for a failure by such
         Lender (or participant or Assignee Lender) to comply with the
         provisions of this Section 5.2 unless such failure results from (a) a
         change in applicable treaty, law or regulation or interpretation
         thereof or (b) an amendment, modification or revocation of any
         applicable tax treaty or a change in official position regarding the
         application or interpretation thereof, in each case after the date such
         Lender (or participant or Assignee Lender) becomes a party to this
         Agreement.

         SECTION 5.3. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement or any other
Loan Document shall be made by the Borrower to the Issuer or, as applicable, to
the Agent for the pro rata account of the Lenders entitled to receive such
payment. All such payments required to be made to the Agent shall be made,
without setoff, deduction or counterclaim, not later than 11:00 a.m., San
Francisco time, on the date due, in same day or immediately available funds, to
such account as the Agent shall specify from time to time by notice to the
Borrower. Funds received after that time shall be deemed to have been received
by the Agent on the next succeeding Business Day. The Agent shall promptly remit
in same day funds to each Lender its share, if any, of such payments received by
the Agent for the account of such Lender. All interest and fees shall be
computed on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such interest or
fee is payable over a year comprised of 365 days or, if appropriate, 366 days.
Whenever any payment to be made shall otherwise be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing interest and fees, if any,
in connection with such payment.

         SECTION 5.4. Sharing of Payments. If any Lender shall obtain any
payment or other recovery as a result of its receipt of any collateral or
otherwise (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Letter of Credit in excess of its pro rata share of
payments then or therewith obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in Letters of Credit as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which
has sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery together with
an amount equal to such selling Lender's ratable share (according to the
proportion of (a) the amount of such selling Lender's required repayment to the
purchasing Lender to (b) the total amount so recovered from

                                       24
<PAGE>

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 may, to the fullest extent permitted by law, exercise
all its rights of payment (including pursuant to Section 5.5) with respect to
such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.

         SECTION 5.5. Use of Proceeds. Letters of Credit shall be used for
general corporate purposes of the Borrower and its Subsidiaries (including
credit support by the Borrower for gas and power contracts for CES, Calpine
Energy Services Canada Partnership and Calpine Energy Services UK Limited). No
Letter of Credit will be used to (i) acquire any equity security of a class
which is registered pursuant to Section 12 of the Securities Exchange Act of
1934 or any "margin stock", as defined in F.R.S. Board Regulation U, (ii)
finance acquisitions (other than the acquisition of equipment, sites and
property in the ordinary course of the Borrower and its Subsidiaries' business,
but in no event may Letters of Credit be used to finance acquisitions of power
projects, reserves of geothermal steam and fluids and natural gas reserves),
(iii) make Investments in any third parties (other than Investments in
Subsidiaries), directly or indirectly, through the Borrower or any of its
Subsidiaries or Affiliates, or (iv) defease, repurchase or prepay any
Subordinated Debt or any Senior Notes.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

         SECTION 6.1. Effectiveness; Initial Credit Extension. The effectiveness
of this Agreement and the obligation of each Lender to make its initial Credit
Extension shall be subject to the prior or concurrent satisfaction of each of
the conditions precedent set forth in this Section 6.1.

         SECTION 6.1.1. Letter of Credit Agreement; Amended and Restated Credit
Agreement. The Agent shall have received, on or before the Closing Date

                  (a) this Agreement, executed and delivered by the Agent, the
         Borrower and each of the Lenders; and

                  (b) evidence satisfactory to it that the Amended and Restated
         Credit Agreement has been executed and delivered by the parties
         thereto, and that any other conditions precedent to the effectiveness
         thereof have been satisfied.

         SECTION 6.1.2. Resolutions, etc. The Agent shall have received from
each Obligor a certificate, dated the Closing Date, of its Secretary or
Assistant Secretary, as to

                                       25
<PAGE>

                  (a) resolutions of its Board of Directors then in full force
         and effect authorizing the execution, delivery and performance of this
         Agreement and each other Loan Document to be executed by it; and

                  (b) the incumbency and signatures of those of its officers
         authorized to act with respect to this Agreement and each other Loan
         Document executed by it,

upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.

         SECTION 6.1.3. Cash Collateral Agreement. The Agent shall have received
the Cash Collateral Agreement, duly executed and delivered by the Borrower, in
substantially the form of Exhibit C hereto.

         SECTION 6.1.4. Cash Collateral. The Borrower shall have deposited in
the Cash Collateral Account an amount in immediately available funds equal to
$132,747,066 on the Closing Date.

         SECTION 6.1.5. Opinions of Counsel. The Agent shall have received
opinions, dated the date of the Closing Date and addressed to the Agent and all
Lenders, from

                  (a) Lisa Bodensteiner, Esq., general counsel of the Borrower,
         and Covington & Burling, special counsel to the Borrower, substantially
         in the forms of Exhibits D-1 and D-2, respectively; and

                  (b) Such other special and local counsel as may be required by
         the Agent, in each case in form and substance satisfactory to the
         Agent.

         SECTION 6.1.6. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case may
be, all fees, costs and expenses due and payable pursuant to Sections 3.2 and
11.3, if then invoiced.

         SECTION 6.1.7. No Material Adverse Effect. No Material Adverse Effect
shall have occurred since December 31, 2002.

         SECTION 6.2. All Credit Extensions. The obligation of each Lender to
make any Credit Extension (including the initial Credit Extension) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 6.2.

         SECTION 6.2.1. Commitment Under Amended and Restated Credit Agreement.
The Revolving Loan Commitment (as defined in the Amended and Restated Credit
Agreement) shall remain in full force and effect.

         SECTION 6.2.2. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension the following statements shall
be true and correct

                  (a) the representations and warranties set forth in Article
         VII (excluding, however, those contained in Section 7.7) and in each
         other Loan Document shall be true

                                       26
<PAGE>

         and correct in all material respects with the same effect as if then
         made (unless stated to relate solely to an earlier date, in which case
         such representations and warranties shall be true and correct as of
         such earlier date);

                  (b) except as disclosed by the Borrower to the Agent and the
         Lenders pursuant to Section 7.7

                           (i)      no labor controversy, litigation,
                  arbitration or governmental investigation or proceeding shall
                  be pending or, to the knowledge of the Borrower, threatened
                  against the Borrower or any of its Significant Subsidiaries
                  which would reasonably be expected to cause a Material Adverse
                  Effect or which purports to materially and adversely affect
                  the legality, validity or enforceability of this Agreement or
                  any other Loan Document; and

                           (ii)     no development shall have occurred in any
                  labor controversy, litigation, arbitration or governmental
                  investigation or proceeding disclosed pursuant to Section 7.7
                  which might have a Material Adverse Effect; and

                  (c) no Default (other than a Nonmaterial Subsidiary Default)
         shall have then occurred and be continuing, and neither the Borrower,
         any other Obligor, nor any of its Significant Subsidiaries are in
         material violation of any law or governmental regulation or court order
         or decree which would reasonably be expected to cause a Material
         Adverse Effect.

         SECTION 6.2.3. Credit Request. The Agent shall have received an
Issuance Request for such Credit Extension. The delivery of an Issuance Request
and the issuance of the Letter of Credit shall constitute a representation and
warranty by the Borrower that on the date of the issuance of the Letter of
Credit the statements made in Section 6.2.2 are true and correct.

         SECTION 6.2.4. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be satisfactory in form and substance
to the Agent and its counsel; the Agent and its counsel shall have received all
information, approvals, opinions, documents or instruments as the Agent or its
counsel may reasonably request.

         SECTION 6.2.5. Indentures.

                  (a) The Borrower shall have certified to the Agent that its
         incurrence of the Indebtedness under the Letters of Credit hereunder is
         permitted under the terms of Section 3.4 of the Pre-2000 Indentures. To
         the extent that the Borrower is relying on clause (a) of Section 3.4 of
         the Pre-2000 Indentures, the Borrower shall have delivered to the Agent
         a certificate of an Authorized Officer of the Borrower demonstrating
         its compliance with the incurrence test set forth therein.

                  (b) The Borrower shall have certified to the Agent that the
         incurrence of Liens in respect of such Borrowing is permitted under the
         terms of Section 3.7 of the Pre-2000 Indentures and Section 3.4 of the
         Shelf Indenture.

                                       27
<PAGE>

                                  ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

         In order to induce the Lenders and the Agent to enter into this
Agreement and to make L/C Advances and issue Letters of Credit hereunder, the
Borrower represents and warrants unto the Agent and each Lender as set forth in
this Article VII.

         SECTION 7.1. Organization, etc. The Borrower and each of its
Significant Subsidiaries is a corporation, partnership, limited liability
company or similar entity validly organized and existing and in good standing
under the laws of the State of its organization, is duly qualified to do
business and is in good standing as a foreign organization in each jurisdiction
where the nature of its business requires such qualification and where the
failure to so qualify would have a material adverse effect on the Borrower's or
any Obligor's ability to perform its obligations under the Loan Documents to
which it is a party, and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its
Obligations under this Agreement and each other Loan Document to which it is a
party and to own or hold under lease its property and to conduct its business
substantially as currently conducted by it.

         SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement and each other Loan
Document executed or to be executed by it, and the execution, delivery and
performance by each other Obligor of each Loan Document executed or to be
executed by it are within the Borrower's and each such Obligor's corporate
powers, have been duly authorized by all necessary corporate action, and do not

                  (a) contravene the Borrower's or any such Obligor's Organic
         Documents;

                  (b) contravene any contractual restriction (including, without
         limitation, the Senior Note Indentures), law or governmental regulation
         or court decree or order binding on or affecting the Borrower or any
         such Obligor; or

                  (c) result in, or require the creation or imposition of, any
         Lien on any of the Borrower's or any other Obligor's properties.

         SECTION 7.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower or any other Obligor of this Agreement
or any other Loan Document to which it is a party. Neither the Borrower nor any
of its Significant Subsidiaries is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.

         SECTION 7.4. Validity, etc. This Agreement constitutes, and each other
Loan Document executed by the Borrower will, on the due execution and delivery
thereof, constitute,

                                       28
<PAGE>

the legal, valid and binding obligations of the Borrower enforceable in
accordance with their respective terms except as enforceability may be subject
to or limited by (i) bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of creditors or (ii)
general principles of equity, including the possible unavailability of specific
performance or injunctive relief; and each Loan Document executed pursuant
hereto by each other Obligor will, on the due execution and delivery thereof by
such Obligor, be the legal, valid and binding obligation of such Obligor
enforceable in accordance with its terms except as enforceability may be subject
to or limited by (i) bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of creditors or (ii)
general principles of equity, including the possible unavailability of specific
performance or injunctive relief.

         SECTION 7.5. Financial Information. The balance sheets of the Borrower
and each of its Subsidiaries as at December 31, 2002 and the related statements
of earnings and cash flow of the Borrower and each of its Subsidiaries, copies
of which have been furnished to the Agent and each Lender, have been prepared in
accordance with GAAP consistently applied, and present fairly the consolidated
financial condition of the corporations covered thereby as at the date thereof
and the results of their operations for the period then ended.

         SECTION 7.6. No Material Adverse Effect. Since December 31, 2002, there
has been no Material Adverse Effect.

         SECTION 7.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding,
investigation, or labor controversy affecting the Borrower or any of its
Significant Subsidiaries, or any of their respective properties, businesses,
assets or revenues, which would reasonably be expected to have a Material
Adverse Effect or which purports to materially and adversely affect the
legality, validity or enforceability of this Agreement or any other Loan
Document.

         SECTION 7.8. Subsidiaries. The Borrower has no Significant
Subsidiaries, except those Significant Subsidiaries which are identified in Item
7.8 ("Existing Significant Subsidiaries") of the Disclosure Schedule. The
organizational chart attached hereto as Schedule 1.1 accurately reflects the
ownership structures of the Borrower's equity interests in its Foreign
Subsidiaries as of the Closing Date.

         SECTION 7.9. Regulations U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no Letter of Credit will be used for a purpose which violates F.R.S.
Board Regulation U or X. Terms for which meanings are provided in F.R.S. Board
Regulation U or X or any regulations substituted therefor, as from time to time
in effect, are used in this Section with such meanings.

         SECTION 7.10. Accuracy of Information. All factual information (which
shall not include projections) heretofore or contemporaneously furnished by or
on behalf of the Borrower in writing to the Agent, any Issuer or any Lender for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all other such factual information hereafter furnished by or on
behalf of the Borrower to the Agent or any Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified

                                       29
<PAGE>

(except with respect to the financial statements of Borrower and its
Subsidiaries, which will fairly present the financial condition of the entities
covered thereby as of the date thereof) and, with respect to information
provided prior to the execution of this Agreement, as of the date of execution
and delivery of this Agreement by the Agent and such Lender, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading.

                                  ARTICLE VIII

                                    COVENANTS

         SECTION 8.1. Covenants. The Borrower agrees with the Agent and each
Lender that, from and after the Closing Date, until all Commitments have
terminated and all Obligations have been paid and performed in full, the
Borrower will perform the obligations set forth in this Section 8.1.

         SECTION 8.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information:

                  (a) as soon as available and in any event within 60 days after
         the end of each of the first three Fiscal Quarters of each Fiscal Year
         of the Borrower, (i) the consolidated balance sheet, statement of
         earnings and cash flow statement of the Borrower and its Subsidiaries
         for such Fiscal Quarter and for the period commencing at the end of the
         previous Fiscal Year and ending with the end of such Fiscal Quarter,
         certified by an Authorized Officer of the Borrower and (ii) a
         consolidating balance sheet and a consolidating statement of earnings
         of the Borrower and its Subsidiaries for such Fiscal Quarter and for
         the period commencing at the end of the previous Fiscal Year and ending
         with the end of such Fiscal Quarter, certified by an Authorized Officer
         of the Borrower;

                  (b) as soon as available and in any event within 120 days
         after the end of each Fiscal Year of the Borrower, (i) a copy of the
         annual audit report for such Fiscal Year for the Borrower and its
         Subsidiaries, including therein the consolidated balance sheet,
         statement of earnings and cash flow statement of the Borrower and its
         Subsidiaries as of the end of such Fiscal Year, in each case certified
         (without any Impermissible Qualification) in a manner acceptable to the
         Agent and the Required Lenders by PricewaterhouseCoopers LLC or other
         independent public accountants acceptable to the Agent and the Required
         Lenders and (ii) a consolidating balance sheet and a consolidating
         statements of earnings of the Borrower and its Subsidiaries as of the
         end of such Fiscal Year, certified by an Authorized Officer of the
         Borrower;

                  (c) as soon as available and in any event within 90 days after
         the end of each Fiscal Year of the Borrower, a consolidated budget for
         the Borrower and its Subsidiaries for the following Fiscal Year, in
         form and substance satisfactory to the Lenders;

                  (d) as soon as possible and in any event within three days
         after the Borrower obtains knowledge of each Default, a statement of an
         Authorized Officer of the Borrower

                                       30
<PAGE>

         setting forth details of such Default and the action which the Borrower
         has taken and proposes to take with respect thereto;

                  (e) as soon as possible and in any event within five days
         after the Borrower obtains knowledge of (x) any adverse development
         with respect to any litigation, action, proceeding, or labor
         controversy described in Section 7.7, (y) the commencement of any labor
         controversy, litigation, action, proceeding of the type described in
         Section 7.7, or (z) any other Material Adverse Effect, notice thereof
         and copies of all documentation relating thereto;

                  (f) promptly after the sending or filing thereof, copies of
         all reports which the Borrower sends to any of its security holders,
         and all reports and registration statements which the Borrower or any
         of its Significant Subsidiaries files with the Securities and Exchange
         Commission or any national securities exchange;

                  (g) immediately upon the Borrower's knowledge of the
         institution of any steps by the Borrower or any member of its
         Controlled Group to terminate any Pension Plan, or the failure to make
         a required contribution to any Pension Plan if such failure is
         sufficient to give rise to a Lien under Section 302(f) of ERISA, or the
         taking of any action with respect to a Pension Plan which could result
         in the requirement that the Borrower furnish a bond or other security
         to the PBGC or such Pension Plan, or the occurrence of any event with
         respect to any Pension Plan which could result in the incurrence by the
         Borrower of any material liability, fine or penalty, or any material
         increase in the contingent liability of the Borrower with respect to
         any post-retirement Welfare Plan benefit, notice thereof and copies of
         all documentation relating thereto; and

                  (h) such other information respecting the condition or
         operations, financial or otherwise, of the Borrower or any of its
         Significant Subsidiaries as any Lender through the Agent may from time
         to time reasonably request and which the Borrower is legally permitted
         to provide to such Lender.

The Borrower may provide some or all of the information required in clauses (a)
and (b) above by providing copies of its Forms 10-Q and/or 10-K filed with the
Securities and Exchange Commission.

         SECTION 8.1.2. Compliance with Laws, etc. The Borrower will, and will
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):

                  (a) the maintenance and preservation of its existence and, if
         applicable, qualification as a foreign corporation or comparable
         entity; and

                  (b) the payment, before the same become delinquent, of all
         taxes, assessments and governmental charges imposed upon it or upon its
         property except to the extent being diligently contested in good faith
         by appropriate proceedings and for which adequate reserves in
         accordance with GAAP shall have been set aside on its books.

                                       31
<PAGE>

         SECTION 8.1.3. Books and Records. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect all
of its business affairs and transactions and permit the Agent or any of its
representatives or any Lender, at reasonable times and intervals, to visit all
of its offices, to discuss its financial matters with its officers and
independent public accountant (and the Borrower hereby authorizes such
independent public accountant to discuss the Borrower's financial matters with
the Agent or its representatives whether or not any representative of the
Borrower is present) and to examine (and, at the expense of the Borrower,
photocopy extracts from) any of its books or other corporate records. The
Borrower shall pay any fees of such independent public accountant incurred in
connection with the exercise by the Agent of its rights pursuant to this
Section; provided, however, after the occurrence and during the continuance of
any Default, the Borrower shall pay for all fees of such independent accountants
incurred with each exercise by the Agent or any Lender of its rights pursuant to
this Section.

                                   ARTICLE IX

                                EVENTS OF DEFAULT

         SECTION 9.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".

         SECTION 9.1.1. Non-Payment of Obligations. The Borrower shall default
in the payment when due of any Reimbursement Obligation, or the Borrower shall
default (and such default shall continue unremedied for a period of five days)
in the payment when due of interest on any such Reimbursement Obligation, any
fee or of any other Obligation.

         SECTION 9.1.2. Breach of Warranty. Any representation or warranty of
the Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrower or any other Obligor to the Agent or any Lender
for the purposes of or in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to Article VI) is or
shall be incorrect when made in any material respect.

         SECTION 9.1.3. Non-Performance of Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any agreement
contained herein or in any other Loan Document executed by it, and such default
shall continue unremedied for a period of 30 days after notice thereof shall
have been given to the Borrower by the Agent or any Lender (or such longer
period as the Required Lenders in their discretion, may agree, provided that
such Obligor has commenced such cure within such 30 day period and thereafter
diligently pursues such cure to completion).

         SECTION 9.1.4. Default on Other Indebtedness. (a) A default shall occur
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of the Borrower or any of its Significant
Subsidiaries or any other Obligor having a principal amount, individually or in
the aggregate, in excess of $10,000,000, (b) a default shall occur in the
performance or observance of any obligation or condition with respect to such
Indebtedness if

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<PAGE>

the effect of such default is to accelerate the maturity of any such
Indebtedness or, in the case of the Borrower only, such default shall continue
unremedied for any applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such holders, to cause
such Indebtedness to become due and payable prior to its expressed maturity (and
notice of such default has been given to the relevant borrower), (c) a default
shall occur in the performance or observance of any obligation or condition with
respect to the Borrower's debt securities issued to a Trust or to any
Indebtedness of any Significant Subsidiary (other than CCFCI and CCFCII) or
Obligor, in either case having a principal amount in excess of $10,000,000, and,
as a result thereof, the holder or holders of such debt securities or such
Indebtedness, or any trustee or agent for such holders, causes such securities
or Indebtedness to be repaid more quickly than theretofore scheduled, whether
through the introduction of a "cash sweep," the increase of an existing "cash
sweep" or otherwise, or (d) a default of a type described in clause (b) above
shall occur with respect to any Indebtedness of CCFCI or CCFCII having an unpaid
principal amount in excess of $10,000,000 (whether or not such default actually
results in the acceleration of the applicable Indebtedness) and, as a result
thereof, the holder or holders of such debt securities or such Indebtedness, or
any trustee or agent for such holders, causes such securities or Indebtedness to
be repaid more quickly than theretofore scheduled, whether through the
introduction of a "cash sweep," the increase of an existing "cash sweep" or
otherwise.

         SECTION 9.1.5. Judgments. Any final judgment or order (not covered by
insurance) for the payment of money shall be rendered against the Borrower or
any Significant Subsidiary or any other Obligor in an amount in excess of
$25,000,000 (or its foreign currency equivalent) (treating any deductibles,
self-insurance or retention as not so covered) which is not stayed or discharged
within 30 days after entry of such final judgment or order, and there shall be
any period of more than 30 consecutive days following entry of the final
judgment or order in excess of $25,000,000 (or its foreign currency equivalent)
during which a stay of enforcement of such final judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect.

         SECTION 9.1.6. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan

                  (a) the institution of any steps by the Borrower, any member
         of its Controlled Group or any other Person to terminate a Pension Plan
         if, as a result of such termination, the Borrower or any such member
         could be required to make a contribution to such Pension Plan, or could
         reasonably expect to incur a liability or obligation to such Pension
         Plan, in excess of $10,000,000; or

                  (b) a contribution failure occurs with respect to any Pension
         Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.

         SECTION 9.1.7. Bankruptcy, Insolvency, etc. The Borrower or any of its
Significant Subsidiaries or any other Obligor shall

                  (a) become insolvent or generally fail to pay, or admit in
         writing its inability or unwillingness to pay, debts as they become
         due;

                                       33
<PAGE>

                  (b) apply for, consent to, or acquiesce in, the appointment of
         a trustee, receiver, sequestrator or other custodian for the Borrower
         or any of its Significant Subsidiaries or any other Obligor or any
         property of any thereof, or make a general assignment for the benefit
         of creditors;

                  (c) in the absence of such application, consent or
         acquiescence, permit or suffer to exist the appointment of a trustee,
         receiver, sequestrator or other custodian for the Borrower or any of
         its Significant Subsidiaries or any other Obligor or for a substantial
         part of the property of any thereof, and such trustee, receiver,
         sequestrator or other custodian shall not be discharged within 60 days,
         provided that the Borrower, each Significant Subsidiary and each other
         Obligor hereby expressly authorizes the Agent and each Lender to appear
         in any court conducting any relevant proceeding during such 60-day
         period to preserve, protect and defend their rights under the Loan
         Documents;

                  (d) permit or suffer to exist the commencement of any
         bankruptcy, reorganization, debt arrangement or other case or
         proceeding under any bankruptcy or insolvency law, or any dissolution,
         winding up or liquidation proceeding, in respect of the Borrower or any
         of its Significant Subsidiaries or any other Obligor, and, if any such
         case or proceeding is not commenced by the Borrower or such Significant
         Subsidiary or such other Obligor, such case or proceeding shall be
         consented to or acquiesced in by the Borrower or such Significant
         Subsidiary or such other Obligor or shall result in the entry of an
         order for relief or shall remain for 60 days undismissed, provided that
         the Borrower, each Significant Subsidiary and each other Obligor hereby
         expressly authorizes the Agent and each Lender to appear in any court
         conducting any such case or proceeding during such 60-day period to
         preserve, protect and defend their rights under the Loan Documents; or

                  (e) take any action authorizing any of the foregoing.

         SECTION 9.1.8. Impairment of Security, etc. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; or the
Borrower, any other Obligor or any Subsidiary shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability; or any Lien securing any Obligation shall, in whole or in part,
cease to be a perfected first priority Lien, subject only to those exceptions
expressly permitted by such Loan Document.

         SECTION 9.2. Action if Event of Default. If any Event of Default shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Agent, upon the direction of the Required Lenders, shall by notice to the
Borrower declare that all Commitments (if not theretofore terminated) be
terminated, whereupon without further notice, the Commitments shall terminate
and the Agent may exercise any and all remedies available under the Loan
Documents and applicable law, including withdrawing amounts from the Cash
Collateral Account pursuant to Section 4.7.

                                       34
<PAGE>

                                   ARTICLE X

                                    THE AGENT

         SECTION 10.1. Actions. Each Lender hereby appoints Scotia Capital as
its Agent under and for purposes of this Agreement and each other Loan Document.
Each Lender authorizes the Agent to act on behalf of such Lender under this
Agreement and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by such Person
(with respect to which such Person agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the Agent, pro
rata according to such Lender's Percentage, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Agent in any way relating to or arising out of this
Agreement and any other Loan Document, including reasonable attorneys' fees, and
as to which the Agent is not reimbursed by the Borrower; provided, however, that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs or expenses which are determined by
a court of competent jurisdiction in a final proceeding to have resulted from
the Agent's gross negligence or willful misconduct. The Agent shall not be
required to take any action hereunder or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement or any other Loan
Document, unless it is indemnified hereunder to its satisfaction. If any
indemnity in favor of the Agent shall be or become, in the Agent's
determination, inadequate, the Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.

         SECTION 10.2. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own willful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which it believes to be genuine and to have
been presented by a proper Person.

         SECTION 10.3. Successor. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all Lenders. If the Agent at
any time shall resign, the Required Lenders may appoint another Lender as a
successor thereto which shall thereupon become the Agent, as applicable,
hereunder. If no successor shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within 30 days after the retiring

                                       35
<PAGE>

Agent's giving notice of resignation, then the retiring Person may, on behalf of
the Lenders, appoint a successor, which shall be one of the Lenders or a
commercial banking institution organized under the laws of the U.S. (or any
State thereof) or a U.S. branch or agency of a commercial banking institution,
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor shall be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Agent, as applicable, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as the Agent, the provisions of

                  (a) this Article X shall inure to its benefit as to any
         actions taken or omitted to be taken by it while it was the Agent under
         this Agreement; and

                  (b) Section 11.3 (with respect to expenses incurred prior to
         resignation) and Section 11.4 shall continue to inure to its benefit.

         SECTION 10.4. Letters of Credit Issued by Agent or any Issuer.

                  (a) The Agent shall have the same rights and powers with
         respect to its participating interests in the Letters of Credit as any
         other Lender and may exercise the same as if it were not the Agent. The
         Agent and its Affiliates may accept deposits from, lend money to, and
         generally engage in any kind of business with the Borrower or any
         Subsidiary or Affiliate of the Borrower as if such Person were not the
         Agent hereunder.

                  (b) Each Issuer shall have the same rights and powers with
         respect to its participating interests in the Letters of Credit as any
         other Lender and may exercise the same as if it were not an Issuer.
         Each Issuer and its Affiliates may accept deposits from, lend money to,
         and generally engage in any kind of business with the Borrower or any
         Subsidiary or Affiliate of the Borrower as if it were not an Issuer
         hereunder.

         SECTION 10.5. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.

         SECTION 10.6. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and

                                       36
<PAGE>

copies of all other communications received by the Agent from the Borrower for
distribution to the Lenders by the Agent in accordance with the terms of this
Agreement.

         SECTION 10.7. Collateral Matters.

                  (a) Each of the Lenders hereby acknowledges and agrees that
         Liens upon the Collateral granted to or held by the Agent under any
         Loan Document will be released:

                           (i)      in whole, upon termination of the
                  Commitments and payment in full of all Obligations (other than
                  contingent indemnification obligations) and the expiration or
                  termination of all Letters of Credit;

                           (ii)     to the extent permitted by Section 11.1(e);
                  and

                           (iii)    if requested by the Borrower, to the extent
                  the amount then on deposit in the Cash Collateral Account
                  exceeds an amount equal to the sum of the Letter of Credit
                  Outstandings and all other Obligations then outstanding.

                  (b) Each Lender hereby authorizes the Agent to act under the
         Cash Collateral Agreement to release the Agent's Lien on applicable
         Collateral only to the extent set forth in clause (a) above.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:

                  (a) modify this Section 11.1 or modify any requirement
         hereunder that any particular action be taken by all the Lenders or by
         the Required Lenders shall be effective unless consented to by each
         Lender;

                  (b) modify any requirement hereunder that any particular
         action be taken by the Required Lenders or change the definition of
         "Required Lenders" shall be effective unless consented to by each
         Lender;

                  (c) increase the Commitment Amount of any Lender or the
         Percentage of any Lender shall be made without the consent of such
         Lender or extend the Commitment Termination Date or change any
         provision expressly requiring the consent of all Lenders shall be made
         without the consent of each Lender;

                                       37
<PAGE>

                  (d) reduce any fees described in Article III shall be made
         without the consent of each Lender affected thereby;

                  (e) authorize the release of any Lien created by a Loan
         Document shall be effective without the consent of Lenders having 100%
         of the aggregate of all Letter of Credit Outstandings and unfunded
         Commitments on such date;

                  (f) extend the due date for, or reduce the amount of, any
         Reimbursement Obligation for a Letter of Credit which has been drawn
         shall be made without the consent of the Issuer thereof and each
         Lender;

                  (g) affect adversely the interests, rights or obligations of
         an Issuer qua an Issuer shall be made without the consent of such
         Issuer; or

                  (h) affect adversely the interests, rights or obligations of
         the Agent qua the Agent shall be made without consent of the Agent.

In addition, Section 10.2 shall not be amended without the consent of the Agent.
No failure or delay on the part of the Agent or any Lender in exercising any
power or right under this Agreement or any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on the Borrower in any case shall
entitle it to any notice or demand in similar or other circumstances. No waiver
or approval by the Agent or any Lender under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval, be
applicable to subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.

         SECTION 11.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted.

         SECTION 11.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all reasonable expenses of the Agent (including the reasonable fees
and out-of-pocket expenses of a single counsel to the Agent, and of local
counsel, if any, who may be retained by counsel to the Agent) in connection with

                  (a) the negotiation, preparation, execution, delivery or
         administration of this Agreement and of each other Loan Document,
         including schedules and exhibits, and any amendments, waivers,
         consents, supplements or other modifications to this Agreement or any
         other Loan Document as may from time to time hereafter be required,
         whether or not the transactions contemplated hereby are consummated,
         and

                                       38
<PAGE>

                  (b) the preparation and review of the form of any document or
         instrument relevant to this Agreement or any other Loan Document.

The Borrower further agrees to pay, and to save the Agent, each Issuer and the
Lenders harmless from all liability for, any stamp or other taxes (other than
income taxes) which may be payable in connection with the execution or delivery
of this Agreement, the issuance of the Letters of Credit, or any other Loan
Documents. The Borrower also agrees to reimburse the Agent, each Issuer and each
Lender upon demand for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses) incurred by the Agent or such Lender in
connection with (x) the negotiation of any restructuring or "work-out", whether
or not consummated, of any Obligations and (y) the enforcement of any
Obligations upon and during the continuing of an Event of Default.

         SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent, the Issuers and
each Lender and each of their respective Affiliates, officers, directors,
employees and agents, and each other person controlling any of the foregoing
within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities Exchange Act of 1934, as amended
(collectively, the "Indemnified Parties"), free and harmless from and against
any and all actions, causes of action, suits, losses, costs, claims, liabilities
and damages, and expenses incurred by any Indemnified Party in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnified Parties or any of them as a result of, or arising
out of, or relating to

                  (a) any transaction financed or to be financed in whole or in
         part, directly or indirectly, with the use of any Letter of Credit;

                  (b) the entering into and performance of this Agreement and
         any other Loan Document by any of the Indemnified Parties (including
         any action brought by or on behalf of the Borrower as the result of the
         Required Lenders' refusal to make any Credit Extension as a result of
         the Borrower's failure to satisfy the conditions in Article VI hereof
         but not including any breach of this Agreement or any other Loan
         Document by the Agent or any of the Lenders);

                  (c) any investigation, litigation or proceeding related to any
         acquisition or proposed acquisition by the Borrower or any of its
         Subsidiaries of all or any portion of the stock or assets of any
         Person, whether or not the Agent or such Lender is party thereto;

                  (d) any investigation, litigation or proceeding related to any
         environmental cleanup, audit, compliance or other matter relating to
         the protection of the environment or the Release by the Borrower or any
         of its Subsidiaries of any Hazardous Material; or

                  (e) the presence on or under, or the escape, seepage, leakage,
         spillage, discharge, emission, discharging or releases from, any real
         property owned or operated by the

                                       39
<PAGE>

         Borrower or any Subsidiary thereof of any Hazardous Material (including
         any losses, liabilities, damages, injuries, costs, expenses or claims
         asserted or arising under any Environmental Law), regardless of whether
         caused by, or within the control of, the Borrower or such Subsidiary,

except for any such Indemnified Liabilities resulting from, arising out of or
relating to the relevant Indemnified Party's gross negligence or willful
misconduct. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. In addition to the
foregoing, the Borrower hereby waives any and all rights to seek or obtain
consequential damages from any Indemnified Party.

         The Lenders agree to indemnify each Issuer with respect to any acts
taken or omissions suffered by the Issuer in connection with each Letter of
Credit issued by it or proposed to be issued by it and the related Issuance
Request (to the extent not reimbursed by the Borrower), ratably according to
their respective Percentages, from and against any and all claims, damages,
losses, liabilities and expenses (including without limitation, reasonable fees
and disbursements of counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against any Issuer in any way relating to
or arising out of any of the Loan Documents or the Letters of Credit or any
action taken or omitted by such Issuer under the Loan Documents or the Letters
of Credit (EXPRESSLY INCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY OR
EXPENSE ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF THE
ISSUER, BUT EXCLUDING ANY SUCH CLAIM, DAMAGE, LOSS, LIABILITY OR EXPENSE
ATTRIBUTABLE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ISSUER). IT IS
THE INTENT OF THE PARTIES HERETO THAT THE ISSUER SHALL, TO THE EXTENT PROVIDED
IN THIS SECTION 11.4, BE INDEMNIFIED FOR ITS OWN ORDINARY, SOLE OR CONTRIBUTORY
NEGLIGENCE. Without limitation of the foregoing, each Lender agrees to reimburse
each Issuer promptly upon demand for such Lender's ratable share of any
reasonable out-of-pocket expenses (including reasonable counsel fees) incurred
by such Issuer 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, the Loan Documents or the Letters of Credit,
or any of them, to the extent that the Issuer is not reimbursed for such
expenses by the Borrower.

         SECTION 11.5. Survival. The obligations of the Borrower under Sections
5.1, 5.2, 11.3 and 11.4, and the obligations of the Lenders under Section 10.1,
shall in each case survive any termination of this Agreement, the payment in
full of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.

         SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.

                                       40
<PAGE>

         SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.

         SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower and the Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent, and the
conditions precedent set forth in Section 6.1 shall have been satisfied.

         SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. This Agreement and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.

         SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:

                  (a) the Borrower may not assign or transfer its rights or
         obligations hereunder without the prior written consent of the Agent
         and all Lenders; and

                  (b) the rights of sale, assignment and transfer of the Lenders
         are subject to Section 11.11.

         SECTION 11.11. Sale and Transfer of Commitments; Participations in
Commitments. Each Lender may assign, or sell participations in its Commitments
to one or more other Persons in accordance with this Section 11.11.

         SECTION 11.11.1. Assignments. Any Lender, with the written consent of
the Borrower and the Agent (which consents shall not be unreasonably withheld
and which consent, in the case of the Borrower, shall be deemed to have been
given in the absence of a written notice delivered by the Borrower to the Agent,
on or before the fifth Business Day after receipt by the Borrower of such
Lender's request for consent, stating, in reasonable detail, the reasons why the
Borrower proposes to withhold such consent and which consent shall not be
required from the Borrower after the occurrence and during the continuance of an
Event of Default) and each Issuer (which consent may be granted or withheld in
its sole unfettered discretion) may at any time assign and delegate its
Commitments to one or more commercial banks or other financial institutions;
provided that, in addition to the consents of the Agent and each Issuer as set
forth above, only notice to and not the consent of the Borrower shall be
required for the assignment and delegation of Commitments to any Affiliate of
such Lender or to any other Lender or an Affiliate of any

                                       41
<PAGE>

other Lender, and (each Person described in the foregoing clause as being the
Person to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), which assignment and delegation shall be
of a constant, and not a varying, percentage of all the assigning Lender's
Commitments and other interests, in a minimum aggregate amount of $5,000,000;
provided, however, that any such Assignee Lender will comply, if applicable,
with the provisions contained in Section 5.2 and further, provided, however,
that, the Borrower, each other Obligor and the Agent shall be entitled to
continue to deal solely and directly with such Lender in connection with the
interests so assigned and delegated to an Assignee Lender until

                  (i)      written notice of such assignment and delegation,
         together with payment instructions, addresses and related information
         with respect to such Assignee Lender, shall have been given to the
         Borrower and the Agent by such Lender and such Assignee Lender,

                  (ii)     such Assignee Lender shall have executed and
         delivered to the Borrower and the Agent a Lender Assignment Agreement,
         and to the extent and on the terms required herein, such agreement
         shall have been accepted by the Agent and the Borrower, and

                  (iii)    the processing fees described below shall have been
         paid.

From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents with
respect to obligations arising after the date of assignment. Such assignor
Lender or such Assignee Lender must pay a processing fee to the Agent upon
delivery of any Lender Assignment Agreement in the amount of $3,000. Any
attempted assignment and delegation not made in accordance with this Section
11.11.1 shall be null and void. In addition to the foregoing, and
notwithstanding any other provision hereof, (i) any Lender may at any time
without notice to or consent by any other Person assign its rights under this
Agreement to any Federal Reserve Bank and (ii) the Agent shall provide notice to
the Lenders of any assignments by it under this Section 11.11.1.

         SECTION 11.11.2. Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") a sub-participating interest
in the Commitments, or other interests of such Lender hereunder; provided,
however, that

                  (a) no sub-participation contemplated in this Section 11.11
         shall relieve such Lender from its Commitments or its other obligations
         hereunder or under any other Loan Document,

                                       42
<PAGE>

                  (b) such Lender shall remain solely responsible for the
         performance of its Commitments and such other obligations,

                  (c) the Borrower and each other Obligor and the Agent shall
         continue to deal solely and directly with such Lender in connection
         with such Lender's rights and obligations under this Agreement and each
         of the other Loan Documents,

                  (d) no Participant, unless such Participant is an Affiliate of
         such Lender, or is itself a Lender, shall be entitled to require such
         Lender to take or refrain from taking any action hereunder or under any
         other Loan Document, and

                  (e) the Borrower shall not be required to pay any amount under
         Section 5.2 that is greater than the amount which it would have been
         required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.1, 5.2, 5.4, 5.5, 11.3 and 11.4, shall be considered a Lender.

         SECTION 11.12. Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.

         SECTION 11.13. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF NEW YORK OR IN ANY MANNER PROVIDED BY LAW. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT

                                       43
<PAGE>

IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         SECTION 11.14. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION AMONG ANY OF THE AGENT,
THE LENDERS AND THE BORROWER BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
THE AGENT, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

         SECTION 11.15. Confidentiality. The Lenders shall hold all non-public
information (which has been identified as such by the Borrower) obtained
pursuant to the requirements of this Agreement in accordance with their
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to any of their examiners, their Affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide transferee, participant or assignee or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided, however, that

                  (a) unless specifically prohibited by applicable law or court
         order, each Lender shall notify the Borrower of any request by any
         governmental agency or representative thereof (other than any such
         request in connection with an examination of the financial condition of
         such Lender by such governmental agency) for disclosure of any such
         non-public information prior to disclosure of such information;

                  (b) prior to any such disclosure pursuant to this Section
         11.15, each Lender shall require any such bona fide transferee,
         participant and assignee receiving a disclosure of non-public
         information to agree in writing

                           (i)      to be bound by this Section 11.15;

                                       44
<PAGE>

                           (ii)     to require such Person to require any other
                  Person to whom such Person discloses such non-public
                  information to be similarly bound by this Section 11.15;

                  (c) except as may be required by an order of a court of
         competent jurisdiction and to the extent set forth therein, no Lender
         shall be obligated or required to return any materials furnished by the
         Borrower or any Subsidiary; and

                  (d) to any direct or indirect contractual counterparty in swap
         agreements or to such contractual counterparty's advisor (so long as
         such contractual counterparty or advisor agrees to be bound by the
         provisions of this Section 11.15).

Notwithstanding anything herein to the contrary, the parties to this Agreement
(and their employees, representatives or other agents) may disclose to any and
all persons, without limitation of any kind, the federal income tax treatment
and tax structure of the transactions contemplated by this Agreement and all
materials of any kind (including opinions or other tax analyses) relating to
such tax treatment and tax structure. However, no such party shall disclose any
information relating to such tax treatment or tax structure to the extent
nondisclosure is reasonably necessary in order to comply with applicable
securities laws. For this purpose, "tax structure" is limited to facts relevant
to the U.S. federal income tax treatment of the transactions contemplated by
this Agreement and does not include information relating to the identity of the
Borrower, its affiliates, agents or advisors.

                                       45
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.

                                   CALPINE CORPORATION

                                   By: /s/ Michael Thomas
                                       -----------------------------------------
                                       Name: Michael Thomas
                                       Title: Senior Vice President - Treasurer

                                   Address: 50 West San Fernando Avenue
                                            San Jose, CA 95113

                                   Facsimile No.: (408) 995-0505

                                   Attention: Senior Vice President - Treasurer

                                       46
<PAGE>

                                  THE BANK OF NOVA SCOTIA,
                                  as Agent

                                  By: /s/ Denis P. O'Meara
                                      ------------------------------------------
                                       Name: Denis P. O'Meara
                                       Title: Managing Director

                                  Address: Scotia Capital
                                           One Liberty Plaza
                                           New York, NY 10006

                                  Facsimile No.: (212) 225-5480

                                  Attention: Denis P. O'Meara

                                  with a copy to: The Bank of Nova Scotia
                                                  600 Peachtree Street N.E.
                                                  Suite 2700
                                                  Atlanta, GA 30308

                                  Facsimile No.: (404) 888-8998

                                  Attention: Hilma Gabbidon
                                             Administrative Agent
                                             Loan Administration

                                       47
<PAGE>

                                  LENDERS

                                  THE BANK OF NOVA SCOTIA

                                  By: /s/ Denis P. O'Meara
                                      ------------------------------------------
                                      Name: Denis P. O'Meara
                                      Title: Managing Director

                                  Address: Scotia Capital
                                           One Liberty Plaza
                                           New York, NY 10006

                                  Facsimile No.: (212) 225-5480

                                  Attention: Denis P. O'Meara

                                  with a copy to: The Bank of Nova Scotia
                                                  600 Peachtree Street N.E.
                                                  Suite 2700
                                                  Atlanta, GA 30308

                                  Facsimile No.: (404) 888-8998

                                  Attention: Hilma Gabbidon
                                             Administrative Agent
                                             Loan Administration

                                       48
<PAGE>

                                                                      SCHEDULE I

                               DISCLOSURE SCHEDULE

ITEM 7.8  EXISTING SIGNIFICANT SUBSIDIARIES:

Calpine Construction Finance Company, L.P.
Calpine Construction Finance Company II, LLC
Calpine Canada Resources Company
Calpine Canada Natural Gas Company
Calpine Canada Energy Limited
Calpine Calgary, Inc.
Calpine Natural Gas Holdings, LLC
Calpine Central Inc.
Calpine Energy Services, LP
CPN Energy Services, LP, Inc.
Geysers Power Company, LLC
Thermal Power Company
Geysers Power I Company
Calpine Construction Finance Company I, LLC Calpine CCFC II Holdings, Inc.

                                       49
<PAGE>

                                                                     SCHEDULE II

                                   PERCENTAGES

THE BANK OF NOVA SCOTIA                       100%

                                       50
<PAGE>

                                                                    SCHEDULE 1.1

                              ORGANIZATIONAL CHART

SEE ATTACHED.

                                       51
<PAGE>

                                                                   SCHEDULE 4.10

EXISTING LETTERS OF CREDIT

<TABLE>
<CAPTION>
BNS L/S                    BENEFICIARY                                      AMOUNT
--------------------------------------------------------------------------------------
<S>               <C>                                                  <C>
026               Port Authority of New York                           $  1,500,000.00
08L0348           Ford Motor Credit Company                            $     52,000.00
08L0349           Ford Motor Credit Company                            $  1,500,000.00
S001              Tampa Electric                                       $    592,200.00
S016              Chase Manhattan Bank                                 $    491,652.00
S017              Chase Manhattan Bank                                 $  2,214,661.00
S024              BNY Western Trust Co.                                $  2,700,000.00
S046              Public Utility District No.1 Klickitat               $  8,305,517.00
S047              Public Service of Colorado                           $ 28,100,000.00
S048              Public Service of Colorado                           $ 14,000,000.00
S049              Equistar Chemicals L.P.                              $  2,400,000.00
S060              ISO New England                                      $  2,600,000.00
SO62              Southern Company Services, Inc.                      $    100,000.00
SO63              American Transmission Systems, Inc.                  $  1,143,000.00
SO64              Duke Energy Trading and Marketing, L.L.C             $  7,095,000.00
SO65              Carolina Power & Light Company                       $  5,200,000.00
S066              Wisconsin Power & Light Company                      $  4,629,170.00
S067              PG&E Gas Transmission, Northwest                     $  3,922,266.00
S002/02           Southern Companies Services, Inc.                    $    150,000.00
S003/02           Southern Companies Services, Inc.                    $  1,100,000.00
S008/02           Connecticut Municipal Electric Energy Cooperative    $  1,000,000.00
S011/02           Mobile Gas Service Corp.                             $  2,300,000.00
S017/02           Liberty Mutual Insurance Co.                         $  3,100,000.00
S018/02           Kemper Surplus Lines Insurance Company               $  1,000,000.00
S026/02           Montreal Trust Company of Canada                     $  3,750,000.00
S027/02           The Bank of Nova Scotia Trust Company of New York    $  3,374,000.00
S029/02           TransCanada PipeLines Limited                        $  1,450,000.00
S031/02           Florida Power & Light                                $  3,444,518.00
S032/02           Kemper, et al                                        $  3,287,500.00
S034/02           TransCanada PipeLines Ltd.                           $  3,900,000.00
S053/02           Alabama Power Company                                $     70,000.00
90503/80085       Pengrowth Corporation                                $  7,200,000.00
90505/80085       Kinder Morgan Texas Pipeline                         $  3,000,000.00
90506/80085       Southern Company Services                            $    175,000.00
90507/80085       Bureau of Land Management                            $    100,000.00
</TABLE>

                                       52

<PAGE>

<TABLE>
<CAPTION>
                                                                        Pound
                                                                       Streling
                                                                      L/C Amount
<S>               <C>                                          <C>
BPG 0801-001      BP Gas Marketing Limited                    $ 57,932,000.00 (35,000,000.00)
NGC Gtee          National Grid Company                       $ 10,386,127.50 ( 6,274,847.45)
BPG 0801-003      Elexon Clear Limited                        $  4,634,560.00 ( 2,800,000.00)
NGC LC            National Grid Company                       $  1,254,858.43 (  758,131.00)
0054/02           CSFB                                        $ 38,354,030.00
0055/02           El Paso Merchant Energy                     $ 15,000,000.00
0058/02           Tennessee Valley Authority                  $  1,000,000.00
0059/02           Tampa Electric Company                      $    551,211.00
0060/02           Tampa Electric Company                      $ 13,156,290.00
0062/02           San Diego Gas and Electric                  $  2,312,000.00
0071/02           Wild Goose Storage                          $    405,000.00
0072/02           Tennessee Valley Authority                  $ 10,000,000.00
0092/02           American Transmission Company LLC           $  1,802,500.00
099/02            Gulf South Pipeline Company, L.P.           $  3,420,000.00
0100/02           Algonquin Gas Transmission Company          $  2,500,000.00
0101/02           Wisconsin Electric Power Company            $ 10,000,000.00
0117/02           Progress Energy                             $    600,000.00
0014/03           Tennessee Valley Authority                  $  3,000,000.00
0015/03           Acadia Power Partners                       $ 13,000,000.00
0016/03           Acadia Power Partners                       $ 15,000,000.00
0018/03                                                       $    626,960.00
0019/03                                                       $    750,000.00
0034/03                                                       $  3,000,000.00
0035/03                                                       $ 13,651,000.00
                                                              ---------------
                  Total LCs Outstanding                       $355,083,602.93
</TABLE>

                                       53

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]