Document:

Exhibit 4.3

                           PSEG Energy Holdings L.L.C.

                           7.75% Senior Notes due 2007

                                   ----------

                   Exchange and Registration Rights Agreement

                                                     April 16, 2003

Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019

Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, NY 10010

Ladies and Gentlemen:

PSEG  Energy  Holdings  L.L.C.,  a New Jersey  limited  liability  company  (the
"Company"),  proposes to issue and sell to the  Purchasers  (as defined  herein)
upon  the  terms  set  forth  in the  Purchase  Agreement  (as  defined  herein)
$350,000,000  aggregate  principal amount of its 7.75% Senior Notes due 2007. As
an  inducement  to the  Purchasers  to enter into the Purchase  Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder, the
Company  agrees  with the  Purchasers  for the  benefit of holders  (as  defined
herein) from time to time of the  Registrable  Securities (as defined herein) as
follows:

      1. Certain  Definitions.  For purposes of this  Exchange and  Registration
Rights  Agreement,  the  following  terms  shall have the  following  respective
meanings:

            "Base Interest" shall mean the interest that would otherwise  accrue
      on the  Securities  under the terms  thereof  and the  Indenture,  without
      giving effect to the provisions of this Agreement.

            The term "broker-dealer"  shall mean any broker or dealer registered
      with the Commission under the Exchange Act.

            "Closing  Date"  shall  mean the date on which  the  Securities  are
      initially issued.

            "Commission"  shall mean the United States  Securities  and Exchange
      Commission,  or any other  federal  agency at the time  administering  the
      Exchange Act or the Securities Act,  whichever is the relevant statute for
      the particular purpose.

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            "Effective Time," in the case of (i) an Exchange Registration, shall
      mean the time and date as of which the  Commission  declares  the Exchange
      Registration  Statement effective or as of which the Exchange Registration
      Statement otherwise becomes effective and (ii) a Shelf Registration, shall
      mean  the time and date as of which  the  Commission  declares  the  Shelf
      Registration  Statement  effective  or as of which the Shelf  Registration
      Statement otherwise becomes effective.

            "Electing  Holder" shall mean any holder of  Registrable  Securities
      that has returned a completed and signed Notice and  Questionnaire  to the
      Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

            "Exchange  Act" shall mean the  Securities  Exchange Act of 1934, or
      any successor thereto, as the same shall be amended from time to time.

            "Exchange  Offer" shall have the meaning assigned thereto in Section
      2(a) hereof.

            "Exchange  Registration"  shall have the meaning assigned thereto in
      Section 3(c) hereof.

            "Exchange  Registration  Statement"  shall have the meaning assigned
      thereto in Section 2(a) hereof.

            "Exchange  Securities"  shall have the meaning  assigned  thereto in
      Section 2(a) hereof.

            The term "holder"  shall mean each of the  Purchasers  and all other
      persons who acquire  Registrable  Securities  from time to time (including
      any  successors or assigns),  in each case for so long as such person owns
      any Registrable Securities.

            "Indenture"  shall mean the Indenture,  dated as of October 8, 1999,
      as amended by the First  Supplemental  Indenture dated as of September 30,
      2002 between the Company and Wachovia Bank, National Association (formerly
      known as First Union  National  Bank),  as  Trustee,  as the same shall be
      amended from time to time.

            "Notice and Questionnaire" means a Notice of Registration  Statement
      and  Selling  Securityholder  Questionnaire  substantially  in the form of
      Exhibit A hereto.

            The  term   "person"   shall   mean  a   corporation,   association,
      partnership,  organization,  business, individual, government or political
      subdivision thereof or governmental agency.

            "Purchase Agreement" shall mean the Purchase Agreement,  dated as of
      April 9, 2003,  between the  Purchasers  and the  Company  relating to the
      Securities.

            "Purchasers"  shall mean the  Purchasers  named in Schedule I to the
      Purchase Agreement.

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<PAGE>

            "Registrable  Securities"  shall  mean  the  Securities;   provided,
      however, that a Security shall cease to be a Registrable Security when (i)
      in the circumstances contemplated by Section 2(a) hereof, the Security has
      been  exchanged  for  an  Exchange   Security  in  an  Exchange  Offer  as
      contemplated in Section 2(a) hereof  (provided that any Exchange  Security
      that, pursuant to the last two sentences of Section 2(a), is included in a
      prospectus for use in connection with resales by  broker-dealers  shall be
      deemed to be a  Registrable  Security  with respect to Sections 5, 6 and 9
      until resale of such  Registrable  Security has been  effected  within the
      180-day  period  referred to in Section 2(a));  (ii) in the  circumstances
      contemplated  by  Section  2(b)  hereof,  a Shelf  Registration  Statement
      registering  such Security  under the  Securities Act has been declared or
      becomes effective and such Security has been sold or otherwise transferred
      by the holder  thereof  pursuant to and in a manner  contemplated  by such
      effective  Shelf  Registration  Statement;  (iii)  such  Security  is sold
      pursuant to Rule 144 under circumstances in which any legend borne by such
      Security relating to restrictions on  transferability  thereof,  under the
      Securities Act or otherwise,  is removed by the Company or pursuant to the
      Indenture; (iv) such Security is eligible to be sold pursuant to paragraph
      (k) of Rule 144; or (v) such Security shall cease to be outstanding.

            "Registration  Default" shall have the meaning  assigned  thereto in
      Section 2(c) hereof.

            "Registration  Expenses" shall have the meaning  assigned thereto in
      Section 4 hereof.

            "Resale Period" shall have the meaning  assigned  thereto in Section
      2(a) hereof.

            "Restricted  Holder" shall mean (i) a holder that is an affiliate of
      the  Company  within the meaning of Rule 405,  (ii) a holder who  acquires
      Exchange Securities outside the ordinary course of such holder's business,
      (iii) a holder who has arrangements or  understandings  with any person to
      participate in the Exchange Offer for the purpose of distributing Exchange
      Securities  and  (iv) a holder  that is a  broker-dealer,  but  only  with
      respect to Exchange Securities received by such broker-dealer  pursuant to
      an Exchange Offer in exchange for Registrable  Securities  acquired by the
      broker-dealer directly from the Company.

            "Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
      rule promulgated under the Securities Act (or any successor provision), as
      the same shall be amended from time to time.

            "Securities"  shall mean,  collectively,  the 7.75% Senior Notes due
      2007  of  the  Company  to be  issued  and  sold  to the  Purchasers,  and
      securities  issued in exchange therefor or in lieu thereof pursuant to the
      Indenture.

            "Securities  Act"  shall  mean the  Securities  Act of 1933,  or any
      successor thereto, as the same shall be amended from time to time.

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<PAGE>

            "Shelf  Registration"  shall have the  meaning  assigned  thereto in
      Section 2(b) hereof.

            "Shelf  Registration  Statement"  shall  have the  meaning  assigned
      thereto in Section 2(b) hereof.

            "Special  Interest"  shall  have the  meaning  assigned  thereto  in
      Section 2(c) hereof.

            "Subsidiary"  shall mean a "significant  subsidiary" as such term is
      defined in Rule 1-02 of Regulation S-X.

            "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
      any successor  thereto,  and the rules,  regulations and forms promulgated
      thereunder, all as the same shall be amended from time to time.

      Unless the context otherwise requires, any reference herein to a "Section"
or "clause" refers to a Section or clause,  as the case may be, of this Exchange
and  Registration  Rights  Agreement,  and  the  words  "herein,"  "hereof"  and
"hereunder"  and  other  words of  similar  import  refer to this  Exchange  and
Registration  Rights  Agreement as a whole and not to any particular  Section or
other subdivision.

      2. Registration Under the Securities Act.

      (a) Except as set forth in Section 2(b) below,  the Company agrees to file
under the  Securities  Act, as soon as  practicable,  but no later than 150 days
after  the  Closing  Date,  a  registration  statement  relating  to an offer to
exchange (such registration  statement,  the "Exchange Registration  Statement",
and such offer,  the "Exchange  Offer") any and all of the Securities for a like
aggregate principal amount of debt securities issued by the Company,  which debt
securities are  substantially  identical to the Securities  (and are entitled to
the  benefits  of a trust  indenture  which is  substantially  identical  to the
Indenture  or is the  Indenture  and  which has been  qualified  under the Trust
Indenture Act),  except that they have been registered  pursuant to an effective
registration  statement  under the Securities Act and do not contain  provisions
for the additional  interest  contemplated  in Section 2(c) below (such new debt
securities hereinafter called "Exchange Securities").  The Company agrees to use
its  reasonable  best  efforts to cause the Exchange  Registration  Statement to
become  effective under the Securities Act as soon as practicable,  but no later
than 180 days after the Closing  Date.  The  Exchange  Offer will be  registered
under  the  Securities  Act on the  appropriate  form and will  comply  with all
applicable  tender  offer rules and  regulations  under the  Exchange  Act.  The
Company  further  agrees to use its best  efforts to commence  and  complete the
Exchange  Offer  promptly,  but no later than 45 days  after  such  registration
statement  has become  effective,  hold the Exchange  Offer open for at least 30
days and exchange Exchange  Securities for all Registrable  Securities that have
been properly  tendered and not  withdrawn on or prior to the  expiration of the
Exchange Offer.  The Exchange Offer will be deemed to have been "completed" only
if the debt securities  received by holders other than Restricted Holders in the
Exchange Offer for  Registrable  Securities  are, upon receipt,  transferable by
each such holder without  restriction  under the Securities Act and the Exchange
Act and without material restrictions under the blue

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<PAGE>

sky or  securities  laws of a  substantial  majority of the States of the United
States of America.  The  Exchange  Offer shall be deemed to have been  completed
upon the  earlier to occur of (i) the  Company  having  exchanged  the  Exchange
Securities for all outstanding  Registrable  Securities pursuant to the Exchange
Offer and (ii) the Company  having  exchanged,  pursuant to the Exchange  Offer,
Exchange  Securities  for all  Registrable  Securities  that have been  properly
tendered and not withdrawn  before the expiration of the Exchange  Offer,  which
shall be on a date that is at least 30 days  following the  commencement  of the
Exchange Offer.  The Company agrees (x) to include in the Exchange  Registration
Statement  a  prospectus  for  use in any  resales  by any  holder  of  Exchange
Securities  that is a broker-dealer  and (y) to keep such Exchange  Registration
Statement  effective for a period (the "Resale Period")  beginning when Exchange
Securities are first issued in the Exchange Offer and ending upon the earlier of
the  expiration of the 180th day after the Exchange  Offer has been completed or
such time as such broker-dealers no longer own any Registrable Securities.  With
respect to such  Exchange  Registration  Statement,  such holders shall have the
benefit of the rights of indemnification  and contribution set forth in Sections
6(a), (c), (d) and (e) hereof.

      (b) If (i) on or  prior  to the  time  the  Exchange  Offer  is  completed
existing  Commission  interpretations  are changed such that the debt securities
received by holders  other than  Restricted  Holders in the  Exchange  Offer for
Registrable  Securities are not or would not be, upon receipt,  transferable  by
each such holder without restriction under the Securities Act, (ii) the Exchange
Offer has not been completed within 225 days following the Closing Date or (iii)
the Exchange Offer is not available to any holder of the Securities, the Company
shall,  in lieu of (or, in the case of clause (iii),  in addition to) conducting
the Exchange Offer  contemplated  by Section 2(a), file under the Securities Act
as soon as  practicable,  but no later  than the later of 30 days after the time
such obligation to file arises, a "shelf"  registration  statement providing for
the  registration  of,  and the sale on a  continuous  or  delayed  basis by the
holders  of,  all of the  Registrable  Securities,  pursuant  to Rule 415 or any
similar  rule that may be adopted by the  Commission  (such  filing,  the "Shelf
Registration"  and  such  registration   statement,   the  "Shelf   Registration
Statement").  The Company agrees to use its reasonable best efforts (x) to cause
the Shelf  Registration  Statement  to become or be declared  effective no later
than 30 days after such Shelf  Registration  Statement is filed and to keep such
Shelf Registration  Statement  continuously effective for a period ending on the
earlier of the second  anniversary  of the Effective  Time or such time as there
are no longer any Registrable Securities outstanding, provided, however, that no
holder  shall be entitled to be named as a selling  securityholder  in the Shelf
Registration  Statement  or to use the  prospectus  forming a part  thereof  for
resales of Registrable  Securities unless such holder is an Electing Holder, and
(y) after the Effective Time of the Shelf Registration Statement,  promptly upon
the request of any holder of Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such holder to use the
prospectus  forming  a part  thereof  for  resales  of  Registrable  Securities,
including, without limitation, any action necessary to identify such holder as a
selling securityholder in the Shelf Registration Statement,  provided,  however,
that nothing in this Clause (y) shall relieve any such holder of the  obligation
to return a  completed  and signed  Notice and  Questionnaire  to the Company in
accordance  with  Section  3(d)(iii)

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<PAGE>

hereof. The Company further agrees to supplement or make amendments to the Shelf
Registration  Statement,  as and when  required  by the  rules,  regulations  or
instructions  applicable to the  registration  form used by the Company for such
Shelf  Registration  Statement or by the Securities Act or rules and regulations
thereunder  for shelf  registration,  and the Company  agrees to furnish to each
Electing  Holder copies of any such  supplement or amendment  prior to its being
used or promptly following its filing with the Commission.

      (c) In the  event  that  (i)  the  Company  has  not  filed  the  Exchange
Registration  Statement or Shelf Registration Statement on or before the date on
which such  registration  statement is required to be filed  pursuant to Section
2(a) or 2(b),  respectively,  or (ii) such  Exchange  Registration  Statement or
Shelf Registration Statement has not become effective or been declared effective
by the Commission on or before the date on which such registration  statement is
required to become or be declared  effective  pursuant to Section  2(a) or 2(b),
respectively,  or (iii) the Exchange Offer has not been completed within 45 days
after the initial effective date of the Exchange Registration Statement relating
to the  Exchange  Offer (if the Exchange  Offer is then  required to be made) or
(iv)  any  Exchange  Registration  Statement  or  Shelf  Registration  Statement
required by Section  2(a) or 2(b)  hereof is filed and  declared  effective  but
shall  thereafter  either be withdrawn by the Company or shall become subject to
an effective  stop order issued  pursuant to Section 8(d) of the  Securities Act
suspending  the  effectiveness  of  such   registration   statement  (except  as
specifically  permitted  herein)  without  being  succeeded  immediately  by  an
additional  registration statement filed and declared effective (each such event
referred to in clauses (i)  through  (iv),  a  "Registration  Default"  and each
period during which a  Registration  Default has occurred and is  continuing,  a
"Registration   Default   Period"),   then,  as  liquidated   damages  for  such
Registration  Default,  subject  to the  provisions  of  Section  9(b),  special
interest ("Special Interest"), in addition to the Base Interest, shall accrue at
a per  annum  rate of 0.25% for the  first 90 days of the  Registration  Default
Period,  at a per annum rate of 0.50% for the second 90 days of the Registration
Default  Period,  at a per  annum  rate of  0.75%  for the  third 90 days of the
Registration  Default Period and at a per annum rate of 1.0%  thereafter for the
remaining portion of the Registration Default Period.

      (d) The Company shall take all actions  necessary or advisable to be taken
by it to ensure that the  transactions  contemplated  herein are  effected as so
contemplated.

      (e) Any reference herein to a registration  statement as of any time shall
be deemed to include any document  incorporated,  or deemed to be  incorporated,
therein  by  reference  as  of  such  time  and  any  reference  herein  to  any
post-effective  amendment  to a  registration  statement as of any time shall be
deemed to  include  any  document  incorporated,  or deemed to be  incorporated,
therein by reference as of such time.

      3. Registration Procedures.

      If the Company files a registration  statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:

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      (a) At or before the Effective  Time of the Exchange  Registration  or the
Shelf Registration,  as the case may be, the Company shall qualify the Indenture
under the Trust Indenture Act of 1939.

      (b) In the event that such qualification  would require the appointment of
a new  trustee  under the  Indenture,  the Company  shall  appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.

      (c) In  connection  with the  Company's  obligations  with  respect to the
registration  of  Exchange  Securities  as  contemplated  by  Section  2(a) (the
"Exchange  Registration"),   if  applicable,  the  Company  shall,  as  soon  as
practicable (or as otherwise specified):

            (i) prepare and file with the Commission, as soon as practicable but
      no later than 150 days after the Closing  Date,  an Exchange  Registration
      Statement on any form which may be utilized by the Company and which shall
      permit  the  Exchange   Offer  and  resales  of  Exchange   Securities  by
      broker-dealers  during the Resale Period to be effected as contemplated by
      Section 2(a), and use its  reasonable  best efforts to cause such Exchange
      Registration   Statement  to  become  effective  as  soon  as  practicable
      thereafter, but no later than 180 days after the Closing Date;

            (ii) as soon as  practicable  prepare  and file with the  Commission
      such  amendments and supplements to such Exchange  Registration  Statement
      and the  prospectus  included  therein as may be  necessary  to effect and
      maintain the effectiveness of such Exchange Registration Statement for the
      periods and  purposes  contemplated  in Section  2(a) hereof and as may be
      required by the applicable rules and regulations of the Commission and the
      instructions   applicable  to  the  form  of  such  Exchange  Registration
      Statement,  and  promptly  provide  each  broker-dealer  holding  Exchange
      Securities with such number of copies of the prospectus  included  therein
      (as then amended or supplemented),  in conformity in all material respects
      with the  requirements  of the Securities Act and the Trust  Indenture Act
      and the  rules  and  regulations  of the  Commission  thereunder,  as such
      broker-dealer reasonably may request prior to the expiration of the Resale
      Period, for use in connection with resales of Exchange Securities;

            (iii)  promptly  notify each  broker-dealer  that has  requested  or
      received copies of the prospectus included in such registration statement,
      and confirm such advice in writing,  (A) when such  Exchange  Registration
      Statement or the prospectus  included therein or any prospectus  amendment
      or  supplement  or  post-effective  amendment  has been filed,  and,  with
      respect to such  Exchange  Registration  Statement  or any  post-effective
      amendment,  when the same has become effective, (B) of any comments by the
      Commission and by the blue sky or securities  commissioner or regulator of
      any state with  respect  thereto  or any  request  by the  Commission  for
      amendments  or  supplements  to such  Exchange  Registration  Statement or
      prospectus  or for  additional  information,  (C) of the  issuance  by the
      Commission of any stop order suspending the effectiveness of such Exchange
      Registration Statement or the initiation or threatening of any proceedings
      for that purpose, (D) if at any time the representations and

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      warranties of the Company  contemplated  by Section 5 cease to be true and
      correct in all material respects, (E) of the receipt by the Company of any
      notification  with respect to the suspension of the  qualification  of the
      Exchange  Securities  for sale in any  jurisdiction  or the  initiation or
      threatening of any proceeding for such purpose,  or (F) at any time during
      the Resale Period when a prospectus is required to be delivered  under the
      Securities  Act, that such Exchange  Registration  Statement,  prospectus,
      prospectus  amendment or supplement or  post-effective  amendment does not
      conform in all material  respects to the  applicable  requirements  of the
      Securities Act and the Trust  Indenture Act and the rules and  regulations
      of the Commission thereunder or contains an untrue statement of a material
      fact or omits to state any material fact required to be stated  therein or
      necessary to make the  statements  therein not  misleading in light of the
      circumstances then existing;

            (iv) in the event that the Company  would be  required,  pursuant to
      Section 3(c)(iii)(F) above, to notify any broker-dealers  holding Exchange
      Securities,  without  delay  prepare  and  furnish  to each such  holder a
      reasonable  number of copies of a  prospectus  supplemented  or amended so
      that,  as thereafter  delivered to purchasers of such Exchange  Securities
      during the Resale Period,  such  prospectus  shall conform in all material
      respects to the  applicable  requirements  of the  Securities  Act and the
      Trust  Indenture  Act and the  rules  and  regulations  of the  Commission
      thereunder and shall not contain an untrue statement of a material fact or
      omit to state a material fact  required to be stated  therein or necessary
      to  make  the   statements   therein  not   misleading  in  light  of  the
      circumstances then existing;

            (v) use its best  efforts  to  obtain  the  withdrawal  of any order
      suspending the  effectiveness of such Exchange  Registration  Statement or
      any post-effective amendment thereto at the earliest practicable date;

            (vi) use its reasonable  best efforts to (A) register or qualify the
      Exchange  Securities  under the  securities  laws or blue sky laws of such
      jurisdictions  as are  contemplated  by  Section  2(a) no  later  than the
      commencement  of the  Exchange  Offer,  (B)  keep  such  registrations  or
      qualifications  in effect  and  comply  with such laws so as to permit the
      continuance of offers,  sales and dealings  therein in such  jurisdictions
      until the  expiration  of the Resale Period and (C) take any and all other
      actions  as may be  reasonably  necessary  or  advisable  to  enable  each
      broker-dealer  holding  Exchange  Securities to consummate the disposition
      thereof in such jurisdictions;  provided,  however, that the Company shall
      not be  required  for  any  such  purpose  to  (1)  qualify  as a  foreign
      corporation in any jurisdiction wherein it would not otherwise be required
      to qualify but for the requirements of this Section 3(c)(vi),  (2) consent
      to general  service of  process in any such  jurisdiction  or (3) make any
      changes to its  certificate of  incorporation  or by-laws or any agreement
      between it and its stockholders;

            (vii) use its  reasonable  best  efforts  to obtain  the  consent or
      approval of each governmental agency or authority,  whether federal, state
      or local, which may be required to effect the Exchange  Registration,  the
      Exchange  Offer  and the

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      offering  and sale of Exchange  Securities  by  broker-dealers  during the
      Resale Period;

            (viii)  provide CUSIP and ISIN numbers for all Exchange  Securities,
      not later than the applicable Effective Time;

            (ix)  comply  with  all  applicable  rules  and  regulations  of the
      Commission, and make generally available to its securityholders as soon as
      practicable  but no later than eighteen months after the effective date of
      such Exchange Registration  Statement, an earning statement of the Company
      and its  subsidiaries  complying  with Section 11(a) of the Securities Act
      (including, at the option of the Company, Rule 158 thereunder).

      (d) In connection with the Company's obligations with respect to the Shelf
Registration,  if applicable,  the Company shall,  as soon as practicable (or as
otherwise specified):

            (i) prepare and file with the Commission, as soon as practicable but
      in any case within the time  periods  specified  in Section  2(b), a Shelf
      Registration  Statement  on any form which may be  utilized by the Company
      and which shall register all of the  Registrable  Securities for resale by
      the  holders  thereof  in  accordance  with  such  method  or  methods  of
      disposition  as may be  specified  by such of the holders as, from time to
      time, may be Electing Holders and use its best efforts to cause such Shelf
      Registration  Statement to become  effective as soon as practicable but in
      any case within the time periods specified in Section 2(b);

            (ii) not less than 30 calendar days prior to the  Effective  Time of
      the Shelf Registration Statement, mail the Notice and Questionnaire to the
      holders of Registrable Securities; no holder shall be entitled to be named
      as a selling  securityholder in the Shelf Registration Statement as of the
      Effective  Time,  and no holder  shall be entitled  to use the  prospectus
      forming a part thereof for resales of Registrable  Securities at any time,
      unless  such  holder  has  returned  a  completed  and  signed  Notice and
      Questionnaire  to the  Company  by the  deadline  for  response  set forth
      therein;  provided,  however, holders of Registrable Securities shall have
      at  least  28  calendar  days  from  the  date on  which  the  Notice  and
      Questionnaire  is first mailed to such  holders to return a completed  and
      signed Notice and Questionnaire to the Company;

            (iii) after the Effective Time of the Shelf Registration  Statement,
      upon the request of any holder of Registrable  Securities that is not then
      an  Electing  Holder,  promptly  send a Notice and  Questionnaire  to such
      holder; provided that the Company shall not be required to take any action
      to name such holder as a selling  securityholder in the Shelf Registration
      Statement  or to enable such holder to use the  prospectus  forming a part
      thereof  for  resales of  Registrable  Securities  until  such  holder has
      returned a completed and signed Notice and Questionnaire to the Company;

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<PAGE>

            (iv) as soon as  practicable  prepare  and file with the  Commission
      such amendments and supplements to such Shelf  Registration  Statement and
      the prospectus included therein as may be necessary to effect and maintain
      the  effectiveness  of such Shelf  Registration  Statement  for the period
      specified in Section 2(b) hereof and as may be required by the  applicable
      rules and regulations of the Commission and the instructions applicable to
      the form of such Shelf Registration Statement, and furnish to the Electing
      Holders copies of any such supplement or amendment  simultaneously with or
      prior to its being used or filed with the Commission;

            (v) comply with the provisions of the Securities Act with respect to
      the disposition of all of the Registrable Securities covered by such Shelf
      Registration   Statement  in  accordance  with  the  intended  methods  of
      disposition   by  the  Electing   Holders   provided  for  in  such  Shelf
      Registration Statement;

            (vi) provide (A) the Electing Holders,  (B) the underwriters  (which
      term,  for purposes of this Exchange and  Registration  Rights  Agreement,
      shall include a person deemed to be an  underwriter  within the meaning of
      Section 2(a)(11) of the Securities Act), if any, thereof, (C) any sales or
      placement  agent therefor,  (D) counsel for any such  underwriter or agent
      and (E) not  more  than  one  counsel  for all the  Electing  Holders  the
      opportunity to participate in the  preparation of such Shelf  Registration
      Statement,  each prospectus  included therein or filed with the Commission
      and each amendment or supplement thereto;

            (vii) for a  reasonable  period  prior to the  filing of such  Shelf
      Registration  Statement,  and throughout  the period  specified in Section
      2(b), make available at reasonable times, at the Company's principal place
      of business or such other  reasonable  place for inspection by the persons
      referred to in Section 3(d)(vi) who shall certify to the Company that they
      have a current  intention to sell the Registrable  Securities  pursuant to
      the Shelf Registration, such financial and other information and books and
      records of the Company,  and cause the  officers,  employees,  counsel and
      independent certified public accountants of the Company to respond to such
      inquiries,  as shall  be  reasonably  necessary,  in the  judgment  of the
      respective  counsel  referred to in such Section,  to conduct a reasonable
      investigation  within the  meaning of  Section 11 of the  Securities  Act;
      provided,  however,  that each such party shall be required to maintain in
      confidence  and not to disclose  to any other  person any  information  or
      records reasonably designated by the Company as being confidential,  until
      such  time as (A) such  information  becomes  a matter  of  public  record
      (whether by virtue of its  inclusion  in such  registration  statement  or
      otherwise),  or (B) such person  shall be  required  so to  disclose  such
      information  pursuant  to a  subpoena  or  order  of any  court  or  other
      governmental  agency or body having  jurisdiction over the matter (subject
      to the  requirements of such order,  and only after such person shall have
      given the Company prompt prior written notice of such requirement), or (C)
      such  information  is required to be set forth in such Shelf  Registration
      Statement or the  prospectus  included  therein or in an amendment to such
      Shelf  Registration  Statement  or an  amendment  or  supplement  to  such
      prospectus in order that such Shelf  Registration  Statement,  prospectus,
      amendment or supplement, as the

                                       10
<PAGE>

      case  may  be,  complies  with  applicable  requirements  of  the  federal
      securities  laws and the rules and  regulations of the Commission and does
      not  contain  an  untrue  statement  of a  material  fact or omit to state
      therein a material fact required to be stated therein or necessary to make
      the statements  therein not misleading in light of the circumstances  then
      existing;

            (viii)  promptly notify each of the Electing  Holders,  any sales or
      placement agent therefor and any underwriter  thereof (which  notification
      may be made through any managing  underwriter that is a representative  of
      such underwriter for such purpose) and confirm such advice in writing, (A)
      when such Shelf Registration  Statement or the prospectus included therein
      or any prospectus amendment or supplement or post-effective  amendment has
      been filed, and, with respect to such Shelf Registration  Statement or any
      post-effective  amendment,  when the same has become effective, (B) of any
      comments by the Commission and by the blue sky or securities  commissioner
      or  regulator  of any state with  respect  thereto  or any  request by the
      Commission  for  amendments  or  supplements  to such  Shelf  Registration
      Statement or prospectus or for additional information, (C) of the issuance
      by the Commission of any stop order  suspending the  effectiveness of such
      Shelf  Registration  Statement or the  initiation  or  threatening  of any
      proceedings for that purpose,  (D) if at any time the  representations and
      warranties of the Company  contemplated by Section 3(d)(xvii) or Section 5
      cease to be true and correct in all material respects,  (E) of the receipt
      by the Company of any  notification  with respect to the suspension of the
      qualification  of the Registrable  Securities for sale in any jurisdiction
      or the initiation or  threatening  of any proceeding for such purpose,  or
      (F) if at any time when a prospectus is required to be delivered under the
      Securities  Act,  that  such  Shelf  Registration  Statement,  prospectus,
      prospectus  amendment or supplement or  post-effective  amendment does not
      conform in all material  respects to the  applicable  requirements  of the
      Securities Act and the Trust  Indenture Act and the rules and  regulations
      of the Commission thereunder or contains an untrue statement of a material
      fact or omits to state any material fact required to be stated  therein or
      necessary to make the  statements  therein not  misleading in light of the
      circumstances then existing;

            (ix) use its reasonable best efforts to obtain the withdrawal of any
      order suspending the effectiveness of such  registration  statement or any
      post-effective amendment thereto at the earliest practicable date;

            (x) if requested by any managing  underwriter or  underwriters,  any
      placement or sales agent or any Electing Holder, promptly incorporate in a
      prospectus  supplement or post-effective  amendment such information as is
      required by the applicable  rules and regulations of the Commission and as
      such managing  underwriter  or  underwriters,  such agent or such Electing
      Holder  specifies  should be included therein relating to the terms of the
      sale of such Registrable Securities, including information with respect to
      the principal amount of Registrable Securities being sold by such Electing
      Holder or agent or to any  underwriters,  the name and description of such
      Electing  Holder,  agent  or  underwriter,  the  offering  price  of  such
      Registrable Securities and any discount,

                                       11
<PAGE>

      commission or other compensation  payable in respect thereof, the purchase
      price being paid  therefor by such  underwriters  and with  respect to any
      other terms of the offering of the  Registrable  Securities  to be sold by
      such  Electing  Holder  or  agent  or to such  underwriters;  and make all
      required filings of such prospectus supplement or post-effective amendment
      promptly  after  notification  of the matters to be  incorporated  in such
      prospectus supplement or post-effective amendment;

            (xi) furnish to each Electing Holder, each placement or sales agent,
      if any,  therefor,  each  underwriter,  if any, thereof and the respective
      counsel  referred to in Section 3(d)(vi) an executed copy (or, in the case
      of an  Electing  Holder,  a  conformed  copy) of such  Shelf  Registration
      Statement,  each  such  amendment  and  supplement  thereto  (in each case
      including  all  exhibits  thereto  (in the case of an  Electing  Holder of
      Registrable  Securities,  upon  request)  and  documents  incorporated  by
      reference  therein)  and such number of copies of such Shelf  Registration
      Statement  (excluding  exhibits  thereto  and  documents  incorporated  by
      reference  therein  unless  specifically  so  requested  by such  Electing
      Holder,  agent or  underwriter,  as the case may be) and of the prospectus
      included in such Shelf Registration  Statement (including each preliminary
      prospectus  and any summary  prospectus),  in  conformity  in all material
      respects with the  applicable  requirements  of the Securities Act and the
      Trust  Indenture  Act and the  rules  and  regulations  of the  Commission
      thereunder,  and such other documents,  as such Electing Holder, agent, if
      any,  and  underwriter,  if  any,  may  reasonably  request  in  order  to
      facilitate  the offering and  disposition  of the  Registrable  Securities
      owned  by  such  Electing  Holder,  offered  or  sold  by  such  agent  or
      underwritten by such underwriter and to permit such Electing Holder, agent
      and  underwriter to satisfy the prospectus  delivery  requirements  of the
      Securities  Act;  and  the  Company  hereby  consents  to the  use of such
      prospectus  (including such  preliminary  and summary  prospectus) and any
      amendment or supplement  thereto by each such  Electing  Holder and by any
      such  agent  and  underwriter,  in each  case in the  form  most  recently
      provided to such person by the Company,  in  connection  with the offering
      and  sale  of  the  Registrable   Securities  covered  by  the  prospectus
      (including such  preliminary and summary  prospectus) or any supplement or
      amendment thereto;

            (xii) use  reasonable  best  efforts to (A)  register or qualify the
      Registrable Securities to be included in such Shelf Registration Statement
      under such securities laws or blue sky laws of such  jurisdictions  as any
      Electing  Holder and each placement or sales agent,  if any,  therefor and
      underwriter,  if any,  thereof  shall  reasonably  request,  (B) keep such
      registrations or  qualifications in effect and comply with such laws so as
      to permit the  continuance of offers,  sales and dealings  therein in such
      jurisdictions  during the period the Shelf  Registration  is  required  to
      remain  effective  under  Section  2(b)  above  and  for so long as may be
      necessary to enable any such  Electing  Holder,  agent or  underwriter  to
      complete  its   distribution   of   Securities   pursuant  to  such  Shelf
      Registration  Statement  and (C) take any and all other  actions as may be
      reasonably  necessary or advisable  to enable each such  Electing  Holder,
      agent, if any, and  underwriter,  if any, to

                                       12
<PAGE>

      consummate  the  disposition  in such  jurisdictions  of such  Registrable
      Securities;  provided, however, that the Company shall not be required for
      any  such  purpose  to  (1)  qualify  as  a  foreign  corporation  in  any
      jurisdiction wherein it would not otherwise be required to qualify but for
      the requirements of this Section 3(d)(xii), (2) consent to general service
      of  process  in any  such  jurisdiction  or (3) make  any  changes  to its
      certificate of  incorporation  or by-laws or any agreement  between it and
      its stockholders;

            (xiii) use its  reasonable  best  efforts  to obtain the  consent or
      approval of each governmental agency or authority,  whether federal, state
      or local,  which may be required to effect the Shelf  Registration  or the
      offering or sale in connection  therewith or to enable the selling  holder
      or  holders  to  offer,   or  to  consummate  the  disposition  of,  their
      Registrable Securities;

            (xiv) unless any Registrable  Securities shall be in book-entry only
      form,  cooperate with the Electing Holders and the managing  underwriters,
      if any, to facilitate the timely  preparation and delivery of certificates
      representing Registrable Securities to be sold, which certificates,  if so
      required by any securities exchange upon which any Registrable  Securities
      are listed, shall be penned,  lithographed or engraved, or produced by any
      combination  of  such  methods,  on  steel  engraved  borders,  and  which
      certificates shall not bear any restrictive  legends;  and, in the case of
      an underwritten offering, enable such Registrable Securities to be in such
      denominations  and  registered in such names as the managing  underwriters
      may  request  at  least  two  business  days  prior  to  any  sale  of the
      Registrable Securities;

            (xv) provide CUSIP and ISIN numbers for all Registrable  Securities,
      not later than the applicable Effective Time;

            (xvi)  enter into one or more  underwriting  agreements,  engagement
      letters,  agency  agreements,  "best efforts"  underwriting  agreements or
      similar  agreements,   as  appropriate,   including  customary  provisions
      relating to indemnification and contribution,  and take such other actions
      in connection  therewith as any Electing Holders  aggregating at least 20%
      in aggregate  principal  amount of the Registrable  Securities at the time
      outstanding   shall  request  in  order  to  expedite  or  facilitate  the
      disposition of such Registrable Securities;

            (xvii)  whether  or not an  agreement  of the  type  referred  to in
      Section 3(d)(xvi) hereof is entered into and whether or not any portion of
      the offering  contemplated  by the Shelf  Registration  is an underwritten
      offering  or is made  through  a  placement  or sales  agent or any  other
      entity,  (A) make such  representations  and  warranties  to the  Electing
      Holders  and the  placement  or  sales  agent,  if any,  therefor  and the
      underwriters,  if  any,  thereof  in  form,  substance  and  scope  as are
      customarily  made in  connection  with  an  offering  of  debt  securities
      pursuant to any appropriate agreement or to a registration statement filed
      on the form applicable to the Shelf Registration; (B) obtain an opinion of
      counsel to the Company in customary form and covering such matters, of the
      type customarily

                                       13
<PAGE>

      covered by such an opinion,  as the managing  underwriters,  if any, or as
      any Electing Holders of at least 20% in aggregate  principal amount of the
      Registrable  Securities at the time  outstanding  may reasonably  request,
      addressed to such Electing Holder or Electing Holders and the placement or
      sales agent, if any,  therefor and the  underwriters,  if any, thereof and
      dated the effective date of such Shelf Registration Statement (and if such
      Shelf Registration  Statement  contemplates an underwritten  offering of a
      part or all of the Registrable  Securities,  dated the date of the closing
      under the underwriting  agreement  relating thereto) (it being agreed that
      the  matters  to  be  covered  by  such  opinion  shall  include  the  due
      incorporation and good standing of the Company and its  Subsidiaries;  the
      qualification of the Company and its Subsidiaries to transact  business as
      foreign corporations; the due authorization, execution and delivery of the
      relevant  agreement of the type referred to in Section  3(d)(xvi)  hereof;
      the due authorization,  execution,  authentication  and issuance,  and the
      validity and  enforceability,  of the Securities;  the absence of material
      legal or governmental  proceedings involving the Company; the absence of a
      breach by the Company or any of its  Subsidiaries  of, or a default under,
      material  agreements  binding  upon the Company or any  Subsidiary  of the
      Company; the absence of governmental  approvals required to be obtained in
      connection  with the  Shelf  Registration,  the  offering  and sale of the
      Registrable Securities, this Exchange and Registration Rights Agreement or
      any agreement of the type referred to in Section 3(d)(xvi) hereof,  except
      such approvals as may be required under state securities or blue sky laws;
      the material  compliance as to form of such Shelf  Registration  Statement
      and any documents  incorporated by reference  therein and of the Indenture
      with the  requirements  of the Securities Act and the Trust  Indenture Act
      and the rules and regulations of the Commission thereunder,  respectively;
      and, as of the date of the opinion and of the Shelf Registration Statement
      or most recent  post-effective  amendment thereto, as the case may be, the
      absence from such Shelf Registration Statement and the prospectus included
      therein,  as  then  amended  or  supplemented,   and  from  the  documents
      incorporated  by reference  therein (in each case other than the financial
      statements and other financial information contained therein) of an untrue
      statement of a material  fact or the omission to state  therein a material
      fact necessary to make the statements  therein not misleading (in the case
      of such documents,  in the light of the circumstances existing at the time
      that such  documents  were filed with the  Commission  under the  Exchange
      Act));  (C) obtain a "cold comfort" letter or letters from the independent
      certified  public  accountants  of the  Company  addressed  to the selling
      Electing  Holders,  the placement or sales agent, if any,  therefor or the
      underwriters,  if any, thereof, dated (i) the effective date of such Shelf
      Registration  Statement  and (ii)  the  effective  date of any  prospectus
      supplement to the prospectus included in such Shelf Registration Statement
      or  post-effective  amendment to such Shelf  Registration  Statement which
      includes  unaudited or audited financial  statements as of a date or for a
      period  subsequent to that of the latest such statements  included in such
      prospectus  (and, if such Shelf  Registration  Statement  contemplates  an
      underwritten  offering  pursuant  to  any  prospectus  supplement  to  the
      prospectus included in such Shelf Registration Statement or post-effective
      amendment to such Shelf Registration Statement

                                       14
<PAGE>

      which includes  unaudited or audited financial  statements as of a date or
      for a period subsequent to that of the latest such statements  included in
      such  prospectus,  dated the date of the  closing  under the  underwriting
      agreement  relating  thereto),  such letter or letters to be in  customary
      form and covering such matters of the type customarily  covered by letters
      of such type;  (D) deliver  such  documents  and  certificates,  including
      officers'  certificates,  as may be  reasonably  requested by any Electing
      Holders of at least 20% in aggregate  principal  amount of the Registrable
      Securities at the time  outstanding  or the  placement or sales agent,  if
      any, therefor and the managing  underwriters,  if any, thereof to evidence
      the accuracy of the representations and warranties made pursuant to clause
      (A) above or those  contained  in Section  5(a) hereof and the  compliance
      with or  satisfaction  of any  agreements or  conditions  contained in the
      underwriting agreement or other agreement entered into by the Company; and
      (E)  undertake  such  obligations   relating  to  expense   reimbursement,
      indemnification and contribution as are provided in Section 6 hereof;

            (xviii) notify in writing each holder of  Registrable  Securities of
      any  proposal  by the  Company  to amend or waive  any  provision  of this
      Exchange and Registration Rights Agreement pursuant to Section 9(h) hereof
      and of any amendment or waiver effected  pursuant  thereto,  each of which
      notices  shall  contain the text of the  amendment  or waiver  proposed or
      effected, as the case may be;

            (xix) in the  event  that any  broker-dealer  registered  under  the
      Exchange Act shall underwrite any Registrable Securities or participate as
      a member of an  underwriting  syndicate or selling group or "assist in the
      distribution"  (within  the  meaning of the  Conduct  Rules (the  "Conduct
      Rules) of the National Association of Securities Dealers, Inc. ("NASD") or
      any successor thereto, as amended from time to time) thereof, whether as a
      holder of such Registrable Securities or as an underwriter, a placement or
      sales agent or a broker or dealer in respect thereof, or otherwise, assist
      such  broker-dealer  in complying  with the  requirements  of such Conduct
      Rules, including by (A) if such Conduct Rules shall so require, engaging a
      "qualified independent  underwriter" (as defined in such Conduct Rules) to
      participate  in  the  preparation  of  the  Shelf  Registration  Statement
      relating to such  Registrable  Securities,  to exercise usual standards of
      due  diligence  in respect  thereto  and, if any  portion of the  offering
      contemplated  by such  Shelf  Registration  Statement  is an  underwritten
      offering or is made through a placement or sales agent,  to recommend  the
      yield of such Registrable Securities,  (B) indemnifying any such qualified
      independent   underwriter  to  the  extent  of  the   indemnification   of
      underwriters  provided  in Section 6 hereof  (or to such  other  customary
      extent  as may be  reasonably  requested  by  such  underwriter),  and (C)
      providing  such  information to such  broker-dealer  as may be required in
      order  for such  broker-dealer  to  comply  with the  requirements  of the
      Conduct Rules; and

            (xx)  comply  with  all  applicable  rules  and  regulations  of the
      Commission, and make generally available to its securityholders as soon as
      practicable  but in any event not later  than  eighteen  months  after the
      effective date of such Shelf

                                       15
<PAGE>

      Registration  Statement,  an  earning  statement  of the  Company  and its
      subsidiaries   complying   with  Section  11(a)  of  the   Securities  Act
      (including, at the option of the Company, Rule 158 thereunder).

      (e) In the event that the Company  would be required,  pursuant to Section
3(d)(viii)(F)  above,  to notify the Electing  Holders,  the  placement or sales
agent, if any,  therefor and the managing  underwriters,  if any,  thereof,  the
Company shall without delay prepare and furnish to each of the Electing Holders,
to each placement or sales agent, if any, and to each such underwriter,  if any,
a reasonable  number of copies of a prospectus  supplemented or amended so that,
as thereafter delivered to purchasers of Registrable Securities, such prospectus
shall conform in all material  respects to the  applicable  requirements  of the
Securities Act and the Trust  Indenture Act and the rules and regulations of the
Commission  thereunder  and shall not contain an untrue  statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing.  Each Electing  Holder agrees that upon receipt of any notice from the
Company  pursuant to Section  3(d)(viii)(F)  hereof,  such Electing Holder shall
forthwith discontinue the disposition of Registrable  Securities pursuant to the
Shelf  Registration  Statement  applicable to such Registrable  Securities until
such Electing  Holder shall have received copies of such amended or supplemented
prospectus,  and if so directed  by the  Company,  such  Electing  Holder  shall
deliver  to the  Company  (at the  Company's  expense)  all  copies,  other than
permanent  file  copies,  then  in  such  Electing  Holder's  possession  of the
prospectus  covering such Registrable  Securities at the time of receipt of such
notice.

      (f) In the event of a Shelf  Registration,  in addition to the information
required to be provided by each Electing Holder in its Notice Questionnaire, the
Company  may  require  such  Electing  Holder to  furnish  to the  Company  such
additional information regarding such Electing Holder and such Electing Holder's
intended method of distribution of Registrable  Securities as may be required in
order to comply with the  Securities  Act. Each such  Electing  Holder agrees to
notify the Company as promptly as  practicable  of any  inaccuracy  or change in
information  previously  furnished by such Electing  Holder to the Company or of
the  occurrence of any event in either case as a result of which any  prospectus
relating  to such  Shelf  Registration  contains  or  would  contain  an  untrue
statement of a material fact  regarding  such  Electing  Holder or such Electing
Holder's intended method of disposition of such Registrable  Securities or omits
to state any material  fact  regarding  such  Electing  Holder or such  Electing
Holder's intended method of disposition of such Registrable  Securities required
to be stated therein or necessary to make the statements  therein not misleading
in light of the  circumstances  then  existing,  and  promptly to furnish to the
Company any additional information required to correct and update any previously
furnished  information  or required so that such  prospectus  shall not contain,
with respect to such  Electing  Holder or the  disposition  of such  Registrable
Securities,  an untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading in light of the circumstances then existing.

      (g) Until the  expiration of two years after the Closing Date, the Company
will not, and will not permit any of its  "affiliates"  (as defined in Rule 144)
to, resell any of the

                                       16
<PAGE>

Securities  that have  been  reacquired  by any of them  except  pursuant  to an
effective registration statement under the Securities Act.

      4. Registration Expenses.

      The  Company  agrees to bear and to pay or cause to be paid  promptly  all
expenses  incident  to the  Company's  performance  of or  compliance  with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD  registration,  filing  and review  fees and  expenses  including  fees and
disbursements  of counsel for the  placement or sales agent or  underwriters  in
connection with such registration,  filing and review, (b) all fees and expenses
in connection  with the  qualification  of the  Securities for offering and sale
under the State  securities  and blue sky laws referred to in Section  3(d)(xii)
hereof and  determination of their  eligibility for investment under the laws of
such  jurisdictions  as any managing  underwriters  or the Electing  Holders may
designate,  including  any fees and  disbursements  of counsel for the  Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration  statement required to be filed hereunder,
each prospectus  included therein or prepared for distribution  pursuant hereto,
each  amendment or  supplement to the  foregoing,  the expenses of preparing the
Securities   for  delivery  and  the  expenses  of  printing  or  producing  any
underwriting agreements,  agreements among underwriters,  selling agreements and
blue sky or legal  investment  memoranda  and all other  documents in connection
with the  offering,  sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses  relating  to the  offering,  sale or delivery  of  Securities  and the
preparation of documents  referred in clause (c) above, (e) fees and expenses of
the Trustee  under the  Indenture,  any agent of the Trustee and any counsel for
the Trustee and of any  collateral  agent or  custodian,  (f) internal  expenses
(including  all salaries and expenses of the  Company's  officers and  employees
performing legal or accounting duties), (g) fees,  disbursements and expenses of
counsel and independent  certified public  accountants of the Company (including
the expenses of any opinions or "cold comfort"  letters  required by or incident
to such performance and compliance), (h) fees, disbursements and expenses of any
"qualified  independent  underwriter"  engaged  pursuant  to  Section  3(d)(xix)
hereof,  (i) fees,  disbursements  and  expenses of one counsel for the Electing
Holders  retained in connection  with a Shelf  Registration,  as selected by the
Electing  Holders of at least a majority in  aggregate  principal  amount of the
Registrable  Securities  held  by  Electing  Holders  (which  counsel  shall  be
reasonably  satisfactory  to the  Company),  (j) any fees charged by  securities
rating  services  for  rating  the  Securities,   and  (k)  fees,  expenses  and
disbursements of any other persons,  including special experts,  retained by the
Company in connection with such  registration  (collectively,  the "Registration
Expenses").  To the extent that any Registration Expenses are incurred,  assumed
or paid by any holder of Registrable  Securities or any placement or sales agent
therefor or underwriter thereof, the Company shall reimburse such person for the
full amount of the Registration  Expenses so incurred,  assumed or paid promptly
after receipt of a request therefor.  Notwithstanding the foregoing, the holders
of the Registrable  Securities  being  registered  shall pay all agency fees and
commissions and underwriting discounts and

                                       17
<PAGE>

commissions attributable to the sale of such Registrable Securities and the fees
and  disbursements  of any counsel or other advisors or experts retained by such
holders (severally or jointly),  other than the counsel and experts specifically
referred to above.

      5. Representations and Warranties.

      The Company  represents  and warrants to, and agrees with,  each Purchaser
and each of the holders from time to time of Registrable Securities that:

      (a) Each registration  statement covering Registrable  Securities and each
prospectus  (including any preliminary or summary prospectus)  contained therein
or  furnished  pursuant to Section  3(d) or Section  3(c) hereof and any further
amendments or supplements to any such registration statement or prospectus, when
it becomes  effective or is filed with the Commission,  as the case may be, and,
in the case of an underwritten offering of Registrable  Securities,  at the time
of the closing under the underwriting  agreement relating thereto,  will conform
in all material respects to the requirements of the Securities Act and the Trust
Indenture Act and the rules and  regulations  of the  Commission  thereunder and
will not  contain  an untrue  statement  of a  material  fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading; and at all times subsequent to the Effective Time when a
prospectus  would be required to be delivered  under the  Securities  Act, other
than from (i) such time as a notice has been  given to  holders  of  Registrable
Securities  pursuant to Section  3(d)(viii)(F)  or Section  3(c)(iii)(F)  hereof
until  (ii)  such time as the  Company  furnishes  an  amended  or  supplemented
prospectus  pursuant  to Section  3(e) or  Section  3(c)(iv)  hereof,  each such
registration  statement,  and each prospectus (including any summary prospectus)
contained therein or furnished  pursuant to Section 3(d) or Section 3(c) hereof,
as then amended or  supplemented,  will conform in all material  respects to the
requirements of the Securities Act and the Trust Indenture Act and the rules and
regulations  of the  Commission  thereunder  and  will  not  contain  an  untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated therein or necessary to make the statements therein not misleading in the
light  of  the  circumstances  then  existing;   provided,  however,  that  this
representation  and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information  furnished in writing to the
Company by a holder of Registrable Securities expressly for use therein.

      (b) Any documents  incorporated by reference in any prospectus referred to
in Section  5(a)  hereof,  when they become or became  effective  or are or were
filed with the Commission,  as the case may be, will conform or conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as  applicable,  and none of such  documents will contain or contained an untrue
statement  of a material  fact or will omit or omitted to state a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading;  provided,  however, that this representation and warranty shall not
apply to any  statements  or omissions  made in reliance  upon and in conformity
with information  furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.

                                       18
<PAGE>

      (c) The  compliance  by the  Company  with all of the  provisions  of this
Exchange  and  Registration   Rights  Agreement  and  the  consummation  of  the
transactions herein contemplated will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage,  deed  of  trust,  loan  agreement  or  other  material  agreement  or
instrument  to which the Company or any  Subsidiary of the Company is a party or
by which the Company or any  Subsidiary  of the Company is bound or to which any
of the  property  or assets of the Company or any  Subsidiary  of the Company is
subject,  nor will such action result in any violation of the  provisions of the
certificate of incorporation,  as amended,  or the by-laws of the Company or any
statute or any order, rule or regulation of any court or governmental  agency or
body having  jurisdiction  over the Company or any  subsidiary of the Company or
any  of  their  properties;  and no  consent,  approval,  authorization,  order,
registration or qualification  of or with any such court or governmental  agency
or body is required  for the  consummation  by the  Company of the  transactions
contemplated  by this Exchange and  Registration  Rights  Agreement,  except the
registration  under the Securities Act of the Securities,  qualification  of the
Indenture  under  the  Trust   Indenture  Act  and  such  consents,   approvals,
authorizations,  registrations or  qualifications as may be required under State
securities or blue sky laws in connection with the offering and  distribution of
the Securities.

      (d)  This  Exchange  and  Registration  Rights  Agreement  has  been  duly
authorized, executed and delivered by the Company.

      6. Indemnification.

      (a)  Indemnification  by the Company.  The Company will indemnify and hold
harmless each of the holders of Registrable  Securities  included in an Exchange
Registration  Statement,  each of the Electing Holders of Registrable Securities
included in a Shelf Registration Statement and each person who participates as a
placement  or sales agent or as an  underwriter  in any offering or sale of such
Registrable Securities against any losses, claims, damages or liabilities, joint
or several, to which such holder,  agent or underwriter may become subject under
the  Securities  Act or otherwise,  insofar as such losses,  claims,  damages or
liabilities  (or actions in respect  thereof)  arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Exchange Registration Statement or Shelf Registration Statement, as the case may
be, under which such Registrable Securities were registered under the Securities
Act,  or any  preliminary,  final or  summary  prospectus  contained  therein or
furnished  by  the  Company  to any  such  holder,  Electing  Holder,  agent  or
underwriter,  or any  amendment or  supplement  thereto,  or arise out of or are
based upon the  omission or alleged  omission to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading, and will reimburse such holder, such Electing Holder, such agent and
such underwriter for any legal or other expenses  reasonably incurred by them in
connection  with  investigating  or  defending  any such action or claim as such
expenses are incurred;  provided,  however, that the Company shall not be liable
to any such  person in any such case to the extent  that any such  loss,  claim,
damage  or  liability  arises  out of or is based  upon an untrue  statement  or
alleged  untrue   statement  or  omission  or  alleged  omission  made  in  such
registration  statement,  or  preliminary,   final  or  summary  prospectus,  or
amendment or supplement

                                       19
<PAGE>

thereto, in reliance upon and in conformity with written  information  furnished
to the Company by such person expressly for use therein.

      (b)  Indemnification  by the Holders and any Agents and Underwriters.  The
Company may require,  as a condition to including any Registrable  Securities in
any registration statement filed pursuant to Section 2(b) hereof and to entering
into any  underwriting  agreement with respect  thereto,  that the Company shall
have received an  undertaking  reasonably  satisfactory  to it from the Electing
Holder of such  Registrable  Securities and from each  underwriter  named in any
such  underwriting  agreement,  severally and not jointly,  to (i) indemnify and
hold  harmless the Company,  and all other  holders of  Registrable  Securities,
against any losses,  claims, damages or liabilities to which the Company or such
other holders of Registrable Securities may become subject, under the Securities
Act or otherwise,  insofar as such losses,  claims,  damages or liabilities  (or
actions in respect  thereof) arise out of or are based upon an untrue  statement
or alleged untrue  statement of a material fact  contained in such  registration
statement, or any preliminary,  final or summary prospectus contained therein or
furnished by the Company to any such Electing Holder,  agent or underwriter,  or
any  amendment  or  supplement  thereto,  or arise out of or are based  upon the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements  therein not  misleading,  in
each case to the extent,  but only to the extent,  that such untrue statement or
alleged  untrue  statement or omission or alleged  omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Electing Holder or underwriter expressly for use therein, and (ii) reimburse the
Company for any legal or other  expenses  reasonably  incurred by the Company in
connection  with  investigating  or  defending  any such action or claim as such
expenses are incurred;  provided, however, that no such Electing Holder shall be
required to  undertake  liability  to any person under this Section 6(b) for any
amounts in excess of the dollar  amount of the  proceeds  to be received by such
Electing Holder from the sale of such Electing Holder's  Registrable  Securities
pursuant to such registration.

      (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under  subsection (a) or (b) above of written notice of the  commencement of any
action,  such  indemnified  party shall,  if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying  party in writing of
the commencement of such action;  but the omission so to notify the indemnifying
party  shall  not  relieve  it  from  any  liability  which  it may  have to any
indemnified  party  otherwise  than under the  indemnification  provisions of or
contemplated  by Section 6(a) or 6(b)  hereof.  In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying  party
of the  commencement  thereof,  such  indemnifying  party  shall be  entitled to
participate  therein  and, to the extent that it shall  wish,  jointly  with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the  consent of the  indemnified  party,  be  counsel  to the  indemnifying
party),  and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof,  such indemnifying party shall
not be liable to such indemnified  party for

                                       20
<PAGE>

any  legal  expenses  of other  counsel  or any  other  expenses,  in each  case
subsequently  incurred by such indemnified party, in connection with the defense
thereof  other than  reasonable  costs of  investigation.  In no event  shall an
indemnifying  party be liable for fees and expenses of more than one counsel (in
addition to local counsel)  separate from their own counsel for all  indemnified
parties in  connection  with any one action or  separate  but similar or related
actions in the same jurisdiction  arising out of the same general allegations or
circumstances.  No indemnifying party shall,  without the written consent of the
indemnified  party,  effect the  settlement or compromise  of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which  indemnification  or  contribution  may be sought  hereunder
(whether or not the  indemnified  party is an actual or potential  party to such
action or claim) unless such settlement,  compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault,  culpability  or a failure  to act by or on behalf of any  indemnified
party.

      (d)  Contribution.  If  for  any  reason  the  indemnification  provisions
contemplated  by Section 6(a) or Section 6(b) are unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses,  claims, damages
or liabilities (or actions in respect  thereof)  referred to therein,  then each
indemnifying  party  shall  contribute  to the  amount  paid or  payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect  thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses,  claims, damages
or liabilities  (or actions in respect  thereof),  as well as any other relevant
equitable  considerations.  The relative  fault of such  indemnifying  party and
indemnified  party shall be  determined  by reference  to,  among other  things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged  omission to state a material  fact relates to  information  supplied by
such indemnifying  party or by such indemnified party, and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement or omission.  The parties hereto agree that it would not be just
and equitable if contributions  pursuant to this Section 6(d) were determined by
pro rata allocation (even if the holders or any agents or underwriters or all of
them were  treated  as one entity for such  purpose)  or by any other  method of
allocation which does not take account of the equitable  considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified party as a
result of the losses,  claims,  damages,  or liabilities  (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses  reasonably  incurred  by such  indemnified  party in  connection  with
investigating  or  defending  any such  action  or  claim.  Notwithstanding  the
provisions of this Section  6(d), no holder shall be required to contribute  any
amount in  excess of the  amount  by which  the  dollar  amount of the  proceeds
received  by such  holder  from the sale of any  Registrable  Securities  (after
deducting any fees,  discounts and commissions  applicable  thereto) exceeds the
amount of any damages  which such holder has  otherwise  been required to pay by
reason of such  untrue or  alleged  untrue  statement  or  omission  or  alleged
omission,  and no  underwriter  shall be  required to  contribute  any amount in
excess  of the  amount  by  which  the  total  price at  which  the  Registrable
Securities  underwritten by it and distributed to

                                       21
<PAGE>

the public were  offered to the public  exceeds the amount of any damages  which
such  underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue  statement or omission or alleged  omission.  No person guilty of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such fraudulent misrepresentation.  The holders' and any underwriters'
obligations in this Section 6(d) to contribute shall be several in proportion to
the principal amount of Registrable  Securities  registered or underwritten,  as
the case may be, by them and not joint.

      (e) The  obligations  of the  Company  under  this  Section  6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and  conditions,  to each  officer,  director and partner of
each holder,  agent and  underwriter  and each person,  if any, who controls any
holder,  agent or underwriter  within the meaning of the Securities Act; and the
obligations of the holders and any agents or  underwriters  contemplated by this
Section 6 shall be in addition to any  liability  which the  respective  holder,
agent or underwriter  may otherwise  have and shall extend,  upon the same terms
and  conditions,  to each  officer and  director of the Company  (including  any
person who, with his consent, is named in any registration statement as about to
become a director of the Company)  and to each person,  if any, who controls the
Company within the meaning of the Securities Act.

      7. Underwritten Offerings.

      (a)  Selection  of  Underwriters.  If any of  the  Registrable  Securities
covered by the Shelf  Registration  are to be sold  pursuant to an  underwritten
offering,  the managing  underwriter or underwriters thereof shall be designated
by Electing Holders holding at least a majority in aggregate principal amount of
the Registrable  Securities to be included in such offering,  provided that such
designated managing underwriter or underwriters is or are reasonably  acceptable
to the Company.

      (b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder  that no such holder may  participate  in any
underwritten  offering  hereunder  unless  such  holder  (i) agrees to sell such
holder's  Registrable  Securities  on the  basis  provided  in any  underwriting
arrangements  approved  by  the  persons  entitled  hereunder  to  approve  such
arrangements  and (ii)  completes  and  executes all  questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements.

      8. Rule 144.

      The Company covenants to the holders of Registrable Securities that to the
extent it shall be required to do so under the Exchange  Act, the Company  shall
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including the reports under Section 13 and 15(d) of the Exchange
Act  referred to in  subparagraph  (c)(1) of Rule 144 adopted by the  Commission
under  the  Securities  Act)  and  the  rules  and  regulations  adopted  by the
Commission  thereunder,  and shall  take such  further  action as any  holder of
Registrable  Securities may reasonably request,  all

                                       22
<PAGE>

to the  extent  required  from  time to  time  to  enable  such  holder  to sell
Registrable  Securities without registration under the Securities Act within the
limitations of the exemption  provided by Rule 144 under the Securities  Act, as
such Rule may be amended from time to time, or any similar or successor  rule or
regulation  hereafter adopted by the Commission.  Upon the request of any holder
of Registrable Securities in connection with that holder's sale pursuant to Rule
144, the Company shall deliver to such holder a written  statement as to whether
it has complied with such requirements.

      9. Miscellaneous.

      (a)  No  Inconsistent  Agreements.   The  Company  represents,   warrants,
covenants and agrees that it has not granted, and shall not grant,  registration
rights with respect to  Registrable  Securities  or any other  securities  which
would be inconsistent with the terms contained in this Exchange and Registration
Rights Agreement.

      (b) Specific Performance.  The parties hereto acknowledge that there would
be no  adequate  remedy  at law if  the  Company  fails  to  perform  any of its
obligations  hereunder and that the Purchasers and the holders from time to time
of the Registrable Securities may be irreparably harmed by any such failure, and
accordingly agree that the Purchasers and such holders, in addition to any other
remedy to which they may be entitled  at law or in equity,  shall be entitled to
compel  specific  performance  of the  obligations  of the  Company  under  this
Exchange and  Registration  Rights  Agreement in  accordance  with the terms and
conditions of this Exchange and Registration  Rights Agreement,  in any court of
the United States or any State thereof having jurisdiction.

      (c) Notices. All notices,  requests,  claims,  demands,  waivers and other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given when  delivered by hand, if delivered  personally  or by courier,  or
three days after being  deposited in the mail  (registered  or  certified  mail,
postage prepaid,  return receipt requested) as follows: If to the Company, to it
at 80 Park Plaza,  Newark,  NJ 07102, and if to a holder, to the address of such
holder set forth in the security register or other records of the Company, or to
such other  address as the Company or any such holder may have  furnished to the
other in  writing  in  accordance  herewith,  except  that  notices of change of
address shall be effective only upon receipt.

      (d) Parties in Interest. All the terms and provisions of this Exchange and
Registration  Rights Agreement shall be binding upon, shall inure to the benefit
of and shall be  enforceable  by the parties hereto and the holders from time to
time of the Registrable  Securities and the respective successors and assigns of
the parties  hereto and such  holders.  In the event that any  transferee of any
holder of Registrable  Securities shall acquire Registrable  Securities,  in any
manner, whether by gift, bequest, purchase,  operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be deemed a
beneficiary  hereof for all purposes and such  Registrable  Securities  shall be
held  subject  to all of the  terms of this  Exchange  and  Registration  Rights
Agreement, and by taking and holding such Registrable Securities such transferee
shall be entitled to receive the benefits of, and be conclusively deemed to have
agreed  to be  bound  by all of the  applicable  terms  and  provisions  of this
Exchange and Registration Rights Agreement. If the Company shall so request, any

                                       23
<PAGE>

such successor,  assign or transferee shall agree in writing to acquire and hold
the Registrable Securities subject to all of the applicable terms hereof.

      (e) Survival.  The respective  indemnities,  agreements,  representations,
warranties and each other provision set forth in this Exchange and  Registration
Rights  Agreement or made pursuant  hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of any holder of Registrable Securities,  any director,  officer or
partner of such holder,  any agent or  underwriter  or any director,  officer or
partner thereof,  or any controlling  person of any of the foregoing,  and shall
survive delivery of and payment for the Registrable  Securities  pursuant to the
Purchase  Agreement and the transfer and registration of Registrable  Securities
by such holder and the consummation of an Exchange Offer.

      (f) Governing Law. This Exchange and  Registration  Rights Agreement shall
be governed by and  construed  in  accordance  with the laws of the State of New
York.

      (g)  Headings.  The  descriptive  headings  of the  several  Sections  and
paragraphs of this Exchange and  Registration  Rights Agreement are inserted for
convenience  only, do not  constitute a part of this  Exchange and  Registration
Rights  Agreement and shall not affect in any way the meaning or  interpretation
of this Exchange and Registration Rights Agreement.

      (h) Entire Agreement;  Amendments.  This Exchange and Registration  Rights
Agreement and the other writings referred to herein (including the Indenture and
the form of  Securities) or delivered  pursuant  hereto which form a part hereof
contain  the entire  understanding  of the parties  with  respect to its subject
matter.  This Exchange and Registration  Rights  Agreement  supersedes all prior
agreements  and  understandings  between the parties with respect to its subject
matter.  This Exchange and Registration  Rights Agreement may be amended and the
observance of any term of this Exchange and Registration Rights Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the
holders of at least a majority in aggregate  principal amount of the Registrable
Securities at the time outstanding. Each holder of any Registrable Securities at
the time or  thereafter  outstanding  shall be bound by any  amendment or waiver
effected  pursuant to this Section 9(h),  whether or not any notice,  writing or
marking  indicating  such  amendment  or  waiver  appears  on  such  Registrable
Securities or is delivered to such holder.

      (i)  Inspection.  For so long as this  Exchange  and  Registration  Rights
Agreement shall be in effect,  this Exchange and  Registration  Rights Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities  shall be made  available for  inspection and copying on any business
day by any holder of  Registrable  Securities  for proper  purposes  only (which
shall  include any purpose  related to the rights of the holders of  Registrable
Securities  under the  Securities,  the  Indenture  and this  Agreement)  at the
offices of the  Company at the address  thereof set forth in Section  9(c) above
and at the office of the Trustee under the Indenture.

                                       24
<PAGE>

      (j)  Counterparts.  This  agreement  may be  executed  by the  parties  in
counterparts,  each of which  shall be  deemed to be an  original,  but all such
respective counterparts shall together constitute one and the same instrument.

                                       25
<PAGE>

      If the foregoing is in accordance with your understanding, please sign and
return to us counterparts  hereof,  and upon the acceptance  hereof by you, this
letter and such acceptance  hereof shall constitute a binding  agreement between
each of the Purchasers and the Company.

                                              Very truly yours,

                                              PSEG Energy Holdings L.L.C.

                                              By: /s/ Miriam E. Gilligan
                                                  ------------------------------
                                                  Name:  Miriam E. Gilligan
                                                  Title: Vice President-Finance
                                                         and Treasurer
Accepted as of the date hereof:

Lehman Brothers Inc.

By: /s/ Gregory J. Hall
   -----------------------------
    Name:  Gregory J. Hall
    Title: Managing Director

Credit Suisse First Boston LLC

By: /s/ Raymond Wood
    -----------------------------
    Name:  Raymond Wood
    Title: Managing Director

                                       26
<PAGE>

                                                                       Exhibit A
                           PSEG Energy Holdings L.L.C.

                         INSTRUCTION TO DTC PARTICIPANTS

                                (Date of Mailing)

                     URGENT - IMMEDIATE ATTENTION REQUESTED

                        DEADLINE FOR RESPONSE: [DATE] *

The Depository  Trust Company  ("DTC") has  identified you as a DTC  Participant
through  which  beneficial  interests in the PSEG Energy  Holdings  L.L.C.  (the
"Company") 7.75% Senior Notes due 2007 (the "Securities") are held.

The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof.  In order to have their
Securities  included  in the  registration  statement,  beneficial  owners  must
complete and return the enclosed  Notice of  Registration  Statement and Selling
Securityholder Questionnaire.

It is important that beneficial  owners of the Securities  receive a copy of the
enclosed  materials as soon as possible as their  rights to have the  Securities
included in the  registration  statement  depend upon their returning the Notice
and  Questionnaire  by [Deadline  For  Response].  Please  forward a copy of the
enclosed  documents  to  each  beneficial  owner  that  holds  interests  in the
Securities  through you. If you require more copies of the enclosed materials or
have any  questions  pertaining  to this  matter,  please  contact  PSEG  Energy
Holdings L.L.C. in writing at 80 Park Plaza, Newark, NJ 07102 or by telephone at
(973) 456-3581.

----------
* Not less than 28 calendar days from date of mailing.

                                      A-1
<PAGE>

                           PSEG Energy Holdings L.L.C.

                        Notice of Registration Statement
                                       and
                      Selling Securityholder Questionnaire

                                     (Date)

Reference is hereby made to the Exchange and Registration  Rights Agreement (the
"Exchange  and  Registration  Rights  Agreement")  between PSEG Energy  Holdings
L.L.C.  (the  "Company")  and the  Purchasers  named  therein.  Pursuant  to the
Exchange  and  Registration  Rights  Agreement,  the  Company has filed with the
United  States   Securities  and  Exchange   Commission  (the   "Commission")  a
registration statement on Form S-3 (the "Shelf Registration  Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the  "Securities  Act"),  of the  Company's  7.75%  Senior  Notes due 2007 (the
"Securities").  A copy of the  Exchange  and  Registration  Rights  Agreement is
attached hereto.  All capitalized  terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

Each beneficial  owner of Registrable  Securities (as defined below) is entitled
to have the  Registrable  Securities  beneficially  owned by it  included in the
Shelf Registration  Statement.  In order to have Registrable Securities included
in the Shelf Registration  Statement,  this Notice of Registration Statement and
Selling  Securityholder  Questionnaire  ("Notice  and  Questionnaire")  must  be
completed, executed and delivered to the Company at the address set forth herein
for  receipt  ON  OR  BEFORE  [Deadline  for  Response].  Beneficial  owners  of
Registrable  Securities who do not complete,  execute and return this Notice and
Questionnaire by such date (i) will not be named as selling  securityholders  in
the Shelf  Registration  Statement and (ii) may not use the Prospectus forming a
part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration  Statement and related Prospectus.  Accordingly,  holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel  regarding the  consequences  of being named or not being
named as a  selling  securityholder  in the  Shelf  Registration  Statement  and
related Prospectus.

The term  "Registrable  Securities" is defined in the Exchange and  Registration
Rights Agreement.

                                      A-2
<PAGE>

                                    ELECTION

The undersigned holder (the "Selling  Securityholder") of Registrable Securities
hereby elects to include in the Shelf  Registration  Statement  the  Registrable
Securities  beneficially  owned  by  it  and  listed  below  in  Item  (3).  The
undersigned,  by signing and returning this Notice and Questionnaire,  agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this  Notice and  Questionnaire  and the  Exchange  and  Registration  Rights
Agreement,  including,  without  limitation,  Section  6  of  the  Exchange  and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.

Upon any sale of  Registrable  Securities  pursuant  to the  Shelf  Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer  set forth as Exhibit B to the  Exchange  and
Registration Rights Agreement.

The Selling  Securityholder  hereby  provides the following  information  to the
Company and  represents  and  warrants  that such  information  is accurate  and
complete:

                                      A-3
<PAGE>

                                  QUESTIONNAIRE

(1)(a)  Full Legal Name of Selling Securityholder:

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

   (b)  Full Legal Name of  Registered  Holder (if not the same as in (a) above)
        of Registrable Securities Listed in Item (3) below:

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

   (c)  Full Legal Name of DTC Participant (if applicable and if not the same as
        (b) above) Through Which Registrable Securities Listed in Item (3) below
        are Held:

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

(2)     Address for Notices to Selling Securityholder:

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

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

                           --------------------------
        Telephone:
                           --------------------------
        Fax:
                           --------------------------
        Contact Person:
                           --------------------------

(3) Beneficial Ownership of Securities:

        Except as set forth  below in this Item (3),  the  undersigned  does not
        beneficially own any Securities.

   (a)  Principal amount of Registrable  Securities  beneficially  owned:  CUSIP
        No(s). of such Registrable Securities:

   (b)  Principal  amount  of  Securities  other  than  Registrable   Securities
        beneficially owned:

        ------------------------------------------------------------------------
        CUSIP No(s). of such other Securities:
                                               ---------------------------------

   (c)  Principal amount of Registrable  Securities which the undersigned wishes
        to be included in the Shelf Registration Statement: CUSIP No(s). of such
        Registrable   Securities  to  be  included  in  the  Shelf  Registration
        Statement:

(4)     Beneficial Ownership of Other Securities of the Company:

        Except as set forth  below in this Item  (4),  the  undersigned  Selling
        Securityholder  is not the  beneficial or registered  owner of any other
        securities  of the Company,  other than the  Securities  listed above in
        Item (3).

        State any exceptions here:

                                      A-4
<PAGE>

(5)     Relationships with the Company:

        Except as set forth below, neither the Selling Securityholder nor any of
        its affiliates,  officers,  directors or principal equity holders (5% or
        more) has held any  position  or  office  or has had any other  material
        relationship with the Company (or its predecessors or affiliates) during
        the past three years.

        State any exceptions here:

(6)     Plan of Distribution:

        Except  as set  forth  below,  the  undersigned  Selling  Securityholder
        intends to distribute the  Registrable  Securities  listed above in Item
        (3) only as follows (if at all): Such Registrable Securities may be sold
        from time to time directly by the undersigned Selling Securityholder or,
        alternatively,  through  underwriters,  broker-dealers  or agents.  Such
        Registrable  Securities may be sold in one or more transactions at fixed
        prices,  at  prevailing  market  prices at the time of sale,  at varying
        prices  determined at the time of sale, or at  negotiated  prices.  Such
        sales may be effected  in  transactions  (which may  involve  crosses or
        block transactions) (i) on any national securities exchange or quotation
        service on which the  Registered  Securities  may be listed or quoted at
        the  time  of  sale,  (ii)  in the  over-the-counter  market,  (iii)  in
        transactions  otherwise  than on such  exchanges  or  services or in the
        over-the-counter  market,  or (iv)  through the  writing of options.  In
        connection  with sales of the Registrable  Securities or otherwise,  the
        Selling   Securityholder  may  enter  into  hedging   transactions  with
        broker-dealers,  which  may  in  turn  engage  in  short  sales  of  the
        Registrable  Securities  in the course of  hedging  the  positions  they
        assume. The Selling  Securityholder may also sell Registrable Securities
        short  and  deliver  Registrable  Securities  to close  out  such  short
        positions,  or loan or pledge  Registrable  Securities to broker-dealers
        that in turn may sell such securities.

        State any exceptions here:

By signing below, the Selling  Securityholder  acknowledges  that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the  Exchange  Act  and  the  rules  and  regulations  thereunder,  particularly
Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the
Registrable  Securities  listed in Item (3) above  after the date on which  such
information  is provided to the Company,  the Selling  Securityholder  agrees to
notify  the  transferee(s)  at the  time

                                      A-5
<PAGE>

of  the  transfer  of  its  rights  and   obligations   under  this  Notice  and
Questionnaire and the Exchange and Registration Rights Agreement.

By signing below, the Selling  Securityholder  consents to the disclosure of the
information  contained  herein in its answers to Items (1) through (6) above and
the  inclusion  of such  information  in the Shelf  Registration  Statement  and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in  connection  with the  preparation  of the
Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and  Registration  Rights  Agreement to provide such information as
may be required by law for inclusion in the Shelf  Registration  Statement,  the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein which may occur subsequent to the
date  hereof at any time  while  the Shelf  Registration  Statement  remains  in
effect.  All notices  hereunder  and pursuant to the  Exchange and  Registration
Rights Agreement shall be made in writing,  by hand-delivery,  first-class mail,
or air courier guaranteeing overnight delivery as follows:

         To the Company:

                                             PSEG Energy Holdings L.L.C.
                                             80 Park Plaza, T-22
                                             P.O. Box 1171
                                             Newark, New Jersey 07101
                                             Attention: Treasurer

Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the  Company,  the terms of this Notice and  Questionnaire,  and the
representations  and  warranties  contained  herein,  shall be binding on, shall
inure to the benefit of and shall be enforceable  by the respective  successors,
heirs,  personal  representatives,  and  assigns of the  Company and the Selling
Securityholder (with respect to the Registrable Securities beneficially owned by
such Selling  Securityholder  and listed in Item (3) above. This Agreement shall
be governed in all respects by the laws of the State of New York.

                                      A-6
<PAGE>

IN WITNESS WHEREOF,  the  undersigned,  by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Dated:
      ----------------------------

      --------------------------------------------------------------------------
      Selling Securityholder
      (Print/type full legal name of beneficial owner of Registrable Securities)

      By:
         -----------------------------------------------------------------------
      Name:
      Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY AT:

                                             PSEG Energy Holdings L.L.C.
                                             80 Park Plaza, T-22
                                             P.O. Box 1171
                                             Newark, New Jersey 07101
                                             Attention: Treasurer

                                      A-7
<PAGE>

                                                                       Exhibit B

              NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

Wachovia Bank, National Association
PSEG Energy Holdings L.L.C.
c/o   Wachovia Bank, National Association
      21 South Street, 3rd Floor
      Morristown, New Jersey 07960

Attention: Trust Officer

         Re: PSEG Energy Holdings L.L.C. (the "Company")
             7.75% Senior Notes due 2007

Dear Sirs:

Please be  advised  that  _____________________  has  transferred  $____________
aggregate  principal  amount  of  the  above-referenced  Notes  pursuant  to  an
effective  Registration  Statement on Form S-3 (File No. 333-____ ) filed by the
Company.

We hereby  certify that the  prospectus  delivery  requirements,  if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial  owner of the Notes is named as a "Selling  Holder" in the Prospectus
dated [date] or in supplements  thereto, and that the aggregate principal amount
of the Notes  transferred are the Notes listed in such Prospectus  opposite such
owner's name.

Dated:                                           Very truly yours,

                                                 -------------------------------
                                                 (Name)

                                             By:
                                                 -------------------------------
                                                 (Authorized Signature)

                                      B-1Exhibit 4.4

Unless this  certificate  is presented by an  authorized  representative  of The
Depository   Trust  Company  (55  Water  Street,   New  York,   New  York)  (THE
"DEPOSITORY")  to PSEG ENERGY HOLDINGS  L.L.C.  (the "COMPANY") or its agent for
registration of transfer,  exchange or payment,  and such certificate  issued is
registered  in the name of CEDE & CO.,  or such  other name as  requested  by an
authorized  representative of the Depository,  ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF  FOR  VALUE OR  OTHERWISE  BY OR TO ANY  PERSON  IS  WRONGFUL,  since the
registered owner hereof, CEDE & CO., has an interest herein.

Unless and until this  certificate is exchanged in whole or in part for Notes in
certificated  form, this certificate may not be transferred except as a whole by
the Depository to a nominee thereof or by a nominee thereof to the Depository or
another  nominee of the Depository or by the Depository or any such nominee to a
successor of the Depository or a nominee of such successor.

CUSIP NO.______                                                       $_________
No. R-1

                           PSEG ENERGY HOLDINGS L.L.C.
                           7.75% Senior Note due 2007

      PSEG  ENERGY  HOLDINGS  L.L.C.,  a New Jersey  limited  liability  company
(herein referred to as the "Company," which term includes any successor  company
under  the  Indenture  hereinafter  referred  to),  for value  received,  hereby
promises to pay to Cede & Co., or registered assigns,  the principal sum of $
on April 16, 2007 (the "Stated Maturity  Date"),  unless redeemed or repurchased
in  accordance  with the  provisions  of this Note,  and to pay  interest on the
outstanding  principal  amount of this Note from            ,  semi-annually  in
arrears on April 16 and October 16 in each year,  commencing
(each, an "Interest Payment Date") at 7.75% per annum until the principal hereof
is paid or duly provided  for.  Interest  payable on each Interest  Payment Date
will include  interest accrued from and including
or from and including the most recent  Interest  Payment Date to which  interest
has been paid or duly provided  for, as the case may be, to but  excluding  such
Interest  Payment  Date.  Interest  will be  computed  based on a  360-day  year
consisting of twelve 30-day months.

      The interest so payable,  and punctually paid or duly provided for, on any
Interest Payment Date will, except as provided below, be paid to the person (the
"Holder")  in  whose  name  this  Note  (or one or more  Predecessor  Notes)  is
registered at the close of business on the

<PAGE>

                                       2

April 1 and October 1 (whether or not a Business  Day (as defined  below))  next
preceding  such  Interest  Payment  Date (a  "Regular  Record  Date").  Any such
interest not so punctually paid or duly provided for ("Defaulted Interest") will
forthwith  cease to be payable to the Holder on such Regular Record Date and may
either be paid to the person in whose name this Note (or one or more Predecessor
Notes) is  registered  at the close of  business  on a special  record date (the
"Special Record Date") for the payment of such Defaulted Interest to be fixed by
the Trustee hereinafter referred to, notice whereof shall be given to the Holder
of this Note not less than ten days prior to such Special Record Date, or may be
paid at any time in any other lawful  manner,  all as more fully provided in the
Indenture.

      For  purposes of this Note,  "Business  Day" means each  Monday,  Tuesday,
Wednesday,  Thursday and Friday which is not a day on which banking institutions
in Newark New Jersey and The City of New York are authorized or obligated by law
or executive order to close.

      Payment  of the  principal  of and any  premium on this Note on the Stated
Maturity Date or date of earlier  redemption or repurchase  will be made against
presentation of this Note at the office or agency of the Company  maintained for
that purpose in the Borough of Manhattan,  The City of New York, in such coin or
currency  of the  United  States of  America  as at the time of payment is legal
tender for the payment of public and private debts.

      Payments of  principal,  premium,  if any, and interest in respect of this
Note will be made in such coin or currency of the United States of America as at
the time of payment is legal  tender for the payment of pubic and private  debts
(i) in the case of  payments  on the  Stated  Maturity  Date or date of  earlier
redemption or repurchase, in immediately available funds and (ii) in the case of
payments on an Interest  Payment  Date,  at the option of the Company,  by check
mailed to the Holder entitled thereto at the applicable address appearing in the
Security  Register or by transfer of immediately  available  funds to an account
maintained  by the payee with a bank  located in the United  States of  America;
provided,  however,  that  so long as Cede & Co.  is the  Holder  of this  Note,
payments of interest on an  Interest  Payment  Date will be made in  immediately
available funds.

      Any payment of principal, premium or interest required to be made on a day
that is not a Business  Day need not be made on such day, but may be made on the
next  succeeding  Business Day with the same force and effect as if made on such
day and no interest shall accrue as a result of such delayed payment.

      General.  This Note is one of the duly authorized  issues of securities of
the  Company  (the  "Securities"),  issued or to be issued in one or more series
under the Indenture,  dated as of October 8, 1999, as  supplemented by the First
Supplemental  Indenture,  dated as of September 30, 2002, between Wachovia Bank,
National  Association  (formerly  known  as  First  Union  National  Bank)  (the
"Trustee")  and  the  Company  (together  with  all  supplements   thereto,  the
"Indenture"), to which Indenture reference is hereby made for a statement of the
respective rights,  limitations of rights,  duties and immunities  thereunder of
the Company,  the Trustee and each of the holders of the  Securities  and of the
terms upon which the Securities are, and are to be,  authenticated and delivered
and transferred.  The Notes will be limited to $350,000,000  aggregate principal
amount, except as permitted in the Indenture.  All terms used in this Note which
are  not  defined  herein  shall  have  the  meanings  assigned  to  them in the
Indenture.

<PAGE>

                                       3

      Events of Default.  If an Event of Default with respect to the Notes shall
have occurred and be continuing,  the principal of the Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.

      Redemption.  This Note will be redeemable at the option of the Company, in
whole or in part at any  time,  on at  least  30 days but not more  than 60 days
prior written  notice mailed to the Holder hereof,  at a price the  ("Redemption
Price") equal to the greater of (i) 100% of the principal amount to be redeemed,
and (ii) the sum, as determined by the Quotation  Agent (as defined  below),  of
the present  values of the  principal  amount to be redeemed  and the  remaining
scheduled  payments  of  interest  thereon  from  the  date of  redemption  (the
"Redemption  Date") to April 16, 2007 (the  "Remaining  Life"),  discounted from
their  respective  payment dates to the  Redemption  Date on a semiannual  basis
(assuming a 360-day year  consisting  of twelve  30-day  months) at the Treasury
Rate (as defined  below) plus 50 basis  points,  plus,  in either case,  accrued
interest thereon to the Redemption Date.

      If money sufficient to pay the Redemption Price of and accrued interest on
all of this Note (or  portion  hereof) to be redeemed  on a  Redemption  Date is
deposited with the Trustee or a Paying Agent on or before such  Redemption  Date
and certain other  conditions are satisfied,  then on and after such  Redemption
Date, interest will cease to accrue on this Note (or such portion hereof) called
for redemption.

      This Note will not be  entitled  to the  benefit of, or be subject to, any
sinking fund.

      Option  to Elect  Repayment  Upon a Change of  Control.  In the event of a
Change of Control (as defined in the  Indenture),  the Holder of this Note shall
have the right to require the Company to  repurchase  this Note,  in whole or in
part,  at 101% of the  principal  amount  thereof plus  accrued  interest to the
Repayment Date in accordance with the procedures set forth in the Indenture.

      The Company shall comply with Rule 14e-1 under the Securities Act of 1934,
as amended (the "Exchange  Act"),  and any other applicable laws and regulations
in the event that a Change of Control occurs.

      Notwithstanding  the  definition  of  term  "Change  of  Control"  in  the
Indenture,  for  purposes  of this  Note,  Change  of  Control  shall  mean  the
occurrence of one or more of the following events:  (i) PSEG (or its successors)
shall cease to own a majority of the  outstanding  Voting  Stock of the Company,
(ii) at any time following the occurrence of the event  described in clause (i),
a Person or group (as that term is used in Section 13(d)(3) of the Exchange Act)
of Persons  (other than PSEG) shall have  become,  directly or  indirectly,  the
beneficial  owner, or shall have acquired the absolute power to direct the vote,
of more than 35% of the  outstanding  Voting Stock of the Company,  (iii) during
any  twelve-month  period,  individuals  who at the  beginning  of  such  period
constitute the Board of Managers  (together with any new managers whose election
or nomination was approved by a majority of the managers then in office who were
either  managers  at the  beginning  of such  period or who were  previously  so
approved)  shall cease for any reason to  constitute  a majority of the Board of
Managers,  unless  approved by a majority of such Board of Managers in office at
the beginning of such period  (including  such new managers) or (iv) the Company
shall have consolidated  with or merged with or into another

<PAGE>

                                       4

Corporation or the properties and assets of the Company shall have been conveyed
or  transferred  substantially  as an entirety to any Person in accordance  with
Section 801 of the Indenture. Notwithstanding the foregoing, a Change of Control
shall be deemed not to have  occurred if one or more of the above events  occurs
or  circumstances  exist and,  after giving effect  thereto,  the Securities are
rated no less than  "BBB-" by  Standard  & Poor's  Ratings  Group and  "Baa3" by
Moody's Investors Service Inc.

      Terms not  otherwise  defined in this  Section  shall have the  respective
meanings ascribed thereto in the Indenture.

      Certain Definitions.

      "Comparable  Treasury  Issue" means the United  States  Treasury  security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life that would be utilized,  at the time of selection  and in  accordance  with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity with the Remaining Life of the Notes to be redeemed.

      "Comparable  Treasury Price" means,  with respect to any Redemption  Date,
the average of four Reference  Treasury Dealer  Quotations,  after excluding the
highest and lowest of such  Reference  Treasury  Dealer  Quotations,  or, if the
Trustee obtains fewer than four such Reference Treasury Dealer  Quotations,  the
average of all such quotations.

      "Quotation  Agent" means the Reference  Treasury  Dealer  appointed by the
Company. "Reference Treasury Dealer" means: (i) each of Lehman Brothers Inc. and
Credit  Suisse  First  Boston  LLC and their  respective  successors;  provided,
however,  that  if  the  foregoing  shall  cease  to be  primary  United  States
Government  securities  dealers in New York City (a "Primary Treasury  Dealer"),
the Company shall substitute  therefor another Primary Treasury Dealer; and (ii)
any other Primary Treasury Dealer selected by the Company.

      "Reference  Treasury  Dealer  Quotations"  means,  with  respect  to  each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the  Trustee,  of the bid and asked  prices for the  Comparable  Treasury  Issue
(expressed  in each case as a  percentage  of its  principal  amount)  quoted in
writing to the Trustee by such Reference  Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such Redemption Date.

      "Treasury Rate" means,  with respect to any Redemption  Date, the rate per
annum equal to the  semi-annual  yield to maturity  of the  Comparable  Treasury
Issue,  calculated on the third  Business Day preceding  such  Redemption  Date,
using a price for the Comparable  Treasury  Issue  (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such Redemption
Date.

      Certain  Financial  Covenants.  The  provisions  of this section  shall be
applicable  to the Notes  until such time as the Notes are rated at least BBB by
Standard & Poor's Ratings Group and Baa2 by Moody's Investors Service,  Inc., in
each case with a stable outlook.

      Limitations  on the  Incurrence  of Debt.  The  Company  shall  not  incur
additional  Consolidated  Recourse  Indebtedness (as defined below),  other than
Permitted  Indebtedness (as

<PAGE>

                                       5

defined below),  unless, on a pro forma basis giving effect to the incurrence of
the additional Consolidated Recourse Indebtedness, (i) the Debt Service Coverage
Ratio (as defined  below) of the  Company  would be at least 2.0 to 1.0 and (ii)
the ratio obtained by dividing  Consolidated  Recourse  Indebtedness by Recourse
Capitalization (as defined below) would not exceed 0.60 to 1.0

      Limitation  on Asset  Sales.  Without  the  consent  of the  holders  of a
majority  in  principal  amount of the  outstanding  Notes  voting as a separate
series under the Indenture,  and except with respect to any transaction to which
the provisions of Article Eight of the Indenture would relate, the Company shall
not, and shall not permit any of its Subsidiaries to,  consummate any Asset Sale
(as defined below),  if (i) the aggregate net book value of all such Asset Sales
consummated during the four calendar quarters immediately  preceding any date of
determination  would  exceed  10% of the  Total  Assets of the  Company  and its
consolidated  Subsidiaries  as shown on the line  item of the same  title on the
Company's most recent quarterly audited or unaudited consolidated balance sheet;
provided however,  that any such Asset Sale shall be disregarded for purposes of
the 10% limitation  specified above to the extent that the net proceeds  thereof
received  by the  Company  or any  Subsidiary  are (a)  within  12 months of the
consummation of such Asset Sale, invested or reinvested by the Company or any of
its  Subsidiaries in a Permitted  Business (as defined  below),  (b) used by the
Company or any of its Subsidiaries to repay  Indebtedness of the Company or such
Subsidiary, or (c) retained by the Company or any of its Subsidiaries.

      Definitions.  The following are  definitions of certain terms used in this
section.  Capitalized terms used and not otherwise defined in this section shall
have the meanings ascribed thereto in this Note and the Indenture.

      "Asset  Sale" means any sale for cash of any  properties  or assets of the
Company or any of its  Subsidiaries  including by way of the sale by the Company
or any of its  Subsidiaries of equity interests in any Subsidiary or by way of a
Sale and Leaseback Transaction or similar transaction;  provided,  however, that
the term Asset Sale shall not  include:  (i) any sales of  accounts  receivable,
(ii) sales of any  properties  or assets sold prior to December 31, 2002 or held
for sale or classified  as  discontinued  operations as of that date,  (iii) any
distribution from partnership  investments of PSEG Resources LLC, (iv) any sales
of  properties  or  assets  required  to be sold to  conform  with  governmental
requirements,  (v) any sales of  properties  or assets  that,  in the  Company's
opinion are  obsolete,  worn out or no longer  useful or necessary in connection
with the operation of the business of the Company or its  Subsidiaries,  or (vi)
any sales of properties or assets to the Company or a wholly-owned Subsidiary of
the Company.

      "Consolidated   Recourse   Indebtedness"   means,   without   duplication,
Indebtedness  of the Company and the Material  Subsidiaries,  but  excluding (i)
non-recourse  Indebtedness,  (ii) Indebtedness in the form of performance or bid
bond support or commitments, (iii) Indebtedness in the form of equity support or
commitments,  and (iv)  Indebtedness  owing to Public Service  Enterprise  Group
Incorporated or any affiliate thereof.

      "Consolidated  Member's Equity" means the consolidated  member's equity of
the Company as determined  in  accordance  with  generally  accepted  accounting
principles  in the United  States as of the date of any  determination  thereof;
provided that,  Accumulated  Other

<PAGE>

                                       6

Comprehensive  (Loss)  Income as shown on the line item of the same title on the
Company's consolidated balance sheet shall be disregarded.

      "Debt Service  Coverage  Ratio" means the ratio obtained by dividing,  (a)
without  duplication,  (i) the sum of (x) EBITDA for the  preceding  four fiscal
quarters,  (y) non-cash  impairment  charges against  EBITDA,  and (z) return of
capital from any  Subsidiary  of the Company,  less (ii)  consolidated  interest
expense  that is not a direct  obligation  of the  Company  and/or any  Material
Subsidiary;  by (b) interest expense for the preceding four fiscal quarters that
is a direct  obligation  of the  Company  and/or any  Material  Subsidiary.  For
purposes  of this  definition,  the  Company  may elect to include  in  interest
expense  interest on the maximum  amount of  Indebtedness  permitted to be drawn
under a credit  facility at the time such credit  facility is first entered into
(to the extent such Indebtedness is not Permitted  Indebtedness),  in which case
(A) subsequent  draws under such credit  facility up to the maximum amount shall
not  constitute  a separate  incurrence  of  Indebtedness,  and (B) such maximum
amount shall be used in the  calculation of the Debt Service  Coverage Ratio for
subsequent incurrences of additional Consolidated Recourse Indebtedness.  If the
Company  makes such an election,  the interest  rate  applicable  to such credit
facility  on the  date of  determination  shall  be used to  determine  interest
expense on the maximum amount of Indebtedness that may be incurred thereunder.

      "EBITDA" means, for the Company, the sum of Operating Income, Other Income
and  Depreciation and  Amortization,  each as shown on the line item of the same
title on the Company's consolidated income statement for the relevant period.

      "Five  Year  Credit  Facility"  means the  $495,000,000  Revolving  Credit
Facility  and  Reimbursement  Agreement,  dated as of May 12,  1999,  among  the
Company,  the various  banks named  therein and the various  agents  referred to
therein, as in effect from time to time.

      "Permitted  Business"  means a business that is the same or similar to the
business of the Company or any  Subsidiary as of April 16, 2003, or any business
reasonably related thereto.

      "Permitted  Indebtedness"  means (i) Indebtedness  outstanding as of April
16, 2003, (ii) Indebtedness not to exceed $495 million at any one time under the
Company's Five Year Credit  Facility (or any  extension,  renewal or replacement
thereof),  (iii)  Indebtedness  incurred  to  refinance,  retire or replace  any
Indebtedness  of the Company or any Subsidiary  outstanding as of April 16, 2003
(including  successive  refinancings or replacements of such  Indebtedness) in a
principal amount no greater than the  Indebtedness to be refinanced,  retired or
replaced  (plus  any  premiums,   costs  and  expenses   payable  in  connection
therewith),  (iv)  guarantees  by the Company or any Material  Subsidiary of any
Consolidated Recourse Indebtedness of the Company or another Material Subsidiary
and  (v)  Indebtedness  the  net  proceeds  of  which  are  used  to  repurchase
outstanding  Securities  of any series  issued under the  Indenture  pursuant to
Section 1007 thereof or deposited  to defease  Securities  of any series  issued
under the Indenture pursuant to Article 14 thereof.

      "Recourse   Capitalization"   means  the  sum  of  Consolidated   Recourse
Indebtedness  and  Consolidated  Member's  Equity,  each  as at the  date of any
determination thereof.

<PAGE>

                                       7

      Modification  and  Waivers;  Obligations  of  the  Company  Absolute.  The
Indenture permits,  with certain  exceptions as therein provided,  the amendment
thereof and the  modification  of the rights and  obligations of the Company and
the rights of the Holders of the  Securities of each series.  Such amendment may
be effected  under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in  aggregate  principal  amount of all
Securities  issued  under the  Indenture  at the time  Outstanding  and affected
thereby.  The Indenture  also contains  provisions  permitting  the Holders of a
majority  in  aggregate   principal   amount  of  the  Securities  at  the  time
Outstanding,  on behalf of the Holders of all Outstanding  Securities,  to waive
compliance by the Company with certain provisions of the Indenture. Furthermore,
provisions  in the  Indenture  permit the  Holders of a  majority  in  aggregate
principal  amount of the  Outstanding  Securities  of an individual  series,  to
waive, on behalf of all of the Holders of Securities of such individual  series,
certain past  defaults  under the  Indenture  and their  consequences.  Any such
consent or waiver shall be  conclusive  and binding upon the Holder of this Note
and upon all  future  Holders  of this  Note  and of any  Note  issued  upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Note.

      No reference  herein to the  Indenture and no provision of this Note or of
the  Indenture  shall alter or impair the  obligation  of the Company,  which is
absolute and  unconditional,  to pay the principal of (and premium,  if any) and
interest on this Note at the times,  place and rate, and in the coin or currency
herein prescribed.

      Defeasance and Covenant Defeasance.  The Indenture contains provisions for
defeasance  at any time of (a) the entire  indebtedness  of the  Company on this
Note and (b) certain  restrictive  covenants and the related defaults and Events
of Default,  upon  compliance by the Company with certain  conditions  set forth
therein, which provisions apply to this Note.

      Authorized  Denominations.  The Notes are issuable only in registered form
without coupons in denominations of $1,000 and integral multiples thereof.

      Registration  of Transfer or Exchange.  As provided in the  Indenture  and
subject to certain  limitations  herein and therein set forth,  the  transfer of
this Note is  registrable  in the Security  Register upon surrender of this Note
for registration of transfer at the office or agency of the Company in any place
where the  principal  of (and  premium,  if any) and  interest  on this Note are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form  satisfactory  to the Company and the Security  Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing,  and thereupon one
or more new  Notes,  of  authorized  denominations  and for the  same  aggregate
principal amount, will be issued to the designated transferee or transferees.

      As provided in the Indenture and subject to certain limitations herein and
therein set forth,  the Notes are  exchangeable  for a like aggregate  principal
amount of Notes of  different  authorized  denominations,  as  requested  by the
Holders surrendering the same.

      This Note is a Global Security.  If The Depository Trust Company is at any
time  unwilling,  unable or ineligible to continue as depository and a successor
depository is not appointed by the Company within 90 days or an Event of Default
under the Indenture has

<PAGE>

                                       8

occurred and is continuing, the Company will issue Notes in certificated form in
exchange  for this Global  Security.  In  addition,  the Company may at any time
determine not to have  Securities  represented by one or more Global  Securities
and, in such event,  will issue Notes in certificated  form in exchange in whole
for this  Global  Security.  In any  such  instance,  an  owner of a  beneficial
interest in this  Global  Security  will be  entitled  to  physical  delivery in
certificated form of Notes equal in principal amount to such beneficial interest
and to have such Notes  registered in its name.  Notes so issued in certificated
form will be issued in  denominations of $1,000 and integral  multiples  thereof
and will be issued in registered form only, without coupons.

      No service charge shall be made for any such  registration  of transfer or
exchange,  but the Company may require  payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

      Prior to due presentment of this Note for  registration  of transfer,  the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Holder of this Note as the owner  hereof for all  purposes,  whether or not this
Note be overdue,  and neither the Company,  the Trustee nor any such agent shall
be affected by notice to the contrary.

      Defined  Terms.  All terms  used in this Note  which  are  defined  in the
Indenture and are not otherwise  defined herein shall have the meanings assigned
to them in the  Indenture.  The term "Board of  Directors" as referred to in the
Indenture  shall, for all purposes of this Note, mean the "Board of Managers" as
defined in this Note.

      Governing  Law. This Note shall be governed by and construed in accordance
with the laws of the State of New Jersey.

<PAGE>

                                       9

      Unless the certificate of  authentication  hereon has been executed by the
Trustee by manual  signature,  this Note shall not be  entitled  to any  benefit
under the Indenture or be valid or obligatory for any purpose.

      IN WITNESS  WHEREOF,  the Company has caused  this  instrument  to be duly
executed under its facsimile company seal.

Dated:       , 2003                          PSEG ENERGY HOLDINGS L.L.C.

                                             By:
                                                    ----------------------------
                                                           Vice President

                                             Attest:
                                                    ----------------------------
                                                             Secretary

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

      This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.

                                                         WACHOVIA BANK, NATIONAL
                                                         ASSOCIATION, as Trustee

                                             By:
                                                    ----------------------------
                                                        Authorized Signatory

<PAGE>

                                       10

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:
  I or we assign and transfer this Security to

                  (Insert assignee's soc. sec. or tax I.D. No.)

              (Print or type assignee's name, address and zip code)

and irrevocably appoint  ______________________  agent to transfer this Security
on the books of the Company. The agent may substitute another to act for him.

Dated:                                       Signed:
       ----------------------------------           ----------------------------
                                                    (Sign exactly as your name
                                                    appears on the other side of
                                                    this Security)

Signature Guarantee:
                    ------------------------------------------------------------

<PAGE>

                                       11

                         OPTION TO ELECT REPAYMENT FORM

         If you wish to elect to have this Note repurchased by the Company upon
a Change of Control, check this box: |_|

      If you wish to elect to have  only part of this  Note  repurchased  by the
Company upon a Change of Control, state the amount: $

Dated:                                       Signed:
       ----------------------------------           ----------------------------
                                                    (Sign exactly as your name
                                                    appears on the other side of
                                                    this Security)

Signature Guarantee:
                    ------------------------------------------------------------

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