Document:

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                                                                   Exhibit 10.7
                      PROCUREMENT AND MARKETING AGREEMENT

                                  BY AND AMONG

                         RELIANT ENERGY SERVICES, INC.

                                      AND

                 RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS LLC

                      RELIANT ENERGY MARYLAND HOLDINGS LLC

                                      AND

                     RELIANT ENERGY NEW JERSEY HOLDINGS LLC

                          DATED AS OF AUGUST 24, 2000

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                               TABLE OF CONTENTS
<TABLE>
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Section                                                                                                         Page
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<S>                                                                                                            <C>
SECTION 1 DEFINITIONS AND EXPLANATION OF TERMS....................................................................1
SECTION 2 TERM OF AGREEMENT......................................................................................11
SECTION 3 COMMODITY PROCUREMENT..................................................................................12
SECTION 4 COMMODITY PROCUREMENT GUIDELINES; REQUESTS FOR
          COMMODITY..............................................................................................14
SECTION 5 POWER MARKETING........................................................................................15
SECTION 6 DISPATCH AND SCHEDULING................................................................................17
SECTION 7 OUTAGES; ACCESS........................................................................................17
SECTION 8 RISK OF LOSS...........................................................................................18
SECTION 9 EARLY TERMINATION......................................................................................18
SECTION 10 METHOD OF PAYMENT.....................................................................................19
SECTION 11 FORCE MAJEURE.........................................................................................21
SECTION 12 EVENTS OF DEFAULT.....................................................................................22
SECTION 13 WAIVER................................................................................................25
SECTION 14 REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................................25
SECTION 15 LIABILITY OF PARTIES..................................................................................29
SECTION 16 ASSIGNMENT; ADDITIONAL COMPANIES AND FACILITIES.......................................................31
SECTION 17 AMENDMENT.............................................................................................32
SECTION 18 NOTICES...............................................................................................32
SECTION 19 APPLICABLE LAW; SUBMISSION TO JURISDICTION............................................................33
SECTION 20 SEVERABILITY..........................................................................................34
SECTION 21 ENTIRE AGREEMENT......................................................................................34
SECTION 22 NO THIRD PARTY BENEFICIARIES..........................................................................34
SECTION 23 COUNTERPARTS..........................................................................................34
SECTION 24 INFORMATION AND CONFIDENTIALITY.......................................................................34
SECTION 25 INDEPENDENT CONTRACTOR................................................................................35
APPENDIX A  FACILITIES
APPENDIX B  EXISTING LDC CONTRACTS
</TABLE>

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                       PROCUREMENT AND MARKETING AGREEMENT

         This Procurement and Marketing Agreement is made and entered into as of
the 24th day of August, 2000 by and among Reliant Energy Services, Inc., a
Delaware corporation ("RES"), and Reliant Energy Mid-Atlantic Power Holdings
LLC, a Delaware limited liability company, Reliant Energy Maryland Holdings LLC,
a Delaware limited liability company, and Reliant Energy New Jersey Holdings
LLC, a Delaware limited liability company (each individually, a "Company" and
collectively, the "Companies"). RES and the Companies may hereinafter be
referenced individually as a "Party" and together as the "Parties."

                                    RECITALS

         The Companies have ownership interests in, lease or operate electric
generation facilities located in Pennsylvania, New Jersey and Maryland in
respect of which they require commodity procurement and power marketing
services.

         The Companies desire to engage RES to provide, and RES desires to
provide, those commodity procurement and power marketing services to the
Companies in accordance with the terms and conditions hereof.

         In consideration of the mutual covenants and agreements set forth
herein, the Parties, intending to be legally bound, hereby agree as follows:

                                    SECTION 1
                      DEFINITIONS AND EXPLANATION OF TERMS

1.1. Definitions. As used in this Agreement, the following capitalized terms
shall have the meanings set forth below:

         "Actual Cost" means, in respect of a quantity of Commodity, the actual
total third-party costs and expenses (including transportation costs, hedging
costs, Taxes (other than income Tax), fees and other costs) incurred by RES and
properly allocable to a Company or Companies to make available such quantity of
Commodity at the relevant Delivery Point.

         "Actual Power Sales Costs" means, for a Facility in a month, the actual
total third-party costs and expenses (including transmission costs and losses,
independent system operator and/or control area charges, allocated FERC annual
charges on sales of power, hedging costs and all other Taxes (other than income
Tax), fees and costs) incurred by RES in respect of that month and properly
allocable to a Company or Companies to market, sell and deliver the Capacity,
Energy and Ancillary Services from that Facility to a Power Purchaser or
potential Power Purchaser.

         "Actual Power Sales Proceeds" means, for a Facility in a month, the sum
of all payments actually made by, and received from, Power Purchasers in respect
of that month pursuant to the Transition Power Purchase Agreements and Power
Sales Arrangements relating to Capacity, Energy or Ancillary Services from that
Facility.

             Signature Page to Procurement and Marketing Agreement

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         "Affiliate" means with respect to a Person, any Person which, directly
or indirectly, controls, is controlled by or is under common control with such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of more
than 50% of the voting securities, by contract or otherwise.

         "AGC" means automatic generation control, which is the capability to
make automatic adjustments to generation output in response to system changes
through the use of a digital computer.

         "Agreement" means this Procurement and Marketing Agreement, including
all appendices attached hereto and all amendments hereto that may be made from
time to time.

         "Ancillary Services" means those ancillary services customarily
provided from time to time by an electric generating facility in the PJM Control
Area, including black start capability, voltage/VAR support, load following,
load regulation, AGC, spinning reserve and non-spinning reserve.

         "Bankruptcy" means, with respect to a Party, (a) an adjudication of
bankruptcy or insolvency or the entry of an order for relief under any
applicable Bankruptcy Law with respect to such Party; (b) the making by such
Party of an assignment for the benefit of its creditors; (c) the filing by such
Party of a petition in bankruptcy or for relief under any Bankruptcy Law; (d)
the filing against such Party of any petition in bankruptcy or for relief under
any Bankruptcy Law (unless such petition is dismissed within 90 days from the
date of filing thereof); (e) the filing by such Party of an answer or pleading
admitting or failing to contest the material allegations of any such petition;
(f) the appointment of a trustee, conservator or receiver for such Party or for
all or substantially all of its assets (unless such appointment is vacated or
stayed within 90 days of such appointment); (g) the taking by such Party of any
action for its winding up or liquidation; or (h) the consent by such Party to
any of the actions described in clauses (a) through (g) being taken against it.

         "Bankruptcy Law" means any bankruptcy, insolvency, moratorium,
receivership or similar Law.

         "Benchmark Product" means sales of Energy commonly recognized in the
electric power trading industry in the United States as "Firm (LD)" sales, which
sales are made on a firm basis, the obligation to deliver of which is not
contingent on native load requirements or the performance of any designated
power generation facility or system of power generation resources, with cover
damages being payable by the non-performing party in the event of an unexcused
failure to deliver or receive. If at any time any Party reasonably believes that
the forepart of this definition no longer describes sales of Energy that are
commonly recognized and made in the electric power trading industry in the
United States and that are being made by RES on behalf of the Companies pursuant
to this Agreement, RES shall, in good faith, provide to the Companies a new
definition that describes sales of Energy that, at that time, are commonly
recognized and made in the power trading industry in the United States and that
are being made by RES on behalf of the Companies pursuant to this Agreement.

             Signature Page to Procurement and Marketing Agreement

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         "Btu" means British thermal unit, which, in turn, means the amount of
heat required to raise the temperature of one avoirdupois pound of pure water
from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure
of 14.73 pounds per square inch absolute.

         "Business Day" means any day other than Saturday or Sunday on which
commercial banks are authorized to open for business in New York, New York.

         "Capacity" means electrical generating capacity (expressed in MW).

         "Clean Air Act" means Title IV of the Clean Air Act Amendments of 1990
(effective November 15, 1990), any amendments thereto and any regulations
promulgated thereunder, which are the basis for the basis for the federal air
pollution l program for sulfur dioxide or nitrogen oxide emissions.

         "Coal" means crushed bituminous coal, containing no synthetic fuels,
substantially free from any extraneous material, with no intermediate sizes to
be added or removed.

         "Coal Delivery Point" means, for each Facility, the receipt facilities
of such Facility customarily used for the receipt of Coal deliveries.

         "Coal Payment" or "CP" has the meaning given to such term in Section
3.2.

         "Coal Procurement Fee" means (a) for any month through and including
December 2000, $41,667, and (b) for any month in any subsequent calendar year,
the product of (i) the Coal Procurement Fee in effect during the immediately
preceding calendar year, multiplied by (ii) a fraction (but if such fraction is
less than one, it shall be deemed to be one), the numerator of which is the
Inflation Index for December of the immediately preceding calendar year (the
"Prior Year") and the denominator of which is the Inflation Index for December
of the calendar year immediately preceding the Prior Year.

         "Commodity" means any of Coal, Emissions Allowances, Fuel Oil or Gas.

         "Commodity Procurement Guidelines" means the commodity procurement
guidelines provided to RES pursuant to Section 4.1, including any revisions made
to those commodity procurement guidelines pursuant to Section 4.1.

         "Commodity Supplier" means a supplier and/or transporter procured by
RES pursuant to this Agreement to supply and/or transport Commodities for
delivery to their respective Delivery Points.

         "Commodity Supply Arrangement" means an agreement or other arrangement
with a Commodity Supplier for the supply and/or transportation of Commodities
for delivery to their respective Delivery Points.

             Signature Page to Procurement and Marketing Agreement

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         "Company" and "Companies" have the meanings given such terms in the
first paragraph of this Agreement.

         "Company Power Sales Level" means for a period of time an amount equal
to the MWh-weighted average gross sales price (expressed in $/MWh) of all sales
to third parties of Comparable Products arranged by RES with respect to such
period of time on behalf of the Companies under this Agreement.

         "Company Related Persons" means the Companies and their Affiliates and
their respective agents, representatives, contractors and subcontractors and the
partners, members, participants, principals, shareholders, directors, trustees,
officers and employees of each of them; provided, however, that Company Related
Persons shall not include RES.

         "Company Share" means, for a Company, the quotient equal to (a) the
summation (expressed in MW) of the Installed Capacities of such Company's
Facilities, divided by (b) the summation (expressed in MW) of the Installed
Capacities of all of the Companies' Facilities; provided, however, that for the
purposes of calculating the Coal Payment, the Installed Capacities of the
Keystone and Conemaugh Facilities shall not be included in the calculation of
Company Share.

         "Comparable Products" means any Benchmark Products sold by RES to third
parties but only if the sales of such Benchmark Products (a) are entered into on
the same date and during the same hour both (i) for RES's own account (whether
for RES or on behalf of Persons other than the Companies) and (ii) on behalf of
any or all of the Companies under this Agreement and (b) have identical periods
of delivery and delivery points in the PJM Control Area.

         "Confidential Information" has the meaning given such term in Section
24.

         "Contract Year" means (a) the period commencing on the date hereof and
ending on December 31, 2000, and (b) each calendar year thereafter; provided,
however, that, for the calendar year in which this Agreement expires or
terminates, Contract Year shall mean the period commencing on the first day of
such calendar year or on the date hereof, as the case may be, and ending on the
date of such expiration or termination.

         "Damages" has the meaning given such term in Section 15.1.

         "Delivery Point" means a Gas Delivery Point, Coal Delivery Point or
Fuel Oil Delivery Point, as applicable.

         "Dollars" and "$" means the lawful currency of the United States of
America.

         "Early Termination Date" means, in respect of a notice of termination
delivered pursuant to Section 9, the later of (a) the date specified in that
notice of termination and (b) the date that occurs six months after receipt of
that notice of termination by all Parties to which that notice is required to be
delivered in accordance with Section 9.

             Signature Page to Procurement and Marketing Agreement

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         "Emissions Allowance" means a Sulfur Dioxide Emissions Allowance or a
Nitrogen Oxide Emissions Allowance as defined by the Clean Air Act.

         "Emissions Allowance Payment" or "EAP" has the meaning given to such
term in Section 3.4.1.

         "Emissions Allowance Procurement Fee" means (a) for any month through
and including December 2000, $29,167, and (b) for any month in any subsequent
calendar year, the product of (i) the Emissions Allowance Procurement Fee in
effect during the immediately preceding calendar year, multiplied by (ii) a
fraction (but if such fraction is less than one, it shall be deemed to be one),
the numerator of which is the Inflation Index for December of the immediately
preceding calendar year (the "Prior Year") and the denominator of which is the
Inflation Index for December of the calendar year immediately preceding the
Prior Year.

         "Energy" means electric energy (expressed in MWh).

         "Energy Delivery Point" means, in respect of each Facility, the
physical point at which the Facility is connected to the corresponding Grid.

         "Event of Default" means any of the events listed in Sections 12.1 and
12.2.

         "Existing LDC Contracts" means the existing contracts with local gas
distribution companies listed in Appendix B for the purchase of Gas for the
Facilities and any extensions, renewals or replacements of those contracts.

         "Facilities" means the electric generation facilities in which the
Companies have or may, from time to time, have ownership interests or which the
Companies lease or operate or may, from time to time, lease or operate and, in
each case, which are listed in Appendix A or added pursuant to Section 16.5 or
Section 16.6.

         "Fee" means each of (a) the portion of the Gas Payment equal to [GPF X
UGQ]; (b) the portion of the Coal Payment equal to [CPF X CS]; (c) the portion
of the Fuel Oil Payment equal to [FOPF X PFOQ]; (d) the portion of the Emissions
Allowance Payment equal to [EAPF X CS]; and (e) the Power Marketing Payment.

         "FERC" means the Federal Energy Regulatory Commission or any similar or
successor Governmental Body exercising the same or equivalent jurisdiction.

         "Financing Parties" means the lenders and equity investors and
potential lenders and equity investors (including any trustee or agent on behalf
of such lenders and equity investors or potential lenders and equity investors)
providing or potentially providing financing or refinancing to the Companies for
the acquisition, ownership, operation, maintenance or leasing of the Facilities,
whether that financing or refinancing takes the form of private debt or equity,
public debt or equity or any other form.

             Signature Page to Procurement and Marketing Agreement

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         "Force Majeure" means, in respect of a Non-Performing Party, an event
beyond the reasonable control of the Non-Performing Party that the
Non-Performing Party is unable to prevent, avoid or overcome through the
exercise of diligent efforts and that is not the result of the Non-Performing
Party's fault or negligence or failure to comply with any provision of this
Agreement. The following events, among others, shall, to the extent they meet
the requirements set forth in the immediately foregoing sentence, constitute
Force Majeure: act of God; landslide; lightning; earthquake; fire; explosion;
flood; storm; hurricane; tornado; storm; insurrection; war; blockade; riot;
civil disturbance; sabotage; and embargo.

         "Fuel Oil" means number 2 fuel oil (either high sulfur or low sulfur)
or number 6 fuel oil (either high sulfur or low sulfur).

         "Fuel Oil Delivery Point" means, for each Facility, the receipt
facilities of such Facility customarily used for the receipt of Fuel Oil
deliveries.

         "Fuel Oil Payment" or "FOP" has the meaning given to such term in
Section 3.3.1.

         "Fuel Oil Procurement Fee" means (a) for any month through and
including December 2000, $0.07/mmBtu, and (b) for any month in any subsequent
calendar year, the product of (i) the Fuel Oil Procurement Fee in effect during
the immediately preceding calendar year, multiplied by (ii) a fraction (but if
such fraction is less than one, it shall be deemed to be one), the numerator of
which is the Inflation Index for December of the immediately preceding calendar
year (the "Prior Year") and the denominator of which is the Inflation Index for
December of the calendar year immediately preceding the Prior Year.

         "Gas" means natural gas or any mixture of hydrocarbon gases or of
hydrocarbon gases and non-combustible gases, consisting predominantly of
methane.

         "Gas Day" means the 24-hour period commencing at 9:00 a.m., or such
other 24-hour period as may be designated by Gas Daily as the time period for
Gas deliveries applicable to the "Daily price Survey" information used in the
definition of "Gas Index."

         "Gas Delivery Point" means, for each Facility, the point of
interconnection between the facilities of the local gas distribution company or
other gas pipeline company and the Gas receipt facilities of such Facility.

         "Gas Index" means for any Gas Day the daily price of spot Gas
(expressed in $/mmBtu) published by Gas Daily in the "Daily Price Survey" for
Transco Zone 6 for such Gas Day; provided, however, that, if (a) Gas Daily does
not publish the index described in this definition or (b) Gas Daily ceases to be
published, RES shall, in good faith, provide to the Companies to be used as the
basis for the Gas Index either (i) an alternative published fallback index or
(ii) an Indicative Market Price.

         "Gas Payment" or "GP" has the meaning given such term in Section 3.1.1.

             Signature Page to Procurement and Marketing Agreement

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         "Gas Price" means, for each mmBtu of Procured Gas, (a) if such mmBtu of
Procured Gas is purchased prior to the applicable Gas pipeline nomination
deadline on the day immediately preceding the Gas Day of delivery but later than
five Business Days before the first Gas Day of the month of delivery, the Gas
Index for the Gas Day for which delivery of that mmBtu to the relevant Gas
Delivery Point has been arranged, plus any additional cost (including local gas
distribution company charges) to deliver that mmBtu of Gas from Transco Zone 6
to the relevant Gas Delivery Point, or (b) if such mmBtu of Procured Gas is
purchased at any time other than as described in clause (a) of this definition,
the Actual Cost to procure and make available that mmBtu of Gas at the relevant
Gas Delivery Point, divided by one mmBtu; provided, however, that, if the mmBtu
of Gas has been purchased from the local gas distribution company pursuant to an
Existing LDC Contract, the Gas Price of such mmBtu of Gas shall mean the Actual
Cost to procure and make available that mmBtu of Gas at the relevant Gas
Delivery Point, divided by one mmBtu.

         "Gas Procurement Fee" means (a) for any month through and including
December 2000, $0.07/mmBtu, and (b) for any month in any subsequent calendar
year, the product of (i) the Gas Procurement Fee in effect during the
immediately preceding calendar year, multiplied by (ii) a fraction (but if such
fraction is less than one, it shall be deemed to be one), the numerator of which
is the Inflation Index for December of the immediately preceding calendar year
(the "Prior Year") and the denominator of which is the Inflation Index for
December of the calendar year immediately preceding the Prior Year.

         "Good Electrical Practice" means, at a particular time, either (a) any
of the practices, methods and acts engaged in or approved by a significant
portion of the competitive electric generating industry operating in the
northeast United States at such time or (b) with respect to any matter to which
(a) does not apply, any of the practices, methods and acts that, in the exercise
of reasonable judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a reasonable
cost consistent with good competitive electric generation business practices,
reliability, safety and expedition. "Good Electrical Practice" is not intended
to be limited to the optimum practice, method or act to the exclusion of all
others but rather to be a spectrum of possible practices, methods or acts having
due regard for, among other things, manufacturers' warranties and the
requirements of Governmental Bodies of competent jurisdiction.

         "Governmental Body" means any federal, state, local, municipal or other
government; any governmental, regulatory or administrative agency, commission or
other authority exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; and any court or governmental tribunal.

         "Grid" means the electric transmission system of a Transmission
          Provider.

         "Indemnified Party" has the meaning given such term in Section 15.1.

         "Indemnifying Party" has the meaning given such term in Section 15.1.

             Signature Page to Procurement and Marketing Agreement

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         "Indicative Market Price" means the arithmetic mean, for the applicable
electricity or natural gas market, disregarding the highest value and lowest
value, of the relevant quotations for the applicable commodity on the same terms
and conditions from at least two Reference Market Makers.

         "Inflation Index" means the Consumer Price Index for All Urban
Consumers (CPI-U) as published by the Bureau of Labor Statistics of the United
States Department of Labor.

         "Installed Capacity" means, for each Facility, the summer rated
Capacity of that Facility available to the Company that has an ownership
interest in, leases or operates that Facility as set forth in, or as may be
adjusted in accordance with or incorporated into, Appendix A.

         "Law" means any constitution, charter, act, statute, law, ordinance,
code, rule, regulation, order, Permit or other applicable legislative or
administrative action of any Governmental Body.

         "Management Committee" means the management committee of each Company.

         "mmBtu" means million Btus.

         "MW" means megawatt.

         "MWh" means megawatt-hour.

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

         "Non-Company Power Sales Level" means for a period of time an amount
equal to the MWh-weighted average gross sales price (expressed in $/MWh) of all
sales made by RES to third parties of Comparable Products with respect to such
period of time, other than those sales arranged by RES on behalf of the
Companies under this Agreement.

         "Non-Paying Party" has the meaning given such term in Section 10.6.

         "Non-Performing Party" has the meaning given such term in Section 11.

         "Notice of Intent to Terminate" has the meaning given such term in
Section 12.3.

         "Outage" means, in respect of a Unit, an interruption of the Unit's
Energy production capability that affects the Unit's ability to provide
Capacity, Energy or Ancillary Services.

         "Participation Agreement" means each of the three Participation
Agreements dated as of August 24, 2000 among Reliant Energy Mid-Atlantic Power
Holdings LLC, as Facility Lessee, Wilmington Trust Company, not in its
individual capacity (except as expressly provided therein) but solely as Lessor
Manager, Bankers Trust Company, not in its individual capacity (except as
expressly provided therein) but solely as Lease Indenture Trustee and Pass
Through Trustee, and specified other entities, as Owner Lessor and Owner
Participant, as amended or modified from time to time.

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         "Party" and "Parties" have the meanings given such terms in the first
paragraph of this Agreement.

         "Paying Party" has the meaning given such term in Section 10.6.

         "Permit" means any permit, license, approval, consent, waiver,
variance, franchise, authorization or other requirement in connection with the
Facilities or the Companies required from any Governmental Body under applicable
Law.

         "Person" means any individual, partnership, corporation, limited
liability company, association, business, trust, Governmental Body or other
entity.

         "PJM Control Area" means the control area recognized by NERC as the PJM
Control Area.

         "Power Marketing Fee" means (a) for any month through and including
December 2000, $291,667, and (b) for any month in any subsequent calendar year,
the product of (i) the Power Marketing Fee in effect during the immediately
preceding calendar year, multiplied by (ii) a fraction (but if such fraction is
less than one, it shall be deemed to be one), the numerator of which is the
Inflation Index for December of the immediately preceding calendar year (the
"Prior Year") and the denominator of which is the Inflation Index for December
of the calendar year immediately preceding the Prior Year.

         "Power Marketing Guidelines" means the power marketing provided to RES
pursuant to Section 5.3, including any revisions made to those power marketing
guidelines pursuant Section 5.3.

         "Power Marketing Payment" or "PMP" has the meaning given to such term
in Section 5.2.

         "Power Purchaser" means a purchaser of Capacity, Energy or Ancillary
Services from the Facilities. For the avoidance of doubt, a purchaser under the
Transition Power Purchase Agreements constitutes a "Power Purchaser."

         "Power Sales Arrangement" means an agreement or other arrangement with
a Power Purchaser made by RES pursuant to this Agreement for the purchase of
Capacity, Energy or Ancillary Services from the Facilities. For the avoidance of
doubt, the Transition Power Purchase Agreements do not constitute "Power Sales
Arrangements."

         "Procured Coal" means, for each Company in a month, the total quantity
of Coal (expressed in tons) procured during that month by RES for delivery to
the Coal Delivery Points of the Company's Facilities.

         "Procured Emissions Allowances" means, for each Company in a month, the
total quantity of Emissions Allowances (expressed in tons) procured during that
month by RES for the Company's Facilities.

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         "Procured Fuel Oil" means, for each Company in a month, the total
quantity of Fuel Oil (expressed in mmBtu) procured during that month by RES for
delivery to the Fuel Oil Delivery Points of the Company's Facilities.

         "Procured Gas" means, for each Company in a month, the total quantity
of Gas (expressed in mmBtu) procured during that month by RES for delivery to
the Gas Delivery Points of the Company's Facilities.

         "Reference Market Makers" means leading reputable dealers in the
relevant electricity or Gas market, selected in good faith by RES.

         "RES" has the meaning given such term in the first paragraph of this
Agreement.

         "RES Related Persons" means RES and its Affiliates and their respective
agents, representatives, contractors and subcontractors and the partners,
members, participants, principals, shareholders, directors, trustees, officers
and employees of each of them; provided, however, that RES Related Persons shall
not include the Companies.

         "Scheduled Outage" means, in respect of a Unit, a planned Outage of
that Unit that has been scheduled at least 15 days in advance by the Company
that has an ownership interest in the Facility and is for inspection, testing,
maintenance, repairs or replacement.

         "Service" means each of the following sets of services being provided
by RES pursuant to, and in accordance with, this Agreement: Coal procurement,
Emissions Allowance procurement, Fuel Oil procurement, Gas procurement and power
marketing.

         "Tax" means any (a) income, ad valorem, property, occupation,
severance, production, extraction, first use, conservation, Btu or Energy,
gathering, transport, pipeline, utility, gross receipts, municipal usage or
easement, gas or oil revenue, gas or oil import, privilege, sales, use,
consumption, excise, lease, transaction, stamp and other or new tax, (b) fee
(including documentation, license and registry fees), (c) charge, (d) license,
(e) levy, (f) duty, (g) permit, (h) assessment or (i) withholding of any type,
in each case, as may be imposed, collected or established by any Governmental
Body, together with any penalty, fine, surcharge, increase or interest on any of
the foregoing that may be imposed, collected or established by any Governmental
Body.

         "Term" has the meaning given such term in Section 2.

         "Termination for Default Date" means, in respect of a Termination for
Default Notice, the later of (a) the date specified in that Termination for
Default Notice and (b) the date of receipt of that Termination for Default
Notice by all Parties to which that Termination for Default Notice is required
to be delivered in accordance with Section 12.3.

         "Termination for Default Notice" has the meaning given such term in
Section 12.3.

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         "Transition Power Purchase Agreement" means each of the (a) Amended and
Restated Power Purchase Agreement by and between Sithe Energies, Inc., Sithe New
Jersey Holdings LLC, Sithe Power Marketing, L.P. and Jersey Central Power &
Light Company dated November 24, 1999, (b) Amended and Restated Power Purchase
Agreement by and between Sithe Energies, Inc., Sithe Pennsylvania Holdings LLC,
Sithe Maryland Holdings LLC, Sithe Power Marketing, L.P. and Pennsylvania
Electric Company dated November 24, 1999 and (c) Amended and Restated Power
Purchase Agreement by and between Sithe Energies, Inc., Sithe Pennsylvania
Holdings LLC, Sithe Power Marketing, L.P. and Metropolitan Edison Company dated
November 24, 1999, in each case, as amended.

         "Transmission Provider" means, in respect of each Facility, the
Person(s) that provide(s) electric transmission services at that Facility's
Energy Delivery Point.

         "Units" means the electric generating units of the Facilities.

         "Unscheduled Outage" means, in respect of a Unit, any Outage of that
Unit that is not a Scheduled Outage.

         1.2 Rules of Construction. In this Agreement, unless the context
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter and vice versa. The terms "include," "includes"
and "including" shall be deemed to be followed by the words "without
limitation." The word "month" shall mean "calendar month" unless otherwise
specified. Each reference to a Section or Appendix shall be a reference to a
Section of, or Appendix to, this Agreement unless otherwise specified. The words
"hereof," "herein," "hereto" and "hereunder" and words of similar import when
used in this Agreement shall, unless otherwise expressly specified, refer to
this Agreement as a whole and not to any particular provision of this Agreement.
A reference to a given agreement or instrument shall be a reference to that
agreement or instrument as modified, amended, supplemented and restated through
the date as of which such reference is made. Section titles are for the
convenience of the Parties and have no effect on the meaning of this Agreement.
The Parties acknowledge that each Party and its counsel have reviewed and
revised this Agreement and that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.

         1.3 Consents. Wherever the consent or approval of any Party is required
under this Agreement, such consent or approval shall not be unreasonably
withheld, unless this Agreement provides that such consent or approval is to be
given by such Party at its sole or absolute discretion or is otherwise
qualified.

                                    SECTION 2
                                TERM OF AGREEMENT

         This Agreement shall become effective when executed by all Parties.
Unless otherwise terminated pursuant to its terms, this Agreement shall continue
to be in effect until the 30th anniversary of its execution by all Parties (such
period of effectiveness, the "Term").

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                                    SECTION 3
                              COMMODITY PROCUREMENT

         3.1 Gas.

                  3.1.1 Procurement. Subject to the terms and conditions of this
         Agreement, RES shall use commercially reasonable efforts to procure on
         behalf of each Company the Gas requested by that Company to be
         delivered to the Gas Delivery Point(s). The gas payment (the "Gas
         Payment" or "GP") to be made by each Company to RES in respect of a
         month shall be calculated in accordance with the following formula:

                                    [FORMULA]

         where:

         n means the total number of mmBtus of Procured Gas for the Company in
         the month.

         i means each mmBtu of Procured Gas for the Company in the month.

         GPRi means the Gas Price in respect of mmBtu of Gas i multiplied by one
         mmBtu.

         GPF means the Gas Procurement Fee for the month.

         UGQ means the total number of mmBtus of Procured Gas for the Company in
         the month that is consumed at the Company's Facilities during the
         month.

         Each Company shall pay its Gas Payment each month in accordance with,
         and subject to, Section 10.

                  3.1.2 Remarketing. Upon the reasonable request of any Company,
         RES shall use commercially reasonable efforts to assist that Company to
         resell to third parties Gas procured for that Company by RES.

         3.2 Coal. Effective upon notice from all of the Companies to RES that
RES's coal procurement obligations under this Agreement are to enter into effect
and subject to the terms and conditions of this Agreement, RES shall use
commercially reasonable efforts to procure on behalf of each Company the Coal
requested by that Company to be delivered to the Coal Delivery Point(s). The
coal payment (the "Coal Payment" or "CP") to be made by each Company to RES in
respect of a month shall be calculated in accordance with the following formula:

                               CP=CC+[CPF X CS]

where:

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CC means the Actual Cost of procuring the Procured Coal for delivery at the
relevant Coal Delivery Points for the Company in the month.

CPF means the Coal Procurement Fee for the month; provided, however, that, in
the case of any month for which RES's coal procurement obligations were not in
effect for the entire month, CPF shall mean a pro-rated portion of the Coal
Procurement Fee based on the number of days in that month during which RES's
coal procurement obligations were in effect.

CS means the Company Share for the Company.

Each Company shall pay its Coal Payment each month in accordance with, and
subject to, Section 10.

         3.3      Fuel Oil.

                  3.3.1 Procurement. Subject to the terms and conditions of this
         Agreement, RES shall use commercially reasonable efforts to procure on
         behalf of each Company the Fuel Oil requested by that Company to be
         delivered to the Fuel Oil Delivery Point(s). The fuel oil payment (the
         "Fuel Oil Payment" or "FOP") to be made by each Company to RES in
         respect of a month shall be calculated in accordance with the following
         formula:

                             FOP=FOC+[FOPF X PFOQ]

         where:

         FOC means the Actual Cost of procuring the Procured Fuel Oil for
         delivery at the relevant Fuel Oil Delivery Points for the Company in
         the month.

         FOPF means the Fuel Oil Procurement Fee for the month.

         PFOQ means the sum of (a) the total number of mmBtus of Procured Fuel
         Oil for the Company in the month that is consumed at the Company's
         Facilities during the month and the (b) the total number of mmBtus of
         Procured Fuel Oil for the Company in previous months that is consumed
         at the Company's Facilities during the month.

         Each Company shall pay its Fuel Oil Payment each month in accordance
         with, and subject to, Section 10.

                  3.3.2 Remarketing. Upon the reasonable request of any Company,
         RES shall use commercially reasonable efforts to assist that Company to
         resell to third parties Fuel Oil procured for that Company by RES.

         3.4      Emissions Allowances.

                  3.4.1 Procurement. Subject to the terms and conditions of
         this Agreement, RES shall use commercially reasonable efforts to
         procure on behalf of each Company the

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         Emissions Allowances requested by that Company. The emissions allowance
         payment (the "Emissions Allowance Payment" or "EAP") to be made by each
         Company to RES in respect of a month shall be calculated in accordance
         with the following formula:

                              EAP=EAC+[EAPF X CS]

         where:

         EAC means the Actual Cost of procuring the Procured Emissions
         Allowances for the Company in the month.

         EAPF means the Emissions Allowance Procurement Fee for the month;
         provided, however, that, in the case of any month for which RES's
         emissions allowance procurement obligations were not in effect for the
         entire month, EAPF shall mean a pro-rated portion of the Emissions
         Allowance Procurement Fee based on the number of days in that month
         during which RES's emissions allowance procurement obligations were in
         effect.

         CS means the Company Share for the Company.

         Each Company shall pay its Emissions Allowance Payment each month in
         accordance with, and subject to, Section 10.

                  3.4.2 Remarketing. Upon the reasonable request of any Company,
         RES shall use commercially reasonable efforts to assist that Company to
         resell to third parties Emissions Allowances procured for that Company
         by RES.

         3.5 Procurement and Administration Obligations. In procuring a
Commodity on behalf of a Company, RES shall not violate the guidelines and
restrictions specified in the Commodity Procurement Guidelines except to the
extent authorized by the applicable Company or Companies; provided, however,
that RES shall have no obligation to procure a Commodity to the extent that,
using commercially reasonable efforts, the Commodity requested is not available
within the guidelines and restrictions specified in the Commodity Procurement
Guidelines. In procuring a Commodity on behalf of a Company hereunder, RES shall
have the option to (a) execute and administer Commodity Supply Arrangements on
behalf of that Company in the capacity of agent for that Company (in which case,
that Company may be directly responsible to the Commodity Suppliers for the
obligations and liabilities under those Commodity Supply Arrangements) or (b)
enter directly into Commodity Supply Arrangements with Commodity Suppliers to
purchase the required Commodity and then resell amounts of the purchased
Commodity to the Company.

                                    SECTION 4
            COMMODITY PROCUREMENT GUIDELINES; REQUESTS FOR COMMODITY

         4.1 Commodity Procurement Guidelines. On the first day of the Term,
the Companies shall provide to RES Commodity Procurement Guidelines that shall
be effective for the

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<PAGE>   17

remainder of the Term; provided, however, that the Companies shall be entitled
to revise the Commodity Procurement Guidelines upon prior notice from all
Companies to RES, in which case the Commodity Procurement Guidelines, as
revised, shall be in effect for the remainder of the Term or until the Companies
further revise those Commodity Procurement Guidelines in accordance with this
Section 4.1. The Commodity Procurement Guidelines shall set forth general
guidelines regarding the characteristics of Commodity Suppliers, as well as
transaction types (including hedges), payment terms and lengths of Commodity
Supply Arrangements, that are acceptable to the Companies. The Commodity
Procurement Guidelines and all changes thereto shall be approved by the
Management Committees.

         4.2 Communicating Requests for Commodities. Each Company shall have the
right to request delivery of Commodities to it by RES in accordance with the
terms and conditions of this Agreement, provided that such request shall be made
in sufficient time so as to provide RES the opportunity, using commercially
reasonable efforts, to procure, schedule and deliver the requested Commodities.
Each Company may make such request orally or in writing through its authorized
representative by either a telephone conversation or a facsimile; provided,
however, that Reliant Energy Mid-Atlantic Power Holdings LLC may make requests
for Fuel Oil for the Keystone and Conemaugh stations through an authorized
representative of Reliant Energy Northeast Management Company. The Parties'
telephone and facsimile numbers to be used in connection with communications of
requests for commodities shall be as set forth in Section 18.

         4.3 Methods of Communication. The Parties consent without further
notice to the recording of any and all conversations on the telephone lines used
for communicating requests and instructions related to the Services performed by
RES under this Agreement (including communications pursuant to this Section 4
and to Section 6). The contents of such recordings may be introduced into
evidence and all objections to the introduction of those contents into evidence
based on principles of Statutes of Fraud or the Parol Evidence Rule are hereby
waived.

                                    SECTION 5
                                 POWER MARKETING

         5.1 Power Marketing Obligations. RES shall market on behalf of each
Company the Capacity, Energy and Ancillary Services of that Company's Facilities
that the Company is entitled to market, subject to the Transition Power Purchase
Agreements and the terms and conditions of this Agreement. RES shall maintain
separate books and records for accounting purposes of those Power Sales
Arrangements entered into by it on behalf of the Companies. In marketing on
behalf of a Company the Capacity, Energy and Ancillary Services of that
Company's Facilities, RES shall not violate the guidelines and restrictions
specified in the Power Marketing Guidelines except to the extent authorized by
the applicable Company or Companies; provided, however, that RES shall have no
obligation to market on behalf of a Company the Capacity, Energy and Ancillary
Services of that Company's Facilities to the extent that, using commercially
reasonable efforts, that Capacity, Energy or Ancillary Services cannot be
marketed within the guidelines and restrictions specified in the Power Marketing
Guidelines. In marketing on behalf of a Company the Capacity, Energy and
Ancillary Services of that Company's Facilities, RES shall have the option to
(a) execute and administer Power Sales Arrangements on behalf of that Company in
the capacity of agent for that Company (in which case, that Company may be
directly responsible to the Power Purchasers for the obligations and liabilities
under

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<PAGE>   18

those Power Sales Arrangements) or (b) enter directly into Power Sales
Arrangements with Power Purchasers to sell amounts of Capacity, Energy and/or
Ancillary Services available from the Facilities.

         5.2 Payments relating to Power Marketing Service. Each Company shall
pay to RES in respect of each month that Company's Power Marketing Payment and
the Actual Power Sales Costs relating to that Company's Facilities for that
month. RES shall cause to be paid to that Company in respect of each month the
Actual Power Sales Proceeds of its Facilities for that month (without
duplication of any payment that may have previously been made by Power
Purchasers directly to that Company). The power marketing payment (the "Power
Marketing Payment" or "PMP") to be made by each Company to RES in respect of a
month shall be calculated in accordance with the following formula:

                                  PMP=PMF X CS

where:

PMF means the Power Marketing Fee for the month; provided, however, that, in the
case of any month for which RES's power marketing obligations were not in effect
for the entire month, PMF shall mean a pro-rated portion of the Power Marketing
Fee based on the number of days in that month for which RES's power marketing
obligations were in effect.

CS means the Company Share for the Company.

Each Company and RES shall make the payments required by this Section 5.2 each
month in accordance with, and subject to, Section 10.

         5.3 Power Marketing Guidelines. On the first day of the Term, the
Companies shall provide to RES Power Marketing Guidelines that shall be
effective for the remainder of the Term; provided, however, that the Companies
shall be entitled to revise the Power Marketing Guidelines upon prior notice
from all Companies to RES, in which case the Power Marketing Guidelines, as
revised, shall be in effect for the remainder of the Term or until the Companies
further revise those Power Marketing Guidelines in accordance with this Section
5.3. The Power Marketing Guidelines shall set forth general guidelines regarding
the characteristics of Commodity Suppliers, as well as transaction types
(including hedges), payment terms and lengths of Power Sales Arrangements, that
are acceptable to the Companies. In addition, the Power Marketing Guidelines
shall provide that RES shall receive approval from the Management Committee
prior to entering into on behalf of a Company any transaction that meets all
three of the following criteria: (a) a term of more than 3 years, (b) the sale
of more than 250 MWs, and (c) a notional value of more than $150,000,000. The
Power Marketing Guidelines and all changes thereto shall be approved by the
Management Committees.

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                                    SECTION 6
                             DISPATCH AND SCHEDULING

         6.1 Dispatch Rights. RES shall have the right to dispatch each Facility
(other than the Keystone and Conemaugh stations) for any amount of Energy and/or
Ancillary Services during any and every hour of the day to fulfill its
obligations under this Agreement, subject to the technical limitations of that
Facility. Notwithstanding the foregoing, RES shall use commercially reasonable
efforts not to dispatch a Unit to the extent that Unit cannot respond to RES's
dispatch request as a result of an Outage. If RES dispatches a Unit that cannot
respond to RES's dispatch request as a result of an Outage, the Company that has
an ownership interest in that Unit shall not be obligated to respond to that
dispatch request to the extent that the Unit cannot respond to that dispatch
request as a result of the Outage.

         6.2 Communications. The scheduling and dispatch communications
described in this Section 6 shall be effectuated by either a telephone
conversation or a facsimile. The Parties' telephone and facsimile numbers to be
used in connection with scheduling and dispatch communications shall be as set
forth in Section 18.

                                    SECTION 7
                                 OUTAGES; ACCESS

         7.1 Scheduled Outages. On the first day of the first Contract Year and
no later than 60 days prior to the beginning of each Contract Year after the
first Contract Year, each Company shall provide RES with a proposed schedule of
Scheduled Outages for each of the Company's Units. That schedule shall be based
on Good Electrical Practice and manufacturers' recommendations. Each Company
shall advise RES promptly in the event the Company expects to deviate from the
Scheduled Outage schedule provided to RES. During each Scheduled Outage, the
relevant Company shall keep RES apprised of the status of the affected Facility
and the expected duration of the Scheduled Outage. Each Company shall use
reasonable efforts to coordinate Scheduled Outages with RES. Notwithstanding the
foregoing, in the case of each of the Keystone and Conemaugh stations, the
relevant Company shall be obligated to provide to RES only the information
provided to that Company by the operator or other Person responsible for the
Scheduled Outages of the Units at those stations and the second and penultimate
sentence of this Section 7.1 shall not apply.

         7.2 Unscheduled Outages. Each Company shall promptly notify RES of any
Unscheduled Outages of the Company's Units. Each Company shall provide RES with
an estimate of the cause, duration and scope of each Unscheduled Outage of the
Company's Units. In addition, each Company shall communicate to RES the proposed
corrective action and estimated duration of each Unscheduled Outage of the
Company's Units. Each Company shall promptly advise RES of any change in status
of any of the foregoing and when and to what extent the affected Unit is
available for dispatch. Each Company shall use diligent efforts to correct each
Unscheduled Outage of the Company's Units. Notwithstanding the foregoing, in the
case of each of the Keystone and Conemaugh stations, the relevant Company shall
be obligated to provide to RES only the information provided to that Company by
the operator or other Person responsible for the Unscheduled Outages of the
Units at those stations and the penultimate sentence of this Section 7.2 shall
not apply.

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                                    SECTION 8
                                  RISK OF LOSS

         The Companies shall, except to the extent resulting from the fraud or
intentional tort by RES, bear all risk of loss and otherwise be responsible for
any and all occurrences with respect to Commodities procured by RES pursuant to
this Agreement upon and after that risk of loss and responsibility passes from
the relevant Commodity Supplier(s) under the relevant Commodity Supply
Arrangement(s). The Companies shall, except to the extent resulting from the
fraud or intentional tort by RES, bear all risk of loss and otherwise be
responsible for any and all occurrences with respect to Capacity, Energy and
Ancillary Services marketed by RES pursuant to this Agreement until that risk of
loss and responsibility passes to the relevant Power Purchaser(s) under the
relevant Power Sales Arrangement(s).

                                    SECTION 9
                                EARLY TERMINATION

         Notwithstanding anything to the contrary in this Agreement, any Party
shall have the unconditional right, at its sole discretion, to terminate this
Agreement in respect of all Services or a particular Service or particular
Services at any time by providing six months' prior notice to each Party to
which the termination shall apply. (For the avoidance of doubt, each Company
shall be entitled to deliver a notice of termination pursuant to this Section 9
only to RES.) The notice of termination delivered pursuant to this Section 9
shall specify the Service or Services to which the termination shall apply, the
date as of which the termination shall apply and, in the case of a notice of
termination delivered by RES, the Company or Companies to which the termination
shall apply.

         9.1      Notice of Termination by a Company.

                  9.1.1 Termination in respect of All Services. If any Company
         provides to RES notice of termination of this Agreement in respect of
         all Services in accordance with this Section 9, this Agreement shall,
         on the corresponding Early Termination Date, terminate in its entirety
         in respect of that Company but continue in full force and effect with
         respect to all Services to all other Companies that were being provided
         by RES to those Companies prior to the corresponding Early Termination
         Date.

                  9.1.2 Termination in respect of a Particular Service or
         Particular Services. If any Company provides to RES notice of
         termination of this Agreement only in respect of a particular Service
         or particular Services in accordance with this Section 9, this
         Agreement shall, on the corresponding Early Termination Date, terminate
         in respect of that Service or those Services to that Company but
         continue in full force and effect with respect to all other Services to
         that Company that were being provided by RES to that Company prior to
         the corresponding Early Termination Date and all Services to all other
         Companies that were being provided by RES to those Companies prior to
         the corresponding Early Termination Date.

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         9.2      Notice of Termination by RES.

                  9.2.1 Termination in respect of All Services to All Companies.
         If RES provides to all Companies notice of termination of this
         Agreement in respect of all Services to all Companies in accordance
         with this Section 9, this Agreement shall, on the corresponding Early
         Termination Date, terminate in its entirety.

                  9.2.2 Termination in respect of All Services to at Least One
         but not All Companies. If RES provides to at least one but not all
         Companies notice of termination in respect of all Services to that
         Company or those Companies in accordance with this Section 9, this
         Agreement shall, on the corresponding Early Termination Date, terminate
         in its entirety in respect of the specified Company or Companies but
         continue in full force and effect with respect to all Services to all
         other Companies that were being provided by RES to those Companies
         prior to the corresponding Early Termination Date.

                  9.2.3 Termination only in respect of a Particular Service or
         Particular Services to All Companies. If RES provides to all Companies
         notice of termination only in respect of a particular Service or
         particular Services to all Companies in accordance with this Section 9,
         this Agreement shall, on the corresponding Early Termination Date,
         terminate in respect of that Service or those Services to all Companies
         but continue in full force and effect with respect to all other
         Services to all Companies that were being provided by RES to those
         Companies prior to the corresponding Early Termination Date.

                  9.2.4 Termination in respect of a Particular Service or
         Particular Services to at Least One but not All Companies. If RES
         provides to at least one but not all Companies notice of termination
         only in respect of a particular Service or particular Services to that
         Company or those Companies in accordance with this Section 9, this
         Agreement shall, on the corresponding Early Termination Date, terminate
         in respect of that Service or those Services to the specified Company
         or Companies but continue in full force and effect with respect to all
         other Services to the specified Company or Companies that were being
         provided by RES to that Company or those Companies prior to the
         corresponding Early Termination Date and all Services to all other
         Companies that were being provided by RES to those Companies prior to
         the corresponding Early Termination Date.

No Party shall have any liability or obligation to the other Parties arising out
of a termination of this Agreement in whole or in part in accordance with this
Section 9. Notwithstanding the foregoing and subject to Sections 12.4, 15.2,
15.3, 15.4 and 15.5, termination of this Agreement in whole or in part in
accordance with this Section 9 does not relieve the Parties of any liability or
obligation for amounts owing in respect of the period prior to that termination.

                                   SECTION 10
                                METHOD OF PAYMENT

         10.1 Invoicing and Payment. In each month commencing with the second
month of the Term and continuing until the month following the end of the Term,
RES shall submit to each Company, on or before the tenth Business Day of the
month, an invoice as described in Section 10.2. Subject to Sections 10.4 and
10.8 and in accordance with Section 10.6, each Company shall

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pay such invoice within 20 days of its receipt of such invoice. Such payment
shall be made in Dollars by wire transfer of immediately available funds to RES
at the account specified in Section 18.1 or any other account that RES shall
direct in a notice to the relevant Company at least ten Business Days prior to
the date such payment is due.

         10.2 Monthly Invoices. The monthly invoice to each Company shall
indicate, for the immediately preceding month, the amount and calculation of the
Gas Payment, Coal Payment, Fuel Oil Payment, Emissions Allowance Payment, Power
Marketing Payment, Actual Power Sales Costs, Actual Power Sales Proceeds, any
other amounts owing by that Company to RES or RES to that Company in respect of
this Agreement and the net amount owing determined in accordance with Section
10.6, in each case, whether or not all or any portion is due as a result of
Section 10.8. In addition, each monthly invoice shall state, for the immediately
preceding 12-month period, the Company Power Sales Level and Non-Company Power
Sales Level.

         10.3 Late Payments. Any amount due from either Party hereunder not paid
in full on or before the date such payment is due will incur a delayed payment
charge on the unpaid amount from the original due date until the date paid at an
annual rate equal to the prime rate of Chase Bank of Texas, N.A. or any
successor institution in effect from time to time plus one percent, prorated by
days, but not to exceed the maximum lawful rate.

         10.4 Billing Disputes. In the event of any dispute as to all or any
portion of any monthly invoice, the disputing Company shall give notice of the
dispute to RES and shall nevertheless pay the full amount of the charges not
subject to the dispute when due. Such notice shall state the amount involved in
the dispute and set forth a full statement of the grounds on which such dispute
is based. RES shall give all due and prompt consideration to any such dispute
and shall advise the disputing Company with regard to RES's position relative
thereto no later than 30 days following receipt of notice of the dispute. Upon
final determination (whether by agreement, adjudication or otherwise) of the
dispute:

                  10.4.1 if any monies are due from the disputing Company with
         respect to the amount in dispute, that Company shall pay or reimburse
         those monies, together with interest at the rate specified in Section
         10.3 from the original due date (or the original payment date in the
         case of a reimbursement) until the date paid or reimbursed, no later
         than 15 Business Days following such final determination; or

                  10.4.2 if any monies are due from RES with respect to the
         amount in dispute, RES shall pay or reimburse those monies, together
         with interest at the rate specified in Section 10.3 from the original
         due date (or the original payment date in the case of a reimbursement)
         until the date paid or reimbursed, no later than 15 Business Days
         following such final determination.

         10.5 Audits. Each Party shall provide or cause to be provided all
information that any other Party may reasonably request to substantiate all
invoices, adjustments and claims under this Agreement. Each Party shall, upon
reasonable notice, have the right to audit, and each other Party shall make or
cause to be made available any and all books and records of that other Party or
its agents that relate to and are reasonably necessary for verification of
charges and costs

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<PAGE>   23

included in invoices rendered under this Agreement. Upon reasonable request, a
Party being audited will be entitled to review the complete audit report and any
supporting materials.

         10.6 Offset and Netting. The Parties shall discharge their obligations
to pay through netting, so that the Party owing the greater aggregate amount
(the "Paying Party") shall pay to the other Party (the "Non-Paying Party") the
difference between the amount owed by the Paying Party and the amount owed by
the Non-Paying Party. Subject to Sections 12.4, 15.2, 15.3, 15.4 and 15.5, each
Party reserves to itself all rights, setoffs, counterclaims and other remedies
and defenses that such Party has or may be entitled to arising from or out of
this Agreement. Subject to Sections 12.4, 15.2, 15.3, 15.4 and 15.5, all
outstanding obligations to make payments under this Agreement may be offset
against each other, set-off or recouped from one another.

         10.7 Taxes. Each Company shall pay all sales, use and other Taxes
(excluding income taxes incurred by RES) and fees, if any, that may now or
hereafter apply to the purchase, sale or use of Commodities for or in connection
with that Company's Facilities or the purchase, sale or marketing of Capacity,
Energy and Ancillary Services from or in connection with that Company's
Facilities under this Agreement. In the event RES, on behalf of any Company,
pays any Taxes or fees that are the responsibility of that Company under this
Agreement, the amount so paid shall be added to the next monthly invoice
submitted by RES to that Company under this Section 10, and that Company shall
pay such amount in accordance with this Section 10. Upon the reasonable request
of any Company, RES shall provide documents relating to Taxes or fees invoiced
pursuant to this Section 10.7.

         10.8 Subordination. Except to the extent set forth in the penultimate
sentence of this Section 10.8, the Fees shall be due and paid to RES by a
Company only when and to the extent such Company is permitted to pay those
amounts as a "Restricted Payment" (as that term is defined in Appendix A to the
relevant Participation Agreement) under the Operative Documents (as that term is
defined in Appendix A to the relevant Participation Agreement) with all unpaid
amounts accumulated until payment is permitted under this Section 10.8. The
parties to each Participation Agreement shall be third-party beneficiaries of
this provision. For purposes of Sections 10.3 and 10.4 only, the Fees shall be
deemed due whenever those amounts would have been due but for the provisions of
this Section 10.8. For the avoidance of doubt, this Section 10.8 shall not
restrict the payment of any amount payable by any Party other than the Fees.

                                   SECTION 11
                                  FORCE MAJEURE

       No Party shall be responsible, liable or deemed in breach of this
Agreement for any delay or failure in the performance of its respective
obligations under this Agreement (such Party referred to herein as the
"Non-Performing Party") to the extent such delay or failure is due to the
existence of Force Majeure. In the event of Force Majeure:

         11.1 the Non-Performing Party shall promptly give the other Parties
notice (no later than 24 hours after learning of the Force Majeure) and shall
provide the other Parties details of the Force Majeure within two days after
learning of the Force Majeure;

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         11.2 the suspension of performance shall be of no greater scope and of
no longer duration than is reasonably attributable to the Force Majeure;

         11.3 the Non-Performing Party shall use diligent efforts to remedy its
inability to perform; and

         11.4 when the Non-Performing Party is able to resume performance of its
obligations under this Agreement, the Non-Performing Party shall promptly give
the other Parties notice to that effect.

                                   SECTION 12
                                EVENTS OF DEFAULT

         12.1 Events of Default of RES. An Event of Default shall be deemed to
have occurred with respect to RES upon the occurrence and during the
continuance of any of the following events:

                  12.1.1 Bankruptcy of RES;

                  12.1.2 RES fails to pay any undisputed amount when due under
         this Agreement within 30 days after receiving notice of such failure
         from the Company or Companies to which the unpaid amount is due;

                  12.1.3 RES fails to perform or observe any of its material
         obligations or covenants hereunder or otherwise is in material breach
         of this Agreement (other than payment obligations, which are
         specifically addressed in Section 12.1.2) and such failure or breach
         continues unremedied for a period of 30 days after receiving notice of
         such failure or breach from the Company or Companies affected by such
         failure or breach;

                  12.1.4 Any representation or warranty made by RES herein shall
         have been false when made and such misrepresentation has had or could
         reasonably be expected to have a material adverse effect on any
         Company; or

                  12.1.5 The Company Power Sales Level is less than 85% of the
         Non-Company Power Sales Level for the full 12-month period immediately
         preceding the time of determination.

         12.2 Event of Default of a Company. An Event of Default shall be deemed
to have occurred with respect to a Company upon the occurrence and during the
continuance of any of the following events:

                  12.2.1 Bankruptcy of that Company;

                  12.2.2 that Company fails to pay any undisputed amount when
         due under this Agreement within 30 days after receiving notice of such
         failure from RES;

                  12.2.3 that Company fails to perform or observe any of its
         material obligations or covenants hereunder or otherwise is in material
         breach of this Agreement (other than

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         payment obligations, which are specifically addressed in Section
         12.2.2) and such failure or breach continues unremedied for a period of
         30 days after receiving notice of such failure or breach from RES; or

                  12.2.4 Any representation or warranty made by that Company
         herein shall have been false when made and such misrepresentation has
         had or could reasonably be expected to have a material adverse effect
         on RES.

         12.3 Notice of Intent to Terminate. Upon the occurrence and during the
continuation of any Event of Default, each Party not in default but affected by
the Event of Default (for the avoidance of doubt, no Company shall be entitled
to deliver a Notice of Intent to Terminate unless there exists an Event of
Default by RES) shall have the right to deliver to the defaulting Party or
Parties a notice of intent to terminate this Agreement with respect to any or
all Services ("Notice of Intent to Terminate"). The Notice of Intent to
Terminate shall specify the Event of Default giving rise to such Notice of
Intent to Terminate, the Service or Services being terminated and, in the case
of a Notice of Intent to Terminate given by RES, the Company or Companies in
default. Except in the case of the Events of Default specified in Sections
12.1.1, 12.2.1 and 12.1.5, the Parties affected (the defaulting Party or Parties
and the Party giving the Notice of Intent to Terminate) shall, following the
giving of a Notice of Intent to Terminate, consult for a period of up to 30 days
as to what steps shall be taken. In the case of an Event of Default other than
the ones specified in Sections 12.1.1, 12.2.1 and 12.1.5, upon expiration of the
30-day period and unless the Parties affected shall have otherwise mutually
agreed on a remedy or the Party in default shall have cured the Event of Default
and, in the case of the Events of Default specified in Sections 12.1.1 and
12.2.1, concurrently with the Notice of Intent to Terminate, and, in the case of
the Event of Default specified in Section 12.1.5, upon expiration of the 90-day
period beginning from the giving of the Notice of Intent to Terminate, the Party
having given a Notice of Intent to Terminate may, by giving notice thereof to
the defaulting Party or Parties (the "Termination for Default Notice"), (a) in
the case of a Termination for Default Notice given by a Company, terminate this
Agreement with respect to the Service or Services specified in the Notice of
Intent to Terminate being provided by RES to that Company, or (b) in the case of
a Termination for Default Notice given by RES, terminate this Agreement with
respect to the Service or Services specified in the Notice of Intent to
Terminate being provided by RES to the defaulting Company or Companies specified
in the Notice of Intent to Terminate. The Termination for Default Notice shall
specify the date as of which the termination shall apply.

                  12.3.1 Termination for Default Notice by a Company.

                           (i) Termination for Default Notice in respect of All
                  Services. If any Company provides to RES a Termination for
                  Default Notice in respect of all Services, this Agreement
                  shall, on the corresponding Termination for Default Date,
                  terminate in its entirety in respect of that Company but
                  continue in full force and effect with respect to all Services
                  to all other Companies that were being provided by RES to
                  those Companies prior to the corresponding Termination for
                  Default Date.

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                           (ii) Termination for Default Notice in respect of a
                  Particular Service or Particular Services. If any Company
                  provides to RES a Termination for Default Notice only in
                  respect of a particular Service or particular Services, this
                  Agreement shall, on the corresponding Termination for Default
                  Date, terminate in respect of that Service or those Services
                  to that Company but continue in full force and effect with
                  respect to all other Services to that Company that were being
                  provided by RES to that Company prior to the corresponding
                  Termination for Default Date and all Services to all other
                  Companies that were being provided by RES to those Companies
                  prior to the corresponding Termination for Default Date.

                  12.3.2 Termination for Default Notice by RES.

                           (i) Termination for Default Notice in respect of All
                  Services to All Companies. If RES provides to all Companies a
                  Termination for Default Notice in respect of all Services to
                  all Companies, this Agreement shall, on the corresponding
                  Termination for Default Date, terminate in its entirety.

                           (ii) Termination for Default Notice in respect of All
                  Services to at Least One but not All Companies. If RES
                  provides to at least one but not all Companies a Termination
                  for Default Notice in respect of all Services to that Company
                  or those Companies, this Agreement shall, on the corresponding
                  Termination for Default Date, terminate in its entirety in
                  respect of the specified Company or Companies but continue in
                  full force and effect with respect to all Services to all
                  other Companies that were being provided by RES to those
                  Companies prior to the corresponding Termination for Default
                  Date.

                           (iii) Termination for Default Notice in respect of a
                  Particular Service or Particular Services to All Companies. If
                  RES provides to all Companies a Termination for Default Notice
                  only in respect of a particular Service or particular Services
                  to all Companies, this Agreement shall, on the corresponding
                  Termination for Default Date, terminate in respect of that
                  Service or those Services to all Companies but continue in
                  full force and effect with respect to all other Services to
                  all Companies that were being provided by RES to those
                  Companies prior to the corresponding Termination for Default
                  Date.

                           (iv) Termination for Default Notice in respect of a
                  Particular Service or Particular Services to at Least One but
                  not All Companies. If RES provides to at least one but not all
                  Companies a Termination for Default Notice only in respect of
                  a particular Service or particular Services to that Company or
                  those Companies, this Agreement shall, on the corresponding
                  Termination for Default Date, terminate in respect of that
                  Service or those Services to the specified Company or
                  Companies but continue in full force and effect with respect
                  to all other Services to the specified Company or Companies
                  that were being provided by RES to that Company or those
                  Companies prior to the corresponding Termination for Default
                  Date and all Services to all other Companies that were

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<PAGE>   27

                  being provided by RES to those Companies prior to the
                  corresponding Termination for Default Date.

No Party shall have any liability or obligation to the other Parties arising out
of a termination of this Agreement in whole or in part in accordance with this
Section 12.3. Notwithstanding the foregoing and subject to Sections 12.4, 15.2,
15.3, 15.4 and 15.5, termination of this Agreement in whole or in part in
accordance with this Section 12.3 shall not relieve the Parties of any liability
or obligation for amounts owing in respect of the period prior to that
termination.

         12.4 Remedies Cumulative. In addition to its right to terminate this
Agreement in whole or in part pursuant to Section 12.3, RES may, in the case of
an Event of Default by any Company, (a) withhold any payments due to that
Company in respect of this Agreement for so long as the Event of Default is
continuing, (b) terminate this Agreement in whole or in part pursuant to Section
9 and (c) pursue any other remedy or remedies available in contract, at law or
in equity, including those rights provided in Section 10.6 (provided that no
Party shall be entitled to terminate this Agreement except as provided in
Section 9 or Section 12.3). Notwithstanding anything in this Agreement to the
contrary, termination pursuant to Section 9 or Section 12.3 shall be each
Company's sole remedy and RES's sole liability for default (whether or not an
Event of Default) by RES, except in the case of fraud or intentional tort by RES
and except that each Company shall be entitled to collect from RES Actual Power
Sales Proceeds actually received and held by RES that, after application of
relevant offsets, setoffs and nettings in accordance with the terms of this
Agreement, are owed to that Company pursuant to Section 5.2.

                                   SECTION 13
                                     WAIVER

         Failure by any Party to exercise any of its rights under this Agreement
shall not constitute a waiver of those rights. No Party shall be deemed to have
waived any right resulting from any failure to perform by any other Party unless
that Party has made such waiver specifically in writing, and no such waiver
shall operate as a waiver of any other past or future failure to perform whether
of a like or different character.

                                   SECTION 14
                   REPRESENTATIONS, WARRANTIES AND COVENANTS

         14.1 Representations and Warranties of each Company. Each Company
represents and warrants as to itself as follows:

                           14.1.1 the Company is a limited liability company
                  duly organized and validly existing under the laws of the
                  State of Delaware and is in good standing and is qualified to
                  do business in all jurisdictions in which the nature of the
                  business conducted by the Company makes such qualification
                  necessary and where failure so to qualify can reasonably be
                  expected to have a material adverse effect upon the Company's
                  financial condition, operations, prospects or business or
                  ability to perform its obligations under this Agreement;

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                           14.1.2 the Company has full legal right, power and
                  authority to execute, deliver and perform this Agreement;

                           14.1.3 the Company has taken all appropriate and
                  necessary limited liability company action to authorize the
                  execution, delivery and performance of this Agreement;

                           14.1.4 the Company has obtained all consents,
                  approvals, authorizations and permits necessary for the valid
                  execution, delivery and performance of this Agreement;

                           14.1.5 this Agreement has been duly executed by the
                  Company and constitutes a legal, valid and binding obligation
                  of the Company, enforceable against the Company in accordance
                  with its terms, except as such enforceability may be limited
                  by applicable Bankruptcy Law or by limitation upon the
                  availability of equitable remedies;

                           14.1.6 the Company is not in violation of any
                  applicable Law promulgated or judgment entered by any
                  Governmental Body, which violation or violations, individually
                  or in the aggregate, would reasonably be expected to have a
                  material adverse effect upon the Company's financial
                  condition, operations, prospects or business or ability to
                  perform its obligations under this Agreement;

                           14.1.7 there are no legal or arbitration proceedings
                  or any proceeding by or before any Governmental Body now
                  pending or, to the best of the Company's knowledge, threatened
                  against the Company, which, if adversely determined, would
                  reasonably be expected to have a material adverse effect upon
                  the Company's financial condition, operations, prospects or
                  business or ability to perform its obligations under this
                  Agreement;

                           14.1.8 the execution, delivery and performance by the
                  Company of this Agreement, the compliance by the Company with
                  the terms and provisions hereof and the carrying out by the
                  Company of the transactions contemplated hereby, (a) does not
                  and will not conflict with or result in a breach or violation
                  of any of the terms or provisions of the organizational
                  documents of the Company and (b) to the best of the Company's
                  knowledge, does not and will not conflict with or result in a
                  breach or violation of any of the terms or provisions of or
                  result in a default under or result in the imposition of any
                  lien upon its properties pursuant to (i) any Law or any order,
                  writ, injunction, judgment or decree by any court or other
                  Governmental Body against the Company or by which the Company
                  or any of its properties is bound or (ii) any loan agreement,
                  indenture, mortgage, note, resolution, bond, contract or other
                  agreement or instrument to which the Company is a party or by
                  which the Company or any of its properties is bound;

                           14.1.9 the Company is sophisticated and experienced
                  in matters relating to the subject of this Agreement, is
                  acting for its own account, has made its own independent
                  decision to enter into this Agreement and each transaction
                  under this Agreement and as to whether this Agreement and each
                  such transaction is appropriate and proper for it based on its
                  own judgment, is not relying on the advice or recommendations
                  of RES in so

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                  doing, and is capable of assessing the merits of and
                  understanding, and understands and accepts, the terms,
                  conditions and risks of this Agreement and each such
                  transaction;

                           14.1.10 the Company is a "forward contract merchant"
                  within the meaning of the United States Bankruptcy Code;

                           14.1.11 the Company has entered into this Agreement
                  and each transaction under this Agreement in connection with
                  the conduct of its business and it has the capacity or ability
                  to make or take delivery of all Commodities and electric power
                  that are the subject of this Agreement and each such
                  transaction; and

                           14.1.12 with respect to each transaction under this
                  Agreement involving the purchase or sale of a Commodity or
                  electric power, it is a producer, processor, commercial user
                  or merchant handling such Commodity or electric power, and it
                  is entering into such transaction for purposes related to its
                  business as such.

                  14.2 Representations and Warranties of RES. RES represents
         and warrants as follows:

                           14.2.1 RES is a corporation, duly organized and
                  validly existing under the laws of the State of Delaware and
                  is in good standing and is qualified to do business in all
                  jurisdictions in which the nature of the business conducted by
                  RES makes such qualification necessary and where failure so to
                  qualify would reasonably be expected to have a material
                  adverse effect upon RES's financial condition, operations,
                  prospects or business or ability to perform its obligations
                  under this Agreement;

                           14.2.2 RES has full legal right, power and authority
                  to execute, deliver and perform this Agreement;

                           14.2.3 RES has taken all appropriate and necessary
                  corporate action to authorize the execution, delivery and
                  performance of this Agreement;

                           14.2.4 RES has obtained all consents, approvals,
                  authorizations and permits necessary for the valid execution,
                  delivery and performance of this Agreement;

                           14.2.5 this Agreement has been duly executed by RES
                  and constitutes a legal, valid and binding obligation of RES,
                  enforceable against RES in accordance with its terms, except
                  as such enforceability may be limited by applicable Bankruptcy
                  Law or by limitation upon the availability of equitable
                  remedies;

                           14.2.6 RES is not in violation of any applicable Law
                  promulgated or judgment entered by any Governmental Body,
                  which violation or violations, individually or in the
                  aggregate, would reasonably be expected to have a material
                  adverse effect upon RES's financial condition, operations,
                  prospects or business or ability to perform its obligations
                  under this Agreement;

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                           14.2.7 there are no legal or arbitration proceedings
                  or any proceeding by or before any Governmental Body now
                  pending or, to the best of RES's knowledge, threatened against
                  RES, which, if adversely determined, would reasonably be
                  expected to have a material adverse effect upon RES's
                  financial condition, operations, prospects or business or
                  ability to perform its obligations under this Agreement; and

                           14.2.8 the execution, delivery and performance by RES
                  of this Agreement, the compliance by RES with the terms and
                  provisions hereof and the carrying out by RES of the
                  transactions contemplated hereby, (a) does not and will not
                  conflict with or result in a breach or violation of any of the
                  terms or provisions of the organizational documents of RES and
                  (b) to the best of RES's knowledge, does not and will not
                  conflict with or result in a breach or violation of any of the
                  terms or provisions of or result in a default under or result
                  in the imposition of any lien upon its properties pursuant to
                  (i) any Law or any order, writ, injunction, judgment or decree
                  by any court or other Governmental Body against RES or by
                  which RES or any of its properties is bound or (ii) any loan
                  agreement, indenture, mortgage, note, resolution, bond,
                  contract or other agreement or instrument to which RES is a
                  party or by which RES or any of its properties is bound.

         14.3 Warranties Regarding Energy, Capacity and Ancillary Services. Each
Company represents and warrants to RES that the Energy, Capacity and Ancillary
Services marketed by RES under this Agreement shall be delivered to Power
Purchasers in accordance with all applicable Laws, and that Power Purchasers
will obtain good title to the Energy, Capacity and Ancillary Services marketed
by RES under this Agreement, free and clear of all liens, claims and
encumbrances of any nature whatsoever.

         14.4 Acknowledgments. Each Company understands and agrees that (a) in
its performance of its obligations under this Agreement, RES is not acting as a
commodity pool operator, commodity trading adviser, investment adviser or in any
fiduciary capacity with respect to the Companies, (b) RES shall have no
obligation hereunder for compliance with any Law or regulation governing the
conduct of commodity pool operators, commodity trading advisers, investment
advisers or fiduciaries, (c) RES may enter into transactions on its own behalf
involving the purchase and sale of the same types of commodities, in the same
geographic region, at the same time and with the same counterparties as those it
enters into on behalf of the Companies in its capacities as contemplated by this
Agreement, and (d) those activities described in (c) above undertaken by RES on
its own behalf in no way constitute a breach of, or otherwise modify, any duty
or obligation by RES under this Agreement. Each Company hereby acknowledges
that, to the extent that RES may act as agent of the Companies as provided in
Sections 3.5 and 5.1, RES's role as agent shall be limited to the legal ability
to bind the Companies to agreements entered into on behalf of the Companies
pursuant to Sections 3.5 and 5.1, and no fiduciary duty or other legal duty or
obligation imposed on an agent toward a principal or any other Person shall be
imposed on RES by virtue of Sections 3.5 and 5.1 or RES's entry into agreements
as agent pursuant thereto. Each of the Companies hereby waives any and all
rights that it may otherwise have under applicable Law or legal precedents to
make any claims or take any action against RES or any RES Related Person based
on any theory of agency, fiduciary duty or other special standard of care.

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         14.5 Warranty Disclaimers. EACH PARTY ACKNOWLEDGES THAT IT HAS ENTERED
INTO THIS AGREEMENT AND IS CONTRACTING TO PROVIDE OR RECEIVE THE SERVICES BASED
SOLELY UPON THE EXPRESSED REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND,
SUBJECT TO THE MATTERS EXPRESSLY WARRANTED IN THIS AGREEMENT, EACH COMPANY
ACCEPTS ALL COMMODITIES PROCURED UNDER THIS AGREEMENT "AS-IS" AND "WITH ALL
FAULTS." THE PARTIES NEGATE ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
COMMODITIES PROCURED UNDER THIS AGREEMENT, WHETHER WRITTEN OR ORAL, EXPRESSED OR
IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

                                   SECTION 15
                              LIABILITY OF PARTIES

         15.1 INDEMNITY. EACH COMPANY (EACH, AN "INDEMNIFYING PARTY") SHALL
FULLY INDEMNIFY AND DEFEND THE RES RELATED PERSONS (THE "INDEMNIFIED PARTIES")
FROM AND AGAINST ANY AND ALL LOSSES, COSTS, DAMAGES, INJURIES, LIABILITIES,
CLAIMS, DEMANDS, PENALTIES AND INTEREST, INCLUDING THIRD-PARTY CLAIMS AND
REASONABLE ATTORNEYS' FEES ("DAMAGES"), DIRECTLY OR INDIRECTLY RELATED TO THIS
AGREEMENT, A COMMODITY SUPPLY ARRANGEMENT OR A POWER SALES ARRANGEMENT UNLESS
CAUSED SOLELY BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED
PARTY; PROVIDED, HOWEVER, THAT THE INDEMNIFYING PARTY SHALL HAVE THE SOLE RIGHT
TO CONTROL THE DEFENSE OF ANY CLAIM OR ACTION WITH RESPECT TO WHICH IT MAY BE
LIABLE TO PROVIDE INDEMNIFICATION PURSUANT TO THIS AGREEMENT, INCLUDING THE
SETTLEMENT OR COMPROMISE THEREOF, EXCEPT THAT NO INDEMNIFYING PARTY SHALL SETTLE
ANY SUCH CLAIM OR ACTION WITHOUT THE PRIOR CONSENT OF THE INDEMNIFIED PARTY.

         15.2 LIMITATION ON DAMAGES. NEITHER ANY PARTY NOR ITS AFFILIATES NOR
THEIR RESPECTIVE AGENTS, REPRESENTATIVES, CONTRACTORS OR SUBCONTRACTORS NOR THE
PARTNERS, MEMBERS, PARTICIPANTS, PRINCIPALS, REPRESENTATIVES, SHAREHOLDERS,
DIRECTORS, TRUSTEES, OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS OR ASSIGNS OF ANY
OF THEM SHALL IN ANY EVENT BE LIABLE TO THE OTHER PARTIES OR THEIR RESPECTIVE
SUBSIDIARIES OR AFFILIATES OR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES,
PARTICIPANTS, PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS, DIRECTORS OR TRUSTEES
OF ANY OF THEM FOR CLAIMS FOR INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR INDIRECT
DAMAGES OF ANY NATURE, ARISING AT ANY TIME, FROM ANY CAUSE WHATSOEVER, WHETHER
ARISING IN TORT, CONTRACT, WARRANTY, STRICT LIABILITY, BY OPERATION OF LAW OR
OTHERWISE, CONNECTED WITH OR RESULTING FROM PERFORMANCE OR

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NON-PERFORMANCE UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS SECTION 15.2
SHALL NOT APPLY TO THIRD-PARTY CLAIMS IN RESPECT OF WHICH, BUT FOR THIS SECTION
15.2, THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 15.1 WOULD APPLY.

         15.3 LIMITED RECOURSE. NEITHER ANY PARTNER, SHAREHOLDER, MEMBER, PARENT
COMPANY OR OTHER AFFILIATE OF ANY PARTY (OR ANY OFFICER OR DIRECTOR OF ANY
THEREOF) NOR ANY PARTNER, SHAREHOLDER, MEMBER, PARENT COMPANY OR OTHER AFFILIATE
OR SUCCESSOR-IN-INTEREST OF SUCH PARTNER, SHAREHOLDER, MEMBER, PARENT COMPANY OR
OTHER AFFILIATE (OR ANY OFFICER OR DIRECTOR OF ANY THEREOF) SHALL HAVE ANY
PERSONAL LIABILITY OR RESPONSIBILITY FOR, RELATING TO OR IN CONNECTION WITH THAT
PARTY'S FAILURE TO PROPERLY PERFORM ANY TERM, COVENANT, CONDITION OR PROVISION
OF THIS AGREEMENT.

         15.4 Limitation on Remedies. Notwithstanding anything in this Agreement
or under applicable Law to the contrary, termination pursuant to Section 9 or
Section 12.3 shall be each Company's sole remedy and RES's sole liability for
any non-performance, inadequate performance, faulty performance or other failure
or breach by RES under or relating to this Agreement, except in the case of
fraud or intentional tort by RES and except that each Company shall be entitled
to collect from RES Actual Power Sales Proceeds actually received and held by
RES that, after application of relevant offsets, setoffs and nettings in
accordance with the terms of this Agreement, are owed to that Company pursuant
to Section 5.2. Each Company hereby expressly waives any right such Company may
otherwise have to claim, collect or receive Damages, to enforce specific
performance or to pursue any other remedy available in contract, at law or in
equity in the event of any non-performance, inadequate performance, faulty
performance or other failure or breach by RES under or relating to this
Agreement, except in the case of fraud or intentional tort by RES.

         15.5 Performance of Third Parties. The Parties hereby acknowledge and
agree that RES shall have no responsibility or liability for the
non-performance, inadequate performance, faulty performance or other failure or
breach by a Commodity Supplier, Power Purchaser or other third party pursuant
to, in connection with or relating to any Commodity Supply Arrangement or Power
Sales Arrangement or in any other way related to or affecting the Services or
this Agreement. In particular, RES shall not be responsible, liable or deemed in
breach of this Agreement for any delay or failure in the performance of its
obligations under this Agreement (including payment) to the extent such delay or
failure is due to the non-performance, inadequate performance, faulty
performance or other failure or breach by a Commodity Supplier, Power Purchaser
or other third party pursuant to, in connection with or relating to any
Commodity Supply Arrangement or Power Sales Arrangement or in any other way
related to or affecting the Services or this Agreement.

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                                  SECTION 16
                ASSIGNMENT; ADDITIONAL COMPANIES AND FACILITIES

         16.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Parties and their successors and permitted assigns.

         16.2 Assignment by RES. RES may assign this Agreement or any of its
rights or obligations hereunder (a) to any of its Affiliates in its sole
discretion without the requirement of consent from any Company and (b) to any
non-Affiliate with consent from each Company, which consent may be withheld in
each Company's sole discretion.

         16.3 Assignment by a Company. Except to the extent provided in Section
16.4, no Company may assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of RES, which may be withheld in
RES's sole discretion.

         16.4 Assignment for Financing. Each Company may, for purposes of
securing financing from the Financing Parties, without the requirement of
consent from RES but upon prior notice to RES, collaterally assign or create
security over all of its assets, including its rights and interests under or
pursuant to this Agreement, as security for that Company's obligations to the
Financing Parties.

         16.5 Additional Companies. In the event that Reliant Energy
Mid-Atlantic Power Holdings LLC has, from time to time, any direct or indirect
subsidiary that has an ownership interest in, leases or operates any electric
generating facilit(y)(ies) but is not a "Company" and "Party" for purposes of
this Agreement, that subsidiary shall, in its sole discretion, have the right to
become a "Company" and "Party" for purposes of this Agreement by giving notice
to RES and the other Companies accompanied by a written instrument in which that
subsidiary agrees to be legally bound by all of the terms, covenants and
conditions of, and makes all of the representations and warranties included in,
this Agreement as if that subsidiary originally had been a "Company" and "Party"
under this Agreement. Upon delivery of that notice and written instrument, that
subsidiary shall be a "Company" and "Party" for all purposes of this Agreement
(and the definitions of "Company," "Companies," "Party" and "Parties" shall be
deemed amended accordingly) and the electric generating facilit(y)(ies) in which
that subsidiary has an ownership interest or which that subsidiary leases or
operates shall be "Facilities" for all purposes of this Agreement. Each such
subsidiary of Reliant Energy Mid-Atlantic Power Holdings LLC shall be a
third-party beneficiary of this provision.

         16.6 Additional Facilities. In the event that a Company acquires,
develops or otherwise obtains an ownership interest in, leases or operates any
electric generating facilities that are not "Facilities" for purposes of this
Agreement, that Company shall, in its sole discretion, have the right to cause
any or all of those electric generating facilities to become "Facilities" for
purposes of this Agreement by giving notice to RES and the other Companies. Upon
delivery of that notice, those electric generating facilities included in that
notice shall be "Facilities" for all purposes of this Agreement.

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                                   SECTION 17
                                    AMENDMENT

         This Agreement may be amended or modified only by an instrument in
writing signed by all Parties. Unless the Parties mutually agree, no Party or
any Affiliate of any Party may make application to FERC seeking any change in
this Agreement pursuant to the provisions of Sections 205 or 206 of the Federal
Power Act, nor support any such application by a third party.

                                   SECTION 18
                                     NOTICES

       Any notice required or permitted to be given hereunder shall be in
writing and shall (as elected by the Party giving such notice) be (a) personally
delivered, (b) transmitted by postage prepaid registered mail, (c) transmitted
by a recognized overnight courier service or (d) transmitted by facsimile to the
receiving Party or Parties as follows:

         18.1     In the case of RES:

                  All Notices except Payments and Scheduling:

                  Reliant Energy Services, Inc.
                  1111 Louisiana
                  Houston, Texas 77002
                  Telephone: (713) 207-9562
                  Facsimile: (713) 207-5012
                  Attention: Contract Administration

                  With a copy to:

                  Reliant Energy Wholesale Group
                  P.O. Box 61867
                  Houston, Texas 77208
                  Telephone: (713) 207-7465
                  Facsimile: (713) 207-0116
                  Attention: Vice President and General Counsel,
                             Wholesale Energy Group

                  Payments:

                  Account Name: Reliant Energy Services, Inc.
                  Bank:         Chase Bank of Texas, N.A., Houston, Texas
                  Account No.:  00102612158
                  ABA No.:      113000609

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                  Scheduling:

                  Phone: (713) 207-1215
                  Fax:  (713) 207-1070

         18.2     In the case of each Company:

                  All Notices except Scheduling and Dispatch:

                  [NAME OF COMPANY]
                  c/o Reliant Energy Power Generation, Inc.
                  1111 Louisiana
                  Houston, Texas 77002
                  Telephone: (713) 207-9562
                  Facsimile: (713) 207-5012
                     Attention: Power Generation Accounting

                  With a copy to:

                  Reliant Energy Wholesale Group
                  P.O. Box 61867
                  Houston, Texas 77208
                  Telephone: (713) 207-7465
                  Facsimile: (713) 207-0116
                  Attention: Vice President and General Counsel,
                             Wholesale Energy Group

                  Scheduling:

                  Phone: (713) 207-1215
                  Fax:   (713) 207-1070

All notices and other communications shall be deemed to have been duly given on
(a) the date of receipt if delivered personally, (b) three days after the date
of posting if transmitted by mail, (c) the next Business Day after delivery to
the courier if transmitted by courier or (d) the date of transmission with
confirmation if transmitted by facsimile, whichever shall first occur. Any Party
may change its address for purposes hereof by notice to the other Party.

                                   SECTION 19
                   APPLICABLE LAW; SUBMISSION TO JURISDICTION

         THIS AGREEMENT IS MADE UNDER AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ANY CONFLICT
OF LAWS PROVISIONS THEREOF THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION. THE PARTIES AGREE THAT ANY LEGAL ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT WILL BE INSTITUTED IN A
FEDERAL OR STATE COURT LOCATED IN HARRIS COUNTY,

             Signature Page to Procurement and Marketing Agreement

                                       33

<PAGE>   36

TEXAS AND EACH PARTY WAIVES ANY OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION, SUIT OR PROCEEDING, AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION,
SUIT OR PROCEEDING.

                                   SECTION 20
                                  SEVERABILITY

         The invalidity or unenforceability of any provision or portion of this
Agreement will not affect the validity of the remainder of this Agreement. If
any provision of this Agreement is determined to be invalid or unenforceable,
the Parties will negotiate in good faith to agree upon substitute provisions to
carry out the purpose and intent of the invalid or unenforceable provision.

                                   SECTION 21
                                ENTIRE AGREEMENT

         This Agreement contains the complete agreement of the Parties hereto
with respect to the matters contained herein and supersedes all other
agreements, understandings and negotiations, whether written or oral, with
respect to the matters contained herein.

                                   SECTION 22
                          NO THIRD PARTY BENEFICIARIES

         Except as otherwise expressly stated herein, this Agreement is intended
to be solely for the benefit of the Parties hereto and their respective
successors and permitted assigns and is not intended to and shall not confer any
rights or benefits on any third party not a signatory hereto.

                                   SECTION 23
                                  COUNTERPARTS

         This Agreement may be executed in one or more counterparts, each of
which shall constitute an original but all of which, when taken together, shall
constitute only one legal instrument. It shall not be necessary in making proof
of this Agreement to produce or account for more than one counterpart.

                                   SECTION 24
                         INFORMATION AND CONFIDENTIALITY

         No Party shall disclose or otherwise make available to any other Person
any information of a technical, commercial or business nature regarding the
Facilities or this Agreement ("Confidential Information") without the prior
written consent of the Part(y)(ies) from which that Confidential Information was
received. Confidential Information shall not include information which (a) the
receiving Party can demonstrate was known to it prior to its disclosure by the
disclosing Part(y)(ies), (b) is, or later becomes, public knowledge without
breach of this

             Signature Page to Procurement and Marketing Agreement

                                       34

<PAGE>   37

         Agreement by the receiving Party, (c) was received by the receiving
Party from a third party without, to the reasonable belief of the receiving
Party, obligation of confidentiality or (d) is developed by the receiving Party
independently from Confidential Information received from the disclosing
Part(y)(ies), as evidenced by appropriate documentation. In the event that
disclosure is required by court order or a Governmental Body, the Party subject
to such requirement may disclose Confidential Information to the extent so
required, but shall promptly notify the disclosing Part(y)(ies) and shall use
reasonable efforts to obtain protective orders or similar restraints with
respect to such disclosure.

                                   SECTION 25
                             INDEPENDENT CONTRACTOR

        Notwithstanding that RES is an Affiliate of each Company, RES's
relationship to each Company under this Agreement is that of a separate entity
and an independent contractor. In the performance of the Services, neither RES
nor any RES Related Person shall be deemed to be the agent, representative,
employee or servant of any Company. This Agreement shall not constitute RES as
the legal representative or agent of any Company nor shall RES have the right or
authority to assume, create or incur any liability or obligation, express or
implied, against, in the name of, or on behalf of any Company or any Company
Related Person, except to the extent expressly authorized by Sections 3.5 and
5.1. Neither the execution or delivery of this Agreement nor the consummation of
the transactions contemplated under this Agreement shall create or constitute a
partnership, joint venture or other form of business organization or arrangement
between or among one or more of the Companies and RES, except for the
contractual arrangements specifically set forth in this Agreement.

         IN WITNESS WHEREOF, the Parties, intending to be legally bound, have
caused this Agreement to be executed by their duly authorized representatives as
of the day and year above written.

                                           RELIANT ENERGY SERVICES, INC.

                                           By:
                                                --------------------------------
                                                William T. Hamilton, Jr.
                                                Vice President-Risk Control

                                           RELIANT ENERGY MID-ATLANTIC
                                           POWER HOLDINGS LLC

                                           By:
                                                --------------------------------
                                                James E. Hammelman
                                                Treasurer

             Signature Page to Procurement and Marketing Agreement

                                       35

<PAGE>   38

                                           RELIANT ENERGY MARYLAND
                                           HOLDINGS LLC

                                           By:
                                                --------------------------------
                                                James E. Hammelman
                                                Treasurer

                                           RELIANT ENERGY NEW JERSEY
                                           HOLDINGS LLC

                                           By:
                                                --------------------------------
                                                James E. Hammelman
                                                Treasurer

             Signature Page to Procurement and Marketing Agreement

                                       36

<PAGE>   39

                                   APPENDIX A

                                   FACILITIES

<TABLE>
<CAPTION>
      Facility                                  Installed Capacity (MW)
      --------                                  -----------------------
<S>                                             <C>
      Conemaugh(1)                                        282.0
      Keystone(2)                                         285.0
      Shawville                                           603.0
      Portland                                            570.0
      Titus                                               274.0
      Sayreville                                          409.0
      Seward                                              196.0
      Warren                                              139.0
      Gilbert                                             538.0
      Werner                                              212.0
      Glen Gardner                                        160.0
      Hunterstown                                         60.0
      Wayne                                               56.0
      Mountain                                            40.0
      Tolna                                               40.0
      Hamilton                                            20.0
      Orrtanna                                            20.0
      Shawnee                                             20.0
      Blossburg                                           19.0
      Piney                                               27.0
      Deep Creek                                          18.0
</TABLE>
      (1) 16.45% ownership interest
      (2) 16.67% ownership interest

Notwithstanding the Installed Capacities set forth above, in the event any
Facility is expanded or any Unit at any Facility is retired, the Parties shall
agree to adjust the Installed Capacity of the affected Facility to reflect the
expansion or retirement and that adjusted Installed Capacity shall be deemed
incorporated into this Appendix A. In the event that a Company is added pursuant
to Section 16.5, the Parties shall agree to the Installed Capacity of each of
that Company's Facilities and those Facilities and their respective Installed
Capacities shall be deemed incorporated into this Appendix A. In the event that
a Facility is added pursuant to Section 16.6, the Parties shall agree to the
Installed Capacity of that Facility and that Facility and its Installed Capacity
shall be deemed incorporated into this Appendix A.

                                   A-1

<PAGE>   40

                                   APPENDIX B

                             EXISTING LDC CONTRACTS
<TABLE>
<CAPTION>
LDC                Contract                                                     Date
---                --------                                                     ----
<S>                <C>                                                          <C>
E-town             Special Provision 4 of Service Classification Contract       12-Jan-00
N Penn Fuel        Bundled Service Agreement, Rate LS                           01-Mar-00
Penn Fuel          Large Volume Daily Service                                   02-Dec-99
CDC PA             LTS Gas Transport                                            02-Dec-99
NJNG               Bundled Service Agreement                                    01-May-79
UGI                Rate IL, Delivery Service Option Service Agreement           12-May-00
National Fuel      Bundled Service Agreement, Rate CPA-LBS                      01-Feb-00
</TABLE>

                                       B-1<PAGE>   1
                                                                Exhibit 10.8
                      AMENDED AND RESTATED PROMISSORY NOTE

$961,550,000.00                                                   Houston, Texas

                  FOR VALUE RECEIVED, RELIANT ENERGY MID-ATLANTIC POWER
HOLDINGS, LLC, a Delaware limited liability company ("Facility Lessee"), whose
address is 1111 Louisiana, Houston, Texas 77002, hereby promises to pay to
RELIANT ENERGY NORTHEAST HOLDINGS, INC., a Delaware corporation ("Lender"),
whose address is 1111 Louisiana, Houston, Texas 77002, Nine Hundred Sixty-One
Million Five Hundred Fifty Thousand and No/100 Dollars ($961,550,000.00), on
January 1, 2029 (the "Maturity Date"), together with accrued and unpaid interest
thereon from the date hereof until such maturity, at the rate per annum and on
the dates and in the manner specified in this Amended and Restated Promissory
Note (the "Note").

         1. Definitions.

                  (a) All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the various
Participation Agreements, each dated as of August 24, 2000 (as the same may be
amended, supplemented or otherwise modified from time to time, the
"Participation Agreements"), among Facility Lessee, the various Owner Lessors,
Wilmington Trust Company, in the capacities referred to therein, the Owner
Participant, and Bankers Trust Company, in the capacities referred to therein.

                  (b) The following terms have the following meanings:

                  "Rent Obligations" means all obligations of Facility Lessee
now or hereafter existing (i) to pay Periodic Lease Rent or Renewal Lease Rent
owing under any of the Facility Leases or Supplemental Lease Rent owing under
any of the Facility Leases or the other Operative Documents and (ii) as a result
of any amendments, modifications, deferrals, renewals or extensions of any such
obligation, or of any instruments or evidences issued in evidence of or in
exchange for such obligation whether for Rent or interest owed thereon
(including interest payable subsequent to the commencement of any proceeding
against or with respect to Facility Lessee under the Bankruptcy Code, or any
provision of a state bankruptcy law, whether or not such interest is an allowed
claim enforceable against the debtor, and whether or not the holder of such
obligation would be otherwise entitled to receive dividends or payments with
respect to any such interest or any such proceeding), fees, expenses or
otherwise.

                  "Senior Obligations" means collectively, (i) all Rent
Obligations, (ii) all obligations of Facility Lessee now or hereafter existing
under any application, reimbursement agreement, indemnity or other agreement or
undertaking with respect to any letter of credit, surety bond or guarantee
constituting Qualifying Credit Support including, without limitation,
reimbursement and indemnity obligations thereunder, interest owed thereon
(including interest payable subsequent to the commencement of any proceeding
against or with respect to Facility Lessee under any chapter of the Bankruptcy
Code, or any provision of a state bankruptcy law, whether or not such interest
is an allowed claim enforceable against the debtor, and whether or not the
holder of such obligation would be otherwise entitled to receive dividends or
payments with respect to any such interest or any such proceeding), and fees and
expenses related thereto and (iii) all obligations of Facility

                                       1
<PAGE>   2

Lessee then or thereafter existing with respect any unsubordinated indebtedness
permitted to be incurred by the terms of the Operative Documents including,
without limitation, the principal thereof, interest owed thereon (including
interest payable subsequent to the commencement of any proceeding against or
with respect to Facility Lessee under any chapter of the Bankruptcy Code, or any
provision of a state bankruptcy law, whether or not such interest is an allowed
claim enforceable against the debtor, and whether or not the holder of such
obligation would be otherwise entitled to receive dividends or payments with
respect to any such interest or any such proceeding), and fees and expenses
related thereto.

                  "Subordinated Indebtedness" means all obligations of Facility
Lessee now or hereafter existing hereunder (whether created directly or acquired
by assignment or otherwise), whether for rent, principal, interest (including
interest accruing after the filing of a petition initiating any bankruptcy
proceeding described in the definition of Rent Obligations, whether or not such
interest accrues after the filing of such petition for purposes of the
Bankruptcy Code or is an allowed claim in such proceeding), fees, expenses or
otherwise.

         2. Subordination.

                  (a) The indebtedness evidenced by this Note and the other
obligations described in the definition of "Subordinated Indebtedness" is
subordinated and subject in right of payment to the prior payment in full of all
Senior Obligations of Facility Lessee. Each holder of this Note, by its
acceptance hereof, agrees to and shall be bound by all the provisions hereof.

                  (b) No payment on account of rent, principal, premium or
interest on the Subordinated Indebtedness shall be made unless (a) full payment
of all amounts then due and payable with respect to Senior Obligations has been
made, (b) such payment would be permitted under the Senior Obligations and by
the Participation Agreements, (c) each of the applicable conditions, if any, set
forth in Section 5.4 of the Participation Agreements has been satisfied and (d)
immediately after giving effect to such payment, there shall not exist any
Significant Lease Default or Lease Event of Default. Any such payment permitted
pursuant to this paragraph is hereinafter referred to as a "Permitted Payment".
For the purposes of these provisions, no Senior Obligation shall be deemed to
have been paid in full until the obligee of such Senior Obligation shall have
indefeasibly received payment in full in cash. Any cash payment on the Senior
Obligations made by a Person which is solvent at the time of and after giving
effect to such payment shall be presumed to have been indefeasibly paid in full
in cash absent actual knowledge by the payor to the contrary.

                  (c) Upon any payment or distribution of assets of Facility
Lessee of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or total or partial liquidation or
reorganization of Facility Lessee, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, then and in any such
event all amounts (including interest, indemnities and fees) due or to become
due upon all Senior Obligations shall first be paid in full before the holders
of the Subordinated Indebtedness shall be entitled to retain any assets so paid
or distributed in respect of the Subordinated Indebtedness (for principal,
premium, interest or otherwise) and upon any such dissolution or winding up or
liquidation or reorganization, any payment or distribution of assets of Facility
Lessee of any kind or character, whether in cash, property or securities, to
which the holders of the Subordinated Indebtedness

                                       2
<PAGE>   3

would be entitled, except as otherwise provided herein, shall be paid by
Facility Lessee or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, or by the holders of
the Subordinated Indebtedness if received by them, directly to the holders of
the Senior Obligations or their representatives for application to such Senior
Obligations in accordance with their terms. So long as any Senior Obligation is
outstanding, the holder of this Note shall not commence, or join with any
creditor other than any Person to whom Senior Obligations are owed, in
commencing, or directly or indirectly causing Facility Lessee to commence, or
assist Facility Lessee in commencing, any proceeding referred to in the
preceding sentence.

                  (d) The holder of this Note hereby irrevocably authorizes and
empowers (without imposing any obligation on) each Person to whom any Senior
Obligation is owed and such Person's representatives, under the circumstances
set forth in the immediately preceding paragraph, to demand, sue for, collect
and receive every such payment or distribution described therein and give
acquittance therefor, to file claims and proofs of claims in any statutory or
nonstatutory proceeding, to vote such Person's ratable share of the full amount
of the Subordinated Indebtedness evidenced by this Note in its sole discretion
in connection with any resolution, arrangement, plan of reorganization,
compromise, settlement or extension and to take all such other action (including
the right to participate in any composition of creditors and the right to vote
such Person's ratable share of the Subordinated Indebtedness, evidenced by this
Note, at creditors' meetings for the election of trustees, acceptances of plans
and otherwise), in the name of the holder of the Subordinated Indebtedness
evidenced by this Note or otherwise, as such Person's representatives may deem
necessary or desirable for the enforcement of the subordination provisions of
this Note. The holder of this Note shall execute and deliver to each Person to
whom any Senior Obligation is owed and such Person's representatives all such
further instruments confirming the foregoing authorization, and all such powers
of attorney, proofs of claim, assignments of claim and other instruments, and
shall take all such other action as may be reasonably requested by such Person
or such Person's representatives in order to enable such holder to enforce all
claims upon or in respect of such Person's ratable share of the Subordinated
Indebtedness evidenced by this Note; provided, however, that nothing herein
shall obligate the holder of this Note to pay or incur any cost, expense or
liability or to take any action that may result in the imposition of any cost,
expense or liability.

                  (e) The holder of this Note shall not, without the prior
written consent of the various Owner Lessors and, so long as the Lien of the
various Lease Indentures shall not have been discharged or terminated in
accordance with the terms thereof, the Lease Indenture Trustee, have any right
to accelerate payment of, or institute any proceedings to enforce, the
Subordinated Indebtedness (other than a Permitted Payment) so long as any Senior
Obligation is outstanding.

                  (f) If any payment (other than a Permitted Payment) or
distribution of assets of Facility Lessee of any kind or character, whether in
cash, property or securities, shall be received by the holder of the
Subordinated Indebtedness before all Senior Obligations are paid in full, such
payment or distribution will be held in trust for the benefit of, and shall be
immediately paid over to, the holders of the Senior Obligations or their
representatives for application to such Senior Obligations in accordance with
their terms.

                  (g) Nothing contained in this Note is intended to or shall
impair as between Facility Lessee, its creditors (other than the holders of
Senior Obligations) and the holders of the

                                       3
<PAGE>   4

Subordinated Indebtedness, the obligations of Facility Lessee, to pay to the
holders of the Subordinated Indebtedness, as and when the same shall become due
and payable in accordance with their terms, or to affect the relative rights of
the holders of the Subordinated Indebtedness and creditors of Facility Lessee
(other than holders of Senior Obligations).

                  (h) The Persons to whom Senior Obligations are due shall not
be prejudiced in their rights to enforce the subordination contained herein in
accordance with the terms hereof by any act or failure to act on the part of
Facility Lessee.

                  (i) The holder of this Note agrees to execute and deliver such
further documents and to do such other acts and things as the Transaction
Parties may reasonably request in order fully to effect the purposes of these
subordination provisions. Each holder of this Note by its acceptance hereof
authorizes and directs the Transaction Parties on its behalf to take such
further action as may be necessary to effectuate the subordination as provided
herein and appoints the various Lease Indenture Trustees, so long as the Lien of
the Lease Indentures shall not have been terminated or discharged in accordance
with the terms thereof and thereafter the various Owner Lessors, as its
attorney-in-fact for any and all such purposes.

                  (j) The subordination effected by these provisions, and the
rights of the Persons to whom Senior Obligations are owed, shall not be affected
by (i) any amendment of, or addition or supplement to any Operative Document, or
any other document evidencing or securing any Senior Obligation, (ii) any
exercise or nonexercise of any right, power or remedy under or in respect of any
Operative Document, or any other document evidencing or securing any Senior
Obligation or (iii) any waiver, consent, release, indulgence, extension,
renewal, modification, delay, or other action, inaction or omission, in respect
of, any Operative Document, or any other document evidencing or securing any
Senior Obligation, whether or not any holder of any Subordinated Indebtedness
shall have had notice or knowledge of any of the foregoing. No failure on the
part of any holder of a Senior Obligation to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                  (k) The holder of this Note and Facility Lessee each hereby
waive promptness, diligence, notice of acceptance and any other notice with
respect to any Senior Obligation and these terms of subordination and any
requirement that any Transaction Party protect, secure, perfect or insure any
Lien or any property subject thereto or exhaust any right to take any action
against Facility Lessee any other Person or any collateral.

                  (l) These terms of subordination shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any Senior Obligation is rescinded or must otherwise be returned by the Person
to whom such Senior Obligation is owed upon the insolvency, bankruptcy or
reorganization of Facility Lessee or otherwise, all as though such payment had
not been made.

                  (m) The provisions of these terms of subordination constitute
a continuing agreement and shall (i) remain in full force and effect until each
of the Facility Leases has been terminated and all amounts owed thereunder have
been paid and the Lien of the Lease Indentures has been terminated or discharged
in accordance with their terms, (ii) be binding upon the holder of this Note

                                       4
<PAGE>   5

and Facility Lessee and their respective successors, transferees and assignees
and (iii) inure to the benefit of, and be enforceable by, the Transaction
Parties. Without limiting the generality of the foregoing clause (iii), the
Transaction Parties may assign or otherwise transfer all or any portion of their
rights and obligations under all or any of the Operative Documents to any other
Person (to the extent permitted by the Operative Documents), and such other
Person shall thereupon become vested with all the rights in respect thereof
granted to the Transaction Parties herein or otherwise.

         3. Interest. The principal of this Note shall bear interest at a rate
per annum equal to the lesser of (a) 9.4% per annum or (b) the highest rate
permitted under applicable law (the "Maximum Lawful Rate").

         4. Notices. All written notices hereunder shall be sent to the
respective parties at the addresses set forth above, Attention: President.

         5. Maturity and Scheduled Payments. Subject to Section 2 and subject to
the right of the holder of this Note to accelerate the maturity hereof as
hereinafter described (which is subject to Section 2), the principal of this
Note shall be due and payable on the Maturity Date and accrued and unpaid
interest on the principal amount outstanding on this Note shall be due and
payable to Lender at its address set forth above as it accrues quarterly on each
January 1, April 1, July 1 and October 1 throughout the term of this Note,
beginning on October 1, 2000, until all unpaid principal and accrued and unpaid
interest on this Note shall be paid in full.

         6. Prepayments. Subject to Section 2, at any time, Facility Lessee may
prepay any amounts owing hereunder in whole or in part, without penalty. If any
payment of principal or interest on this Note shall become due on a day that is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall in such case be included in computing
interest in connection with such payment. All payments made in accordance with
this Note are to be made in lawful money of the United States of America in same
day funds at the locations specified herein, or such other place as Lender shall
designate in writing to Facility Lessee.

         7. Events of Default. If any of the following events (each, an "Event
of Default") shall occur and be continuing, the obligation of Lender to make any
further advance hereunder shall terminate and the outstanding principal balance
of this Note, together with accrued and unpaid interest and any other sums that
Facility Lessee may owe to Lender under or in connection with this Note or
otherwise (collectively, the "Obligations") shall automatically become
immediately due and payable, without any further notice of any kind to Facility
Lessee, all of which notices are expressly waived below:

                  (a) the Facility Lessee fails to pay any principal or interest
         on this Note when due;

                  (b) the Facility Lessee (i) admits in writing its inability to
         pay its debts generally as they become due; (ii) generally fails to pay
         its debts as they become due; (iii) files a petition or answer seeking
         for itself, or consenting to or acquiescing in any reorganization,
         arrangement, composition, readjustment, liquidation, dissolution or
         similar relief under, any bankruptcy law or any insolvency law or other
         law for the relief or aid of debtors (including,

                                       5
<PAGE>   6

         without limitation, the Bankruptcy Code or any amendment thereto); or
         (iv) makes an assignment for the benefit of its creditors; or

                  (c) there is appointed a receiver, custodian, liquidator,
         fiscal agent or trustee of Facility Lessee or of the whole or any
         substantial part of its properties or assets, or any court enters an
         order, judgment or decree approving a petition filed against Facility
         Lessee seeking reorganization, arrangement, composition, readjustment,
         liquidation, dissolution or similar relief under any law referred to in
         paragraph (b) above and either such order, judgment or decree so filed
         against it is not dismissed or stayed (unless and until such stay is no
         longer in effect) within 30 days of entry thereof or an order for
         relief is entered pursuant to any such law.

         8. Maximum Lawful Rate. Nothing contained in this Note or any other
document executed in connection herewith is intended to require Facility Lessee
to pay interest (including fees, charges or expenses or any other amounts which,
under applicable law, are deemed interest) for the account of Lender at a rate
exceeding the Maximum Lawful Rate.

                  All agreements between Facility Lessee and Lender, whether now
existing or hereafter arising and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
demand being made on this Note, prepayment or otherwise, shall the amount paid,
or agreed to be paid, to the Lender for the use, forbearance, or detention of
the money to be loaned under this Note or otherwise or for the payment or
performance of any covenant or obligation contained herein or in any other
document executed in connection herewith exceed the Maximum Lawful Rate. If the
amount of any interest (including fees, charges or expenses or any other amounts
which, under applicable law, are deemed interest) contracted for, taken,
reserved, charged or received by or for the account of Lender, would exceed the
Maximum Lawful Rate, then, ipso facto, the amount of such interest payable for
the account of Lender shall be automatically reduced to such Maximum Lawful
Rate, and if, from any such circumstance, Lender shall ever receive interest or
anything which might be deemed interest under applicable law which would exceed
the Maximum Lawful Rate, such amount which would be excessive interest shall be
applied to the reduction of the principal amount owing on account of this Note
held by Lender and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal of such Note, such excess shall be
refunded to Facility Lessee. All sums paid or agreed to be paid to Lender for
the use, forbearance or detention of the indebtedness of Facility Lessee to
Lender shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full of the principal (including the period of any renewal or extension
thereof) so that the interest on account of such indebtedness shall not exceed
the Maximum Lawful Rate.

                                       6
<PAGE>   7

         9. Expenses. In addition to all principal and accrued interest on this
Note, Facility Lessee agrees, subject to Section 2, to pay (i) all reasonable
costs and expenses incurred by all owners and holders of this Note in collecting
this Note through any probate, reorganization, bankruptcy or any other
proceeding; (ii) reasonable attorneys' fees when and if this Note is placed in
the hands of an attorney for collection after default; and (iii) all attorneys'
fees related to the preparation and execution of this Note and any document,
agreement or instrument executed in connection with or given as security for
this Note.

         10. Waivers. Facility Lessee and any and all endorsers, guarantors and
sureties severally waive grace, presentment for payment, notice of dishonor,
protest and notice of protest and diligence in collecting and bringing of suit
against any party hereto. Facility Lessee and any and all endorsers, guarantors
and sureties further agree: (i) to all renewals, extensions, amendments and
modifications hereof without limit, or partial payments hereon; (ii) to any
release or substitution of security herefor, in whole or in part, or any release
or discharge of any guarantor, surety, or co-maker, with or without notice,
before or after maturity; (iii) that waiver of any default shall not constitute
waiver of any prior or subsequent default; and (iv) that no remedy, right or
power conferred upon Lender or the holder of this Note is intended to be
exclusive of any other remedy, right or power given hereunder or now or
hereafter available at law, in equity or otherwise. This Note may be transferred
by Lender, and the rights and privileges of Lender under this Note shall inure
to the benefit of Lender's representatives, successors and assigns.

         11. Proceeds. The Loans are for business, commercial, or investment
purposes and none of such proceeds shall be used for personal, consumer, family
household or agricultural purposes or for purchasing or carrying margin stock.

         12. Governing Law. This Note shall be governed by and construed in
accordance with, the laws of the State of New York but without giving effect to
the conflict of laws principles thereof.

         13. Final Agreement. THIS NOTE AND THE OTHER DOCUMENTS, AGREEMENTS AND
INSTRUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                       7
<PAGE>   8

                                     RELIANT ENERGY MID-ATLANTIC POWER
                                     HOLDINGS, LLC.

                                     By:
                                         -----------------------------------
                                         James E. Hammelman
                                         Treasurer

                                     RELIANT ENERGY NORTHEAST HOLDINGS, INC.

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

                                       8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}]]