Document:

<PAGE>
                                                                     Exhibit 4.1

                                U.S. $400,000,000

                                CREDIT AGREEMENT

                            Dated as of June 30, 2005

                                      Among

                       CENTERPOINT ENERGY RESOURCES CORP.

                                  as Borrower,

                                       and

                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders,

                                       and

                 CITIGROUP GLOBAL MARKETS INC., BARCLAYS CAPITAL
                       and BANC OF AMERICA SECURITIES LLC

                               as Lead Arrangers,

                                       and

                                 CITIBANK, N.A.

                            as Administrative Agent,

                                       and

                   BARCLAYS BANK PLC and BANK OF AMERICA, N.A.

                            as Co-Syndication Agents

                                       and

           CITIBANK, N.A., BARCLAYS BANK PLC and BANK OF AMERICA, N.A.

                                as Issuing Banks

                                       and

     CREDIT SUISSE, CAYMAN ISLANDS BRANCH, DEUTSCHE BANK AG NEW YORK BRANCH,
  JPMORGAN CHASE BANK, N.A., THE ROYAL BANK OF SCOTLAND PLC AND WACHOVIA BANK,
                              NATIONAL ASSOCIATION

                             as Documentation Agents

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                TABLE OF CONTENTS

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

                                 DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01 Certain Defined Terms.................................................................    1
SECTION 1.02 Computation of Time Periods...........................................................   17
SECTION 1.03 Accounting Terms......................................................................   17

                                            ARTICLE II

                                 AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01 The Revolving Advances and Letters of Credit..........................................   17
SECTION 2.02 Making the Revolving Advances.........................................................   18
SECTION 2.03 Issuance of and Drawings and Reimbursement Under Letters of Credit....................   19
SECTION 2.04 The CAF Advances......................................................................   20
SECTION 2.05 Competitive Bid Procedure.............................................................   20
SECTION 2.06 Fees..................................................................................   22
SECTION 2.07 Termination or Reduction of the Revolving Commitments.................................   23
SECTION 2.08 Repayment.............................................................................   23
SECTION 2.09 Interest..............................................................................   24
SECTION 2.10 Interest Rate Determination...........................................................   25
SECTION 2.11 Optional Conversion of Revolving Advances.............................................   25
SECTION 2.12 Optional Prepayments of Revolving Advances............................................   25
SECTION 2.13 Increased Costs.......................................................................   26
SECTION 2.14 Illegality............................................................................   26
SECTION 2.15 Payments and Computations.............................................................   27
SECTION 2.16 Taxes.................................................................................   27
SECTION 2.17 Sharing of Payments, Etc..............................................................   29
SECTION 2.18 Use of Proceeds.......................................................................   30
SECTION 2.19 Increase in the Aggregate Revolving Commitments.......................................   30
SECTION 2.20 Evidence of Debt......................................................................   31

                                            ARTICLE III

                              CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01 Conditions Precedent to Effectiveness of Sections 2.01 and 2.04.......................   31
SECTION 3.02 Conditions Precedent to Each Revolving Borrowing, Issuance and Commitment Increase....   32
SECTION 3.03 Conditions Precedent to Each CAF Borrowing............................................   33
SECTION 3.04 Determinations Under Section 3.01.....................................................   33

                                            ARTICLE IV

                                  REPRESENTATIONS AND WARRANTIES

SECTION 4.01 Representations and Warranties of the Borrower........................................   34
</TABLE>

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       ii

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

                                     COVENANTS OF THE BORROWER

SECTION 5.01 Affirmative Covenants.................................................................   35
SECTION 5.02 Negative Covenants....................................................................   37
SECTION 5.03 Financial Covenants...................................................................   41
SECTION 5.04 Borrower's Accounting Reorganization..................................................   41

                                            ARTICLE VI

                                         EVENTS OF DEFAULT

SECTION 6.01 Events of Default.....................................................................   41
SECTION 6.02 Actions in Respect of the Letters of Credit upon Default..............................   43

                                            ARTICLE VII

                                     THE ADMINISTRATIVE AGENT

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

                                           ARTICLE VIII

                                           MISCELLANEOUS

SECTION 8.01 Amendments, Etc.......................................................................   46
SECTION 8.02 Notices, Etc..........................................................................   46
SECTION 8.03 No Waiver; Remedies...................................................................   48
SECTION 8.04 Costs and Expenses....................................................................   48
SECTION 8.05 Right of Set off......................................................................   49
SECTION 8.06 Binding Effect........................................................................   49
SECTION 8.07 Assignments and Participations........................................................   49
SECTION 8.08 Patriot Act Notification..............................................................   52
SECTION 8.09 Confidentiality.......................................................................   52
SECTION 8.10 Governing Law.........................................................................   52
SECTION 8.11 Counterparts..........................................................................   52
SECTION 8.12 Removal of Lender.....................................................................   52
SECTION 8.13 Jurisdiction, Etc.....................................................................   53
</TABLE>

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       iii

<TABLE>
<CAPTION>
Schedules
---------
<S>           <C>
Schedule I    List of Applicable Lending Offices

Schedule II   Lead Arrangers Addresses

Schedule III  Commitment Percentages
</TABLE>

<TABLE>
<CAPTION>
Exhibits
--------
<S>           <C>
Exhibit A     Form of Promissory Note

Exhibit B     Form of Notice of Borrowing

Exhibit C     Form of Assignment and Acceptance

Exhibit D     Form of CAF Note

Exhibit E     Form of Competitive Bid Request

Exhibit F     Form of Competitive Bid

Exhibit G     Form of Competitive Bid Confirmation

Exhibit H     Form of Notice of Letter of Credit Issuance

Exhibit I     Form of Assumption Agreement
</TABLE>

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                CREDIT AGREEMENT

                            Dated as of June 30, 2005

            CENTERPOINT ENERGY RESOURCES CORP., a Delaware corporation (the
"Borrower"), the banks, financial institutions and other institutional lenders
(the "Initial Lenders") listed on the signature pages hereof, CITIGROUP GLOBAL
MARKETS INC. ("CGMI"), BARCLAYS CAPITAL, the investment banking division of
BARCLAYS BANK PLC and BANC OF AMERICA SECURITIES LLC, as lead arrangers (the
"Lead Arrangers"), and BARCLAYS BANK PLC ("Barclays") and BANK OF AMERICA, N.A.,
as syndication agents (the "Co-Syndication Agents"), CITIBANK, N.A.
("Citibank"), BARCLAYS and BANK OF AMERICA, N.A., as Issuing Banks, and
Citibank, as administrative agent (the "Administrative Agent") for the Lenders
(as hereinafter defined), agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

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

            "Accounting Reorganization" has the meaning specified in Section
      5.02(c).

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

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

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

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

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

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

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

<TABLE>
<CAPTION>
    Public Debt Rating         Applicable Margin for    Applicable Margin for
    S&P/Moody's/Fitch           Base Rate Advances    Eurodollar Rate Advances
-----------------------------  ---------------------  ------------------------
<S>                            <C>                    <C>
Level 1
BBB+/Baa1/BBB+ or
above                                  0.0%                    0.35%

Level 2
BBB/Baa2/BBB                           0.0%                   0.425%
</TABLE>

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       2

<TABLE>
<CAPTION>
    Public Debt Rating         Applicable Margin for    Applicable Margin for
    S&P/Moody's/Fitch           Base Rate Advances    Eurodollar Rate Advances
-----------------------------  ---------------------  ------------------------
<S>                            <C>                    <C>
Level 3
BBB-/Baa3/BBB-                         0.0%                    0.50%

Level 4
BB+/Ba1/BB+                            0.0%                    0.80%

Level 5
Lower than Level 4 or
unrated by S&P, Moody's
and Fitch                              0.0%                    1.00%
</TABLE>

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

<TABLE>
<CAPTION>
       Public Debt Rating          Applicable
       S&P/Moody's/Fitch           Percentage
--------------------------------   -----------
<S>                                <C>
Level 1                               0.10%
BBB+/Baa1/BBB+ or above

Level 2                              0.125%
BBB/Baa2/BBB

Level 3                               0.15%
BBB-/Baa3/BBB-

Level 4                               0.20%
BB+/Ba1/BB+

Level 5                               0.25%
Lower than Level 4 or unrated by
S&P, Moody's and Fitch
</TABLE>

            "Applicable Utilization Fee" means, as of any date on which the
      aggregate principal amount of the Advances plus the Letters of Credit
      exceeds 50% of the aggregate amount of the Lenders' Revolving Commitments,
      a percentage per annum equal to 0.10%.

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

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

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                                       3

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

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

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

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

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

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

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

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

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

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

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

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

            "Capital Stock" means any and all shares, interests, participations
      or other equivalents (however designated) of capital stock of a
      corporation, and any and all equivalent ownership interests in a Person
      (other than a corporation), including without limitation, partnership
      interests in partnerships and member

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       4

      interests in limited liability companies, and any and all warrants or
      options to purchase any of the foregoing or securities convertible into
      any of the foregoing.

            "Cash Interest" means interest expense of the Borrower and its
      Subsidiaries, to the extent actually paid in cash, during the relevant
      period.

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

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

            "Commitment Percentage" means, for each Lender, the percentage
      identified as its Commitment Percentage opposite such Lender's name on
      Schedule III attached hereto, as such percentage may be modified by
      assignment in accordance with the terms of this Agreement or by reductions
      or increases in the Revolving Commitment pursuant to Section 2.07 and
      Section 2.19.

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

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

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

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

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       5

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

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

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

            "EBITDA" means, for any period, net income (or net loss) plus the
      sum of (a) interest expense, (b) income tax expense, (c) depreciation
      expense, (d) amortization expense and (e) to the extent reflected as a
      charge in the computation of net income for such period, any other
      non-cash charges, in each case determined in accordance with GAAP for such
      period.

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

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

            "Environmental Action" means any action, suit, demand, demand
      letter, claim, notice of non compliance or violation, notice of liability
      or potential liability, investigation, proceeding, consent order or
      consent agreement relating in any way to any Environmental Law,
      Environmental Permit or Hazardous Materials or arising from alleged injury
      or threat of injury to health, safety or the environment, including,
      without limitation, (a) by any governmental or regulatory authority for
      enforcement, cleanup, removal, response, remedial or other actions or
      damages and (b) by any governmental or regulatory authority or any third
      party for damages, contribution, indemnification, cost recovery,
      compensation or injunctive relief.

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

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

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

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

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

            "ERISA Event" means (a) (i) the occurrence of a reportable event,
      within the meaning of Section 4043 of ERISA, with respect to any Plan
      unless the 30 day notice requirement with respect to such event has been
      waived by the PBGC, or (ii) the requirements of subsection (1) of Section
      4043(b) of ERISA

                     CERC 5-Year Revolving Credit Agreement

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                                       6

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

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

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

            "Eurodollar Rate" means, for any Interest Period for each Eurodollar
      Rate Advance comprising part of the same Borrowing, an interest rate per
      annum equal to the rate per annum obtained by dividing (a) the rate per
      annum (rounded upward to the nearest whole multiple of 1/100 of 1% per
      annum, if such rate per annum is not such a multiple) at which deposits in
      U.S. dollars are offered by the principal office of Citibank, N.A. in
      London, England to prime banks in the London interbank market at 11:00
      A.M. (London time) two Business Days before the first day of such Interest
      Period in an amount substantially equal to the Administrative Agent's
      Eurodollar Rate Advance comprising part of such Borrowing to be
      outstanding during such Interest Period and for a period equal to such
      Interest Period by (b) a percentage equal to 100% minus the Eurodollar
      Rate Reserve Percentage for such Interest Period.

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

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

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

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

            "Existing 3-Year Revolving Credit Facility" has the meaning
      specified in Section 3.01(b).

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       7

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

            "Fee Letter" means the 5-Year Revolving Credit Facility Fee Letter
      dated as of May 31, 2005 between Citibank, CGMI and the Borrower.

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

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

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

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

            "GAAP" has the meaning specified in Section 1.03.

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

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

            "Hazardous Materials" means (a) petroleum and petroleum products,
      byproducts or breakdown products, radioactive materials, asbestos
      containing materials, polychlorinated biphenyls and radon gas and

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<PAGE>
                                       8

      (b) any other chemicals, materials or substances designated, classified or
      regulated as hazardous or toxic or as a pollutant or contaminant under any
      Environmental Law.

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

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

            "Indebtedness" of any Person means the sum of (a) all items (other
      than capital stock, capital surplus and retained earnings) that, in
      accordance with GAAP consistently applied, would be included in
      determining total liabilities as shown on the liability side of a balance
      sheet of such Person as at the date on which the Indebtedness is to be
      determined and (b) the amount of all Guarantees by such Person; provided,
      however, that Indebtedness of a Person shall not include any Junior
      Subordinated Debt owned by any Hybrid Preferred Securities Subsidiary or
      any Guarantee by Borrower of payments with respect to any Hybrid Preferred
      Securities.

            "Increase Date" has the meaning as set forth in Section 2.19(a).

            "Increasing Lender" has the meaning as set forth in Section 2.19(b).

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

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

            "Information Memorandum" means the information memorandum dated June
      3, 2005] used by the Lead Arrangers in connection with the syndication of
      the Commitments.

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

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

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<PAGE>
                                       9

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

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

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

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

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

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

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       10

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

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

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

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

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

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

            "Material Adverse Change" means any material adverse change in the
      ability of the Borrower to perform its obligations under the Loan
      Documents on a timely basis (it being understood and agreed that a
      Material Adverse Change shall not include the effect of any True-Up
      Litigation) since December 31, 2004.

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

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

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

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

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

            "Non-Recourse Debt" means (i) any Indebtedness for Borrowed Money
      incurred by any Project Finance Subsidiary to finance the acquisition,
      improvement, installation, design, engineering, construction,

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<PAGE>
                                       11

      development, completion, maintenance or operation of, or otherwise to pay
      costs and expenses relating to or providing financing for any project,
      which Indebtedness for Borrowed Money does not provide for recourse
      against the Borrower or any Subsidiary of the Borrower (other than a
      Project Finance Subsidiary and such recourse as exists under a Performance
      Guaranty) or any property or asset of the Borrower or any Subsidiary of
      the Borrower (other than Equity Interests in, or the property or assets
      of, a Project Finance Subsidiary and such recourse as exists under a
      Performance Guaranty) and (ii) any refinancing of such Indebtedness for
      Borrowed Money that does not increase the outstanding principal amount
      thereof (other than to pay costs incurred in connection therewith and the
      capitalization of any interest, fees, premium or penalties) at the time of
      the refinancing or increase the property subject to any Lien securing such
      Indebtedness for Borrowed Money or otherwise add additional security or
      support for such Indebtedness for Borrowed Money.

            "Note" means a promissory note of the Borrower payable to the order
      of any Lender that has requested a Note pursuant to Section 2.19(a), in
      substantially the form of Exhibit A hereto, evidencing the aggregate
      indebtedness of the Borrower to such Lender resulting from the Revolving
      Advances made by such Lender.

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

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

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

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

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

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

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

            "Permitted Liens" means with respect to any Person:

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       12

      or any Subsidiary of such Person by reason of such Lien has not matured,
      or has been, and continues to be, effectively enjoined or stayed;

            (b) landlord Liens for rent not yet due and payable and Liens for
      materialmen, mechanics, warehousemen, carriers, employees, workmen,
      repairmen and other similar nonconsensual Liens imposed by operation of
      law, for current wages or accounts payable or other sums not yet
      delinquent, in each case arising in the ordinary course of business or if
      overdue, that are being contested in good faith by appropriate
      proceedings, provided, however, that any right to seizure, levy,
      attachment, sequestration, foreclosure or garnishment with respect to
      Property of such Person or any Subsidiary of such Person by reason of such
      Lien has not matured, or has been, and continues to be, effectively
      enjoined or stayed;

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       13

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

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

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

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

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

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       14

      terminated pursuant to Section 2.07 or 6.01, the Revolving Facility as in
      effect immediately prior to such termination).

            "Public Debt Rating" means, as of any date, (a) at any time the
      non-credit enhanced senior unsecured long-term debt of the Borrower is
      rated by S&P, by Moody's and by Fitch and such ratings are equivalent,
      such rating, (b) the middle of such ratings in the case where there is a
      split between all such ratings or (c) if such ratings are split and two of
      the ratings fall in the same level (the "Majority Level"), and the third
      rating is in a different level then such rating shall be the Majority
      Level. For purposes of the foregoing, (x) if only two of such three
      agencies issue a rating, the higher of such ratings shall apply, provided
      that if the higher rating is two or more levels above the lower rating,
      the rating next above the lower of the two shall apply; if only one of
      such three agencies issues a rating, such rating shall apply and (y) if
      any such rating established by S&P, Moody's or Fitch shall be changed,
      such change shall be effective as of the date on which such change is
      first announced publicly by the rating agency making such change and (z)
      if S&P, Moody's or Fitch shall change the basis on which ratings are
      established, each reference to the Public Debt Rating announced by S&P,
      Moody's or Fitch, as the case may be, shall refer to the then equivalent
      rating by S&P, Moody's or Fitch, as the case may be.

            "Receivables Transaction" means, collectively, the transactions
contemplated by (i) the Receivables Purchase Agreement, dated as of January 21,
2004, as amended by Amendment #1 dated as of January 19, 2005, among CenterPoint
Energy Gas Receivables, LLC, as seller, the Borrower, as initial servicer, Blue
Ridge Asset Funding Corporation and Wachovia Bank, National Association, as
agent, (ii) the Receivables Sale Agreement, dated as of January 21, 2004, among
the Borrower, Arkansas Louisiana Finance Corporation, CenterPoint Energy Gas
Transmission Company, CenterPoint Energy-Mississippi River Transmission
Corporation, CenterPoint Energy Field Services, Inc., CenterPoint Energy
Intrastate Pipelines, Inc. and CenterPoint Energy Services, Inc. (formerly known
as CenterPoint Energy Gas Services, Inc.), as originators, and CenterPoint
Energy Gas Receivables, LLC, as buyer, and (iii) related agreements (as each
such agreement in clauses (i) through (iii) may be amended, supplemented or
otherwise modified from time to time, or replaced, refunded or refinanced).

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

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

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

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       15

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

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

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

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

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

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

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

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

            "Termination Date" means the earlier of June 30, 2010 and the date
      of termination in whole of the Commitments pursuant to Section 2.07 or
      6.01.

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       16

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

            "Total Debt" means, as of any date of determination, the sum of (i)
      the total Indebtedness for Borrowed Money as shown on the consolidated
      balance sheet of Borrower and its Consolidated Subsidiaries, determined
      without duplication of any Guarantee of Indebtedness for Borrowed Money of
      Borrower by any of its Consolidated Subsidiaries or of any Guarantee of
      Indebtedness of any such Consolidated Subsidiary by Borrower or any other
      Consolidated Subsidiary of Borrower, and any Mandatory Payment Preferred
      Stock, less (ii) such amount of Indebtedness for Borrowed Money
      attributable to amounts then outstanding under receivables facilities or
      arrangements to the extent that such amount would not have been shown as
      Indebtedness for Borrowed Money on a balance sheet prepared in accordance
      with GAAP prior to January 1, 1997, less (iii) with respect to any Indexed
      Debt Securities that are Fully Hedged and the liabilities in respect of
      which as shown on the consolidated balance sheet of Borrower and its
      Consolidated Subsidiaries have increased from the amount of liabilities in
      respect thereof at the time of their issuance by reason of an increase in
      the price of the Indexed Asset relating thereto, the excess of (a) the
      aggregate amount of liabilities in respect of such Indexed Debt Securities
      at the time of determination over (b) the initial amount of liabilities in
      respect of such Indexed Debt Securities at the time of their issuance,
      provided that at the time of determination such increase in the price of
      the Indexed Asset relating to such Indexed Debt Securities has not been
      recorded on such consolidated balance sheet, less (iv) Non-Recourse Debt
      of the Borrower and its Subsidiaries.

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

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

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

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

            Any designation of a Subsidiary of the Borrower as an Unrestricted
      Subsidiary shall be evidenced by a certificate of a Responsible Officer of
      the Borrower giving effect to such designation and a certificate executed
      by a Responsible Officer certifying that such designation complied with
      the preceding conditions

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       17

      and was permitted by Section 5.02(j) delivered to the Administrative
      Agent, for delivery to each Lender. If, at any time, any Unrestricted
      Subsidiary would fail to meet the preceding requirements as an
      Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
      Subsidiary for purposes of this Agreement and any Indebtedness of such
      Subsidiary shall be deemed to be incurred by a Significant Subsidiary of
      the Borrower as of such date and, if such Indebtedness is not permitted to
      be incurred as of such date under Section 5.02(j), the Borrower shall be
      in default of such covenant. A Responsible Officer of the Borrower may at
      any time designate any Unrestricted Subsidiary to be a Subsidiary;
      provided that such designation shall be deemed to be an incurrence of
      Indebtedness by a Subsidiary of the Borrower of any outstanding
      Indebtedness of such Unrestricted Subsidiary and such designation shall
      only be permitted if (1) such Indebtedness is permitted under this
      Agreement calculated on a pro forma basis as if such designation had
      occurred at the beginning of the four-quarter reference period; and (2) no
      Default or Event of Default would be in existence following such
      designation.

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

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

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

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

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

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

            SECTION 2.01 The Revolving Advances and Letters of Credit. (a) The
Revolving Advances. Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make advances to the Borrower (the "Revolving
Advances") from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate amount not to exceed
at any time outstanding the amount set forth opposite such Lender's name on
Schedule III hereof or, if such Lender has entered into any Assignment and
Acceptance, set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(c), as such amount may be reduced
pursuant to Section 2.06 (such Lender's "Revolving Commitment", and, in the
aggregate, the "Revolving Facility"). Each Revolving Borrowing, in the case of a
Revolving Borrowing consisting of Eurodollar Rate Advances, shall be in minimum
principal aggregate amounts of $10,000,000 or an integral multiple of $1,000,000
in excess thereof, or in the case of a Revolving Borrowing consisting of Base
Rate Advances, shall be in minimum principal aggregate amounts of $5,000,000 or
an integral multiple of $1,000,000 in excess thereof, and shall consist of
Revolving Advances of the same Type made on the same day by the Lenders ratably
according to

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       18

their respective Revolving Commitments. Within the limits of each Lender's
Revolving Commitment, the Borrower may borrow under this Section 2.01, prepay
pursuant to Section 2.12 and reborrow under this Section 2.01.

            (b) The Letters of Credit. Each Issuing Bank severally agrees, on
the terms and conditions hereinafter set forth, to issue letters of credit (the
"Letters of Credit") in U.S. Dollars for the account of the Borrower in support
of obligations (including, without limitation, performance, bid and similar
bonding obligations and credit enhancement) of the Borrower and its Affiliates,
from time to time on any Business Day during the period from the Effective Date
until the Business Day before the Termination Date in an aggregate Available
Amount (i) for all Letters of Credit issued by such Issuing Bank not to exceed
at any time the lesser of (x) the Letter of Credit Facility at such time and (y)
such Issuing Bank's Letter of Credit Commitment at such time and (ii) for each
such Letter of Credit not to exceed the Unused Revolving Credit Commitments of
the Lenders at such time; provided, however, that in no event shall the
aggregate Available Amount for all Letters of Credit exceed $150,000,000. No
Letter of Credit shall have an expiration date (including all rights of the
Borrower or the beneficiary to require renewal) later than the Business Day
before the Termination Date. Within the limits of the Letter of Credit Facility,
and subject to the limits referred to above, the Borrower may request the
issuance of Letters of Credit under this Section 2.01(b), repay any Letter of
Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c)
and request the issuance of additional Letters of Credit under this Section
2.01(b).

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

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

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

            (c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Revolving Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such Revolving Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss, cost or
expense

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       19

incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Revolving Advance to be made by such Lender
as part of such Revolving Borrowing when such Revolving Advance, as a result of
such failure, is not made on such date.

            (d) Unless the Administrative Agent shall have received notice from
a Lender prior to the date of any Revolving Borrowing that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
Revolving Borrowing, the Administrative Agent may assume that such Lender has
made such portion available to the Administrative Agent on the date of such
Revolving Borrowing in accordance with subsection (a) of this Section 2.02 and
the Administrative Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Revolving Advances comprising such Revolving Borrowing and (ii) in the
case of such Lender, the greater of the Federal Funds Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation. If the Borrower and such Lender shall pay such interest
to the Administrative Agent for the same or an overlapping period, the
Administrative Agent shall promptly remit to the Borrower the amount of such
interest paid by the Borrower for such period. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Revolving Advance as part of such Revolving Borrowing
for purposes of this Agreement.

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

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

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

            (c) Participations in Letters of Credit. Upon the issuance of a
Letter of Credit by any Issuing Bank under Section 2.03(a), such Issuing Bank
shall be deemed, without further action by any party hereto, to have sold to
each Lender, and each Lender shall be deemed, without further action by any
party hereto, to have purchased from such Issuing Bank, a participation in such
Letter of Credit in an amount for each Lender equal to such Lender's Pro Rata
Share of the Available Amount of such Letter of Credit, effective upon the
issuance of such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       20

agrees to pay such Lender's Pro Rata Share of each L/C Disbursement made by such
Issuing Bank and not reimbursed by the Borrower forthwith on the date due as
provided in Section 2.08(b) by making available for the account of its
Applicable Lending Office to the Administrative Agent for the account of such
Issuing Bank by deposit to the Administrative Agent's Account, in same day
funds, an amount equal to such Lender's Pro Rata Share of such L/C Disbursement.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this Section 2.03(c) in respect of Letters of Credit
is absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an Event of
Default or the termination of the Commitments, and that each such payment shall
be made without any off-set, abatement, withholding or reduction whatsoever. If
and to the extent that any Lender shall not have so made the amount of such L/C
Disbursement available to the Administrative Agent, such Lender agrees to pay to
the Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date such L/C Disbursement is due pursuant to
Section 2.08(b) until the date such amount is paid to the Administrative Agent,
at the Federal Funds Rate for its account or the account of such Issuing Bank,
as applicable. If such Lender shall pay to the Administrative Agent such amount
for the account of such Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by such Issuing Bank shall
be reduced by such amount on such Business Day.

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

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

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

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

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

            (b) Each Lender may, in its sole discretion, irrevocably offer to
make one or more CAF Advances to the Borrower responsive to each Competitive Bid
Request from the Borrower. Any such irrevocable offer by a Lender must be
received by the Administrative Agent, in the form of Exhibit F hereto (a
"Competitive Bid"), (i) in the case of each CAF Eurodollar Rate Advance, not
later than 10:30 A.M. (New York City time), three

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       21

(3) Business Days before the Borrowing Date specified for such CAF Eurodollar
Rate Advance and (ii) in the case of each Fixed Rate Advance, not later than
9:30 A.M. (New York City time) on the Borrowing Date specified for such Fixed
Rate Advance. Competitive Bids that do not conform substantially to the format
of Exhibit F may be rejected by the Administrative Agent after conferring with,
and upon the instruction of, the Borrower, and the Administrative Agent shall
notify the Lender of such rejection as soon as practicable. Each Competitive Bid
shall refer to this Agreement and (i) specify the maximum principal amount of
CAF Advances for each maturity date (which shall be in an aggregate principal
amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and which may equal, but not exceed, the principal amount requested for
such maturity date by the Borrower) and the aggregate maximum principal amount
of CAF Advances for all maturity dates (which amount, with respect to any
Lender, may exceed such Lender's Commitment) that the Lender is willing to make
to the Borrower, and (ii) specify the CAF Rate at which the Lender is prepared
to make each such CAF Advance. A Competitive Bid submitted by a Lender pursuant
to this Section 2.05(b) shall be irrevocable absent manifest error.

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       22

Advances shall be made pro rata based as nearly as possible on the respective
maximum principal amounts of CAF Advances offered to be made by such Lenders.
The Competitive Bid Confirmation given by the Borrower pursuant to this Section
2.05(d) shall be irrevocable.

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

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

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

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

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

            SECTION 2.06 Fees. (a) Facility Fee. The Borrower agrees to pay to
the Administrative Agent for the account of each Lender a facility fee on the
aggregate amount of such Lender's Revolving Commitment, irrespective of usage,
from the Effective Date in the case of each Initial Lender and from the
effective date specified in the Assignment and Acceptance pursuant to which it
became a Lender in the case of each other Lender until the Termination Date at a
rate per annum equal to the Applicable Percentage in effect from time to time,
payable in arrears quarterly on the last day of each March, June, September and
December, commencing September 30, 2005, and on the Termination Date.

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

            (c) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
Administrative Agent for the account of each Lender a commission, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing September 30, 2005, and on the Termination Date, on such Lender's Pro

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       23

Rata Share of the average daily aggregate Available Amount during such quarter
of all Letters of Credit outstanding from time to time at the rate of the
Applicable Margin for Eurodollar Rate Advances under the Revolving Facility.

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

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

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

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

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

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

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

            (c) Obligations Absolute.

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

            (ii) The Borrower also agrees with each Issuing Bank that no Issuing
      Bank shall be responsible for, and the Borrower's payment obligations
      under Section 2.08 shall not be affected by, among other things, (i) the
      validity or genuineness of documents or of any endorsements thereon, even
      though

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       24

      such documents shall in fact prove to be invalid, fraudulent or forged,
      (ii) any dispute between or among the Borrower and any beneficiary of any
      Letter of Credit or any other party to which such Letter of Credit may be
      transferred or (iii) any claims whatsoever of the Borrower against any
      beneficiary of such Letter of Credit or any such transferee.

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

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

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

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       25

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

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

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

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

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

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

            SECTION 2.12 Optional Prepayments of Revolving Advances. The
Borrower may, upon at least two Business Days' notice to the Administrative
Agent, in the case of a Revolving Borrowing consisting of Eurodollar Rate
Advances, or upon same day notice to the Administrative Agent, in the case of a
Revolving Borrowing consisting of Base Rate Advances, stating the proposed date
and aggregate principal amount of the prepayment, and if such notice is given
the Borrower shall, prepay the outstanding principal amount of the Revolving
Advances comprising part of the same Revolving Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in a minimum aggregate principal amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and (y) in the event of any such
prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

                     CERC 5-Year Revolving Credit Agreement

<PAGE>
                                       26

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                       27

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

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

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

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

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

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

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                                       28

hereunder or under any Note or CAF Note or any other documents to be delivered
hereunder to any Lender or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.16) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law; provided, however, that the Borrower shall
not be required to increase any such sums payable to any Lender with respect to
any Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of Section 2.16(e) or (ii) that are United States withholding taxes
imposed on sums payable to such Lender at the time such Lender becomes a party
to this Agreement, except to the extent that any such Lender's assignor (if any)
was entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Taxes pursuant to this Section 2.16. Whenever any
Taxes or Other Taxes (as defined in Section 2.16(b)) are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Lender or Administrative
Agent, as the case may be, either (A) official tax receipts or notarized copies
of such receipts to such Lender within thirty (30) days after payment of any
applicable tax or (B) a certificate executed by a Responsible Officer of the
Borrower confirming that such Taxes or Other Taxes have been paid, together with
evidence of such payment.

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

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

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

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

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                                       29

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

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

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

            (h) If any Taxes or Other Taxes are not correctly or legally
asserted and the Administrative Agent or any Lender determines, in its sole
discretion, that it has received a refund of those Taxes or Other Taxes as to
which it has been indemnified by the Borrower, the Administrative Agent or such
Lender shall within 20 days after such refund pay to the Borrower the amount of
such refund to the extent that the Borrower indemnified the Administrative Agent
or such Lender for such Taxes or Other Taxes pursuant to this Section 2.16, net
of any out-of-pocket costs of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay
such refund to such Governmental Authority. This paragraph shall not be
construed to require the Administrative Agent or any Lender to make available
its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

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

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<PAGE>

                                       30

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

            SECTION 2.19 Increase in the Aggregate Revolving Commitments. (a)
The Borrower may, at any time but in any event not more than once in any
calendar year prior to the Termination Date, whether or not the Revolving
Commitments have been reduced pursuant to Section 2.07, by notice to the
Administrative Agent, request that the aggregate amount of the Revolving
Commitments be increased by an amount of $10,000,000 or an integral multiple of
$5,000,000 in excess thereof (a "Commitment Increase") to be effective as of a
date that is at least 90 days prior to the scheduled Termination Date then in
effect (the "Increase Date") as specified in the related notice to the
Administrative Agent; provided, however that (i) in no event shall the aggregate
amount of the Commitments at any time exceed $525,000,000 and (ii) on the date
of any request by the Borrower for a Commitment Increase and on the related
Increase Date, the applicable conditions set forth in Section 3.02 shall be
satisfied.

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

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

            (d) On each Increase Date, each Eligible Assignee that accepts an
offer to participate in a requested Commitment Increase in accordance with
Section 2.19(b) (each such Eligible Assignee, an "Assuming Lender") shall become
a Lender party to this Agreement as of such Increase Date and the Revolving
Commitment of each Increasing Lender for such requested Commitment Increase
shall be so increased by such amount (or by the amount allocated to such Lender
pursuant to the last sentence of Section 2.19(b)) as of such Increase Date;
provided, however, that the Administrative Agent shall have received on or
before such Increase Date the following, each dated such date:

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

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

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

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                                       31

On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.19(d), the Administrative Agent
shall notify the Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier, of
the occurrence of the Commitment Increase to be effected on such Increase Date
and shall record in the Register the relevant information with respect to each
Increasing Lender and each Assuming Lender on such date.

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

            SECTION 2.20 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender to the Borrower (with a copy of such notice to
the Administrative Agent) to the effect that a promissory note or other evidence
of indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of pledge, enforcement or otherwise) the Advances owing
to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender, with a copy to the Administrative Agent, a Note or a CAF
Note, as the case may be, in substantially the form of Exhibit A or Exhibit D
hereto, respectively and as the case may be, payable to the order of such Lender
in a principal amount equal to the amount of the Revolving Advance or the CAF
Advance, as the case may be, of such Lender. All references to Notes or CAF
Notes in the Loan Documents shall mean Notes or CAF Notes, respectively and if
any, to the extent issued hereunder.

            (b) The Register maintained by the Administrative Agent pursuant to
Section 8.07(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances comprising
such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii)
the terms of each Assignment and Acceptance delivered to and accepted by it,
(iii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder, and (iv) the amount of
any sum received by the Administrative Agent from the Borrower hereunder and
each Lender's share thereof.

            (c) Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
Lender Party to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrower under this Agreement.

                                  ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

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

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                                       32

            (a) The Lead Arrangers shall be satisfied that any and all amounts
      outstanding (including without limitation all principal, interest, fees
      and other amounts owed) under the $250,000,000 3-Year Revolving Credit
      Agreement, dated as of March 23, 2004 (as amended, supplemented or
      otherwise modified from time to time, the "Existing 3-Year Revolving
      Credit Facility"), among the Borrower, the lenders party thereto, and
      Citigroup Global Markets Inc., as sole lead arranger and sole bookrunning
      manager, Citicorp USA, Inc., as administrative agent and Bank of America,
      N.A., Deutsche Bank AG New York Branch, JPMorgan Chase Bank, Wachovia
      Bank, National Association, Banc One Capital Markets, Inc., Credit Suisse
      First Boston, Cayman Islands Branch, Keybank National Association and The
      Royal Bank of Scotland PLC, as co-syndication agents, shall be paid by the
      Borrower in full, and such Existing 3-Year Revolving Credit Facility shall
      be cancelled or otherwise terminated prior to or immediately after the
      initial Advances are made hereunder.

            (b) Nothing shall have come to the attention of the Lenders during
      the course of their due diligence investigation to lead them to believe
      that the Information Memorandum was or has become misleading, incorrect or
      incomplete in any material respect.

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

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

                  (i) The Notes, duly executed by the Borrower and made payable
            to the order of each Lender who has requested a Note, pursuant to
            Section 2.20(a).

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

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

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

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

                  (vi) A favorable opinion of Shearman & Sterling LLP, counsel
            for the Administrative Agent, in form and substance satisfactory to
            the Administrative Agent.

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

            SECTION 3.02 Conditions Precedent to Each Revolving Borrowing,
Issuance and Commitment Increase. The obligation of each Lender to make a
Revolving Advance on the occasion of each Revolving Borrowing and the Obligation
of each Issuing Bank to issue or amend a Letter of Credit (including the initial
issuance) or renewal of a Letter of Credit, other than in the case of an
automatic renewal, and each Commitment Increase shall be subject to the
conditions precedent that the Effective Date shall have occurred and on the date
of

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                                       33

such Revolving Borrowing, issuance or the Commitment Increase (a) the following
statements shall be true (and each of the giving of the Applicable Notice of
Borrowing, Notice of Letter of Credit Issuance or request for Commitment
Increase and the acceptance by the Borrower of the proceeds of such Revolving
Borrowing or of such Letter of Credit or the renewal of such Letter of Credit,
other than in the case of an automatic renewal, shall constitute a
representation and warranty by the Borrower that on the date of such Revolving
Borrowing, Issuance, renewal or Commitment Increase such statements are true):

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

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

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

            SECTION 3.03 Conditions Precedent to Each CAF Borrowing. The
obligation of each Lender that is to make a CAF Advance on the occasion of a CAF
Borrowing to make such CAF Advance as part of such CAF Borrowing is subject to
the conditions precedent that (i) the Administrative Agent shall have received
the written confirmatory Competitive Bid Request pursuant to Section 2.05(a)
with respect thereto, (ii) the Administrative Agent shall have received a
Competitive Bid Confirmation from the Borrower pursuant to Section 2.05(d),
(iii) on or before the date of such CAF Borrowing, but prior to such CAF
Advance, the Administrative Agent shall have received a CAF Note in accordance
with Section 2.20(a) payable to the order of such Lender for each of the one or
more CAF Advances to be made by such Lender as part of such CAF Borrowing, in a
principal amount equal to the principal amount of the CAF Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such CAF
Advance in accordance with Section 2.05, and (iv) on the date of such CAF
Borrowing the following statements shall be true (and each of the giving of the
applicable Competitive Bid Request and the acceptance by the Borrower of the
proceeds of such CAF Borrowing shall constitute a representation and warranty by
the Borrower that on the date of such CAF Borrowing such statements are true):

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

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

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

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

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                                       34

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

            (f) There is no pending or threatened action, suit, investigation,
      litigation or proceeding, including, without limitation, any Environmental
      Action, affecting the Borrower or any of its Subsidiaries before any
      court, governmental agency or arbitrator that (i) could be reasonably
      likely to have a Material Adverse Effect or (ii) purports to affect the
      legality, validity or enforceability of this Agreement or any other Loan
      Document or the consummation of the transactions contemplated hereby.

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

            (h) Neither the Borrower nor any Subsidiary of the Borrower is an
      "investment company" as defined in, or otherwise subject to regulation
      under, the Investment Company Act of 1940, as amended. None of the
      execution and delivery of the Loan Documents by the Borrower or the
      performance of its obligations thereunder violate any regulation under the
      Public Utility Holding Company Act of 1935, as amended.

            (i) The Borrower is and each of its Subsidiaries are in substantial
      compliance with all applicable laws, ordinances, rules, regulations, and
      requirements of governmental authorities (including,

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      without limitation, Environmental Laws and ERISA and the rules and
      regulations thereunder) except for any non-compliance that could not
      reasonably be expected to have a Material Adverse Effect.

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

                                   ARTICLE V

                            COVENANTS OF THE BORROWER

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

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

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

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

            (d) Preservation of Corporate Existence, Etc. Preserve and maintain,
      and cause each of its Subsidiaries to preserve and maintain, its corporate
      existence, rights (charter and statutory) and franchises, except (other
      than in the case of the Borrower) to the extent such failure could not
      reasonably be expected to have a Material Adverse Effect; provided,
      however, that the Borrower and its Subsidiaries may consummate any merger
      or consolidation permitted under Section 5.02(b) and provided further that
      neither the Borrower nor any of its Subsidiaries shall be required to
      preserve any right or franchise if the board of

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      directors of the Borrower or such Subsidiary shall determine that the
      preservation thereof is no longer desirable in the conduct of the business
      of the Borrower or such Subsidiary, as the case may be, and that the loss
      thereof is not disadvantageous in any material respect to the Borrower,
      such Subsidiary or the Lenders.

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

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

            (g) Maintenance of Properties, Etc. Maintain and preserve, and cause
      each of its Subsidiaries to maintain and preserve, all of its material
      properties that are used or useful in the conduct of its business in good
      working order and condition, ordinary wear and tear excepted.

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

            (i) Use of Proceeds. Use the proceeds of each Advance only for
      general corporate purposes, including capital expenditures, of the
      Borrower and its Subsidiaries, and the repayment of commercial paper.

            (j) Reporting Requirements. Furnish to the Lenders:

                  (i) as soon as practicable and in any event within 60 days
            after the end of each of the first three quarters of each fiscal
            year of the Borrower, unaudited Consolidated balance sheets of the
            Borrower and its Subsidiaries, prepared in conformity with GAAP
            consistently applied, as of the end of such quarter and Consolidated
            statements of income and cash flows of the Borrower and its
            Subsidiaries, prepared in conformity with GAAP consistently applied,
            for the period commencing at the end of the previous fiscal year and
            ending with the end of such quarter, duly certified (subject to year
            end audit adjustments and the inclusion of abbreviated footnotes) by
            a Responsible Officer of the Borrower as having been prepared in
            accordance with generally accepted accounting principles and
            certificates of a Responsible Officer of the Borrower as to
            compliance with the terms of this Agreement and setting forth in
            reasonable detail the calculations necessary to demonstrate
            compliance with Section 5.03 (which requirement may be satisfied by
            delivering the Borrower's quarterly report on Form 10-Q with respect
            to such fiscal quarter as filed with the Securities and Exchange
            Commission);

                  (ii) as soon as practicable and in any event within 120 days
            after the end of each fiscal year of the Borrower commencing 2004, a
            copy of the annual audit report for such year for the Borrower and
            its Subsidiaries, containing Consolidated balance sheets of the
            Borrower and its Subsidiaries as of the end of such fiscal year and
            Consolidated statements of income and cash

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                                       37

            flows of the Borrower and its Subsidiaries for such fiscal year
            accompanied by an opinion of an independent public accountants, in
            each case prepared in conformity with GAAP consistently applied
            (which requirement may be satisfied by delivering the Borrower's
            annual report on Form 10-K with respect to such fiscal year as filed
            with the Securities and Exchange Commission) together with a
            certificate of a Responsible Officer of the Borrower identifying
            Significant Subsidiaries determined with respect to such financial
            statements;

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

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

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

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

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

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

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

                  (i) Permitted Liens;

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

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                                       38

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

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

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

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

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

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

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

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

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

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

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                                       39

            such obligations), as to the Borrower and all of its Restricted
            Subsidiaries, 10% of Net Tangible Assets.

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

            (c) Accounting Changes. Make or permit, or permit any of its
      Subsidiaries (other than a Project Finance Subsidiary or an Unrestricted
      Subsidiary) to make or permit, any change in accounting policies or
      reporting practices, except as required or permitted by GAAP or as
      contemplated by Section 5.04.

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

            (e) Restrictions on Dividends, Intercompany Loans, or Investments.
      Permit, or permit any Significant Subsidiary (other than a Project Finance
      Subsidiary or an Unrestricted Subsidiary) to, create or otherwise cause or
      permit to exist or become effective any explicit and direct restriction
      under any agreement evidencing or providing for the issuance of
      Indebtedness for Borrowed Money (other than this Agreement) on the ability
      of any Significant Subsidiary (other than a Project Finance Subsidiary or
      an Unrestricted Subsidiary) to (i) pay dividends or make any other
      distributions on its capital stock or pay any Indebtedness owed to the
      Borrower or any Subsidiary (other than a Project Finance Subsidiary or an
      Unrestricted Subsidiary) of the Borrower, (ii) make any loans or advances
      to or investments in the Borrower or any Subsidiary (other than a Project
      Finance Subsidiary or an Unrestricted Subsidiary) of the Borrower, or
      (iii) transfer any of its property or assets to the Borrower or any
      Subsidiary (other than a Project Finance Subsidiary or an Unrestricted
      Subsidiary) of the Borrower; provided, that the foregoing

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      shall not prohibit financial incurrence, maintenance and similar covenants
      that indirectly have the practical effect of prohibiting or restricting
      the ability of a Significant Subsidiary to make such payments or
      provisions that require that a certain amount of capital be maintained, or
      prohibit the return of capital to shareholders above certain dollar
      limits; provided, further, that the foregoing shall not apply to (i)
      restrictions and conditions imposed by law or by this Agreement, (ii)
      restrictions and conditions existing on the date hereof, any amendment or
      modification thereof (other than an amendment or modification expanding
      the scope of any such restriction or condition and any restrictions or
      conditions) that (x) replace restrictions or conditions existing on the
      date hereof and (y) are substantially similar to such existing restriction
      or condition, (iii) restrictions (including any extension of such
      restrictions that does not expand the scope of any such restrictions)
      existing at the time at which any such Subsidiary first becomes a
      Significant Subsidiary, so long as such restriction was in existence prior
      to such time in accordance with the other provisions of this Agreement and
      was not agreed to or incurred in contemplation of such change of status
      and (iv) any restrictions with respect to a Significant Subsidiary imposed
      pursuant to an agreement that has been entered into in connection with a
      disposition of all or substantially all of the Capital Stock or assets of
      such Subsidiary (if such disposal is otherwise permitted under this
      Agreement).

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

            (g) Investments in the Parent. Make or hold, or permit any of its
      Subsidiaries to make or hold, any Investment in the Parent, other than
      money pool loans.

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

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

            (j) Certain Investments, Loans, Advances, Guaranties and
      Acquisitions. Permit, or permit any of its Significant Subsidiaries to
      purchase or acquire (including pursuant to any merger) any Capital

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                                       41

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

            SECTION 5.03 Financial Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will:

            (a) Total Debt to Capitalization Ratio. Maintain a ratio of Total
      Debt for Borrowed Money to Consolidated Capitalization of no greater than
      0.65:1.00, calculated on a quarterly basis.

            (b) Fixed Charge Coverage Ratio. Maintain a ratio of EBITDA to Cash
      Interest for the immediately preceding four calendar quarters of no less
      than 2.00:1.00, calculated on a quarterly basis.

            SECTION 5.04 Borrower's Accounting Reorganization.

            (a) The Borrower may undertake an accounting reorganization of its
      operations and corporate structure that would involve the extinguishment
      of a negative retained earnings balance and the restatement of its assets
      and its liabilities to their fair values (the "Accounting
      Reorganization").

            (b) In the event that the Accounting Reorganization occurs, the
      Borrower shall notify the Administrative Agent thereof and notwithstanding
      any of the terms, conditions or provisions of this Agreement or the other
      Loan Documents to the contrary, compliance with the financial covenants,
      standards, terms and conditions in this Agreement and the Loan Documents
      shall be based on the performance by the Borrower and its Subsidiaries
      therewith as though the Accounting Reorganization had not occurred and the
      Borrower shall deliver, together with the certificates required under
      Section 5.01(j), pro forma financial statements prepared on the basis that
      the Accounting Reorganization had not occurred.

            (c) In addition, the Borrower may request various amendments to the
      covenants, representations, Events of Defaults and the other standards,
      terms and conditions of this Agreement and the Loan Documents. If so
      requested, the Borrower and the Lenders agree to enter into negotiations
      in order to amend such provisions (with the agreement of the Required
      Lenders or, if required by Section 8.01, all of the Lenders) so as to
      equitably reflect such changes with the desired result that the criteria
      for evaluating any of the Borrower's and its Restricted Subsidiaries'
      financial condition shall be the same after the Accounting Reorganization
      as if such Accounting Reorganization had not occurred. Each of the Lenders
      agrees to consider these requests and proposed amendments in good faith
      and agrees not to unreasonably withhold or delay its consent to such
      amendments. Unless and until such provisions have been so amended, this
      Section shall govern the Borrower's compliance with this Agreement and the
      Loan Documents.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

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

            (a) The Borrower shall fail to pay (i) any principal of any Advance
      when the same becomes due and payable, or (ii) any interest on any
      Advance, any fees payable under the Fee Letter, any Applicable Utilization
      Fees, the Facility Fee payable pursuant to Section 2.06(a) or any Letter
      of Credit fees under

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                                       42

      Section 2.06(c) within five Business Days after the same becomes due and
      payable or (iii) any other payment of fees or other amounts payable under
      this Agreement or any Note or CAF Note, as the case may be, within ten
      Business Days after notice of such payment is received by the Borrower
      from the Administrative Agent or the Required Lenders; or

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

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

            (d) The Borrower or any of its Significant Subsidiaries (other than
      a Project Finance Subsidiary or an Unrestricted Subsidiary) shall fail to
      pay any principal of or premium or interest on any Indebtedness for
      Borrowed Money that is outstanding in a principal amount of at least
      $50,000,000 in the aggregate (but excluding Indebtedness outstanding
      hereunder) of the Borrower or such Subsidiary (as the case may be), when
      the same becomes due and payable (whether by scheduled maturity, required
      prepayment, acceleration, demand or otherwise), and such failure shall
      continue after the applicable grace period, if any, specified in the
      agreement or instrument relating to such Indebtedness; or any other event
      shall occur or condition shall exist under any agreement or instrument
      relating to any such Indebtedness and shall continue after the applicable
      grace period, if any, specified in such agreement or instrument, if the
      effect of such event or condition is to accelerate, or to permit the
      acceleration of, the maturity of such Indebtedness; or any such
      Indebtedness shall be declared to be due and payable, or required to be
      prepaid or redeemed (other than by a regularly scheduled required
      prepayment or redemption), purchased or defeased, or an offer to prepay,
      redeem, purchase or defease such Indebtedness shall be required to be
      made, in each case prior to the stated maturity thereof; or

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

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

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

            (h) The Borrower or any of its ERISA Affiliates shall incur, or
      could be reasonably expected to incur, liability in excess of $50,000,000
      in the aggregate as a result of one or more of the following: (i) the
      occurrence of any ERISA Event; (ii) the partial or complete withdrawal of
      the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or
      (iii) the reorganization or termination of a Multiemployer Plan;

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

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

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                                  ARTICLE VII

                            THE ADMINISTRATIVE AGENT

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

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

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

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

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

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

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

            SECTION 7.06 Successor Administrative Agents. The Administrative
Agent may resign at any time by giving written notice thereof to the Lenders and
the Borrower and may be removed at any time with or without cause by the
Required Lenders; provided, however, that any removal of the Administrative
Agent will not be effective until it has also been replaced as Issuing Bank and
released from all of its obligations in respect thereof. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a

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combined capital and surplus of at least $500,000,000, provided that if the
Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and (2) all payments, communications and determinations provided to be
made by, to or through the Administrative Agent shall instead be made by or to
each Lender and Issuing Bank directly, until such time as the Required Lenders
appoint a successor Administrative Agent as provided for above in this
paragraph. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.

            SECTION 7.07 Co-Syndication Agents; Lead Arrangers. None of the
Lenders or other Persons identified on the facing page or signature pages of
this Agreement as a "co-syndication agent" or "lead arranger" shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than, in the case of such Lenders, those applicable to all Lenders as
such. Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Lender.

                                  ARTICLE VIII

                                  MISCELLANEOUS

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

            SECTION 8.02 Notices, Etc. (a) All notices and other communications
provided for hereunder shall be either (x) in writing (including telecopier or
telegraphic communication) and mailed, telecopied, telegraphed or delivered or
(y) as and to the extent set forth in Section 8.02(b) and in the proviso to this
Section 8.02(a), in an electronic medium and delivered as set forth in Section
8.02(b), if to the Borrower, at its address at P.O. Box 2805, Houston, TX 77252,
Attention: Assistant Treasurer (telecopy: 713 207 3301); if to any Lender, at
its Domestic Lending Office specified opposite its name on Schedule I hereto; if
to any other Lender, at its Domestic Lending Office specified in the Assignment
and Acceptance pursuant to which it became a Lender; if to the Lead Arrangers,
at the addresses specified on Schedule II hereto; and if to the Administrative
Agent, at its address at Two Penns Way, Suite 200, New Castle, Delaware, 19720,
Attention: Bank Loan Syndications Department/Jacqueline Caine (telecopy: 212 994
0961), with a copy to 388 Greenwich Street, New York, New York, 10013,
Attention: Nietzsche Rodricks (telecopy: 212 816 8098); or, as to the Borrower
or the Administrative Agent, at such other address as shall be designated by
such party in a written notice to the other parties and, as to each other party,
at such other address as shall be designated by such party in a written notice
to the Borrower and the Administrative Agent; provided, that materials required
to be delivered pursuant to Section 5.01(j)(i), (ii) and (iv) shall be delivered
to the Administrative Agent as specified in Section 8.02(b) or as otherwise
specified to the Borrower by the Administrative Agent. All

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such notices and communications shall, when mailed, telecopied, telegraphed or
emailed, be effective when deposited in the mails, telecopied, delivered to the
telegraph company or confirmed by email, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VII
shall not be effective until received by the Administrative Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Notes or CAF Notes (if any) or of any Exhibit
hereto to be executed and delivered hereunder shall be effective as delivery of
a manually executed counterpart thereof.

            (b) The Borrower hereby agrees that, unless otherwise requested by
the Administrative Agent, it will provide to the Administrative Agent all
information, documents and other materials that it is obligated to furnish to
the Administrative Agent pursuant to the Loan Documents, including, without
limitation, all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new, or a conversion of an
existing, borrowing or other extension of credit (including any election of an
interest rate or interest period relating thereto), (ii) relates to the payment
of any principal or other amount due under this Agreement prior to the scheduled
date therefor, (iii) provides notice of any default or event of default under
this Agreement, (iv) is required to be delivered to satisfy any condition
precedent to the effectiveness of this Agreement and/or any borrowing or other
extension of credit hereunder or (v) initiates or responds to legal process (all
such non-excluded information being referred to herein collectively as the
"Communications") by transmitting the Communications in an electronic/soft
medium (provided such Communications contain any required signatures) in a
format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com
(or such other e-mail address designated by the Administrative Agent from time
to time).

            (c) Each party hereto agrees that the Administrative Agent may make
the Communications available to the Lenders and the Issuing Banks by posting the
Communications on IntraLinks or another relevant website, if any, to which each
Lender, Issuing Bank and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent) (the "Platform"). Nothing in this Section 8.02 shall prejudice the right
of the Administrative Agent to make the Communications available to the Lenders
and the Issuing Banks in any other manner specified in the Loan Documents.

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

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

            (f) Each party hereto agrees that any electronic communication
referred to in this Section 8.02 shall be deemed delivered upon the posting of a
record of such communication (properly addressed to such

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       48

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

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

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

            SECTION 8.04 Costs and Expenses. (a) The Borrower agrees to pay on
demand all reasonable costs and expenses of the Administrative Agent and the
Lead Arrangers in connection with the preparation, execution, delivery,
administration, modification and amendment of or any consent or waiver under
this Agreement, the Notes (if any) and the other documents to be delivered
hereunder, including, without limitation, (A) all reasonable due diligence,
syndication (including printing, distribution and bank meetings), computer and
duplication expenses, (B) the reasonable fees and expenses of counsel for the
Administrative Agent and the Lead Arrangers with respect thereto and with
respect to advising the Administrative Agent as to its rights and
responsibilities under this Agreement and (C) all reasonable out-of-pocket
expenses incurred by the Issuing Banks in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder. The Borrower further agrees to pay on demand all costs and
expenses of the Administrative Agent and the Lenders, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Notes (if any) and the other documents to be delivered
hereunder, including, without limitation, reasonable fees and expenses of
counsel for the Administrative Agent, the Lead Arrangers and each Lender in
connection with the enforcement of rights under this Section 8.04(a).

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

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<PAGE>

                                       49

special, indirect, consequential or punitive damages against any other party
hereto, any of their Affiliates, or any of their respective directors, officers,
employees, attorneys and agents, on any theory of liability arising out of or
otherwise relating to the Notes or CAF Notes (if any), this Agreement, the
Letters of Credit any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Advances.

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

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

            SECTION 8.05 Right of Set off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes or CAF Notes, if any, due and payable
pursuant to the provisions of Section 6.01, each Lender, the Issuing Banks and
each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final, in
whatever currency) at any time held and other indebtedness at any time owing by
such Lender or such Affiliate to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note or CAF Note, as the case may be, held
by such Lender or the Issuing Banks, whether or not such Lender or Issuing Bank
shall have made any demand under this Agreement or such Note or CAF Note and
although such obligations may be unmatured or are owed to a branch or office of
such Lender or the Issuing Bank different from the branch or office holding such
deposit or obligated on such indebtedness. Each Lender and Issuing Bank agrees
promptly to notify the Borrower after any such set off and application, provided
that the failure to give such notice shall not affect the validity of such set
off and application. The rights of each Lender, the Issuing Bank and its
Affiliates under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set off) that such Lender,
Issuing Bank and its Affiliates may have.

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

            SECTION 8.07 Assignments and Participations. (a) Each Lender may
assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Revolving Advances owing to it and the Note or Notes, if any,
held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement (other than any right to make CAF Advances, CAF Advances owing to it
and CAF Note or CAF Notes, if any), (ii) except in the case of an assignment to
a Person that, immediately prior to such assignment, was a Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, the
amount of the Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, (iii) each such assignment
shall be to an Eligible Assignee, (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note,
if any, subject

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<PAGE>

                                      50

to such assignment, and (v) the parties to each such assignment shall deliver to
the Administrative Agent a processing and recordation fee of $3,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
its rights under Sections 2.13, 2.16 and 8.04 to the extent any claim thereunder
relates to an event arising prior to such assignment) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

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

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

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

            (e) Each Issuing Bank may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under the undrawn portion of its
Letter of Credit Commitment at any time; provided, however, that (i) except in
the case of an assignment to a Person that immediately prior to such assignment
was an Issuing

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<PAGE>

                                       51

Bank or an assignment of all of an Issuing Bank's rights and obligations under
this Agreement, the amount of the Letter of Credit Commitment of the assigning
Issuing Bank being assigned pursuant to each such assignment (determined as of
the date of the Assignment and Acceptance with respect to such assignment) shall
in no event be less than $10,000,000 and shall be in an integral multiple of
$1,000,000 in excess thereof, (ii) each such assignment shall be to an Eligible
Assignee and (iii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500.

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

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

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

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

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                       52

            SECTION 8.08 Patriot Act Notification. Each Lender and the
Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub.L. 107-56 (signed into law October 26, 2001)) (the "Patriot
Act"), it is required to obtain, verify and record information that identifies
the Borrower, which information includes the name and address of the Borrower
and other information that will allow such Lender or the Administrative Agent,
as applicable, to identify the Borrower in accordance with the Patriot Act. The
Borrower shall, and shall cause each of their Subsidiaries to, provide, to the
extent commercially reasonable, such information and take such actions as are
reasonably requested by the Administrative Agent or any Lenders in order to
assist the Administrative Agent and the Lenders in maintaining compliance with
the Patriot Act.

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

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

            SECTION 8.11 Counterparts; Integration; Electronic Execution.

            (a) Execution in Counterparts, Integration. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. This Agreement, and any separate letter agreements with respect to
fees payable to the Administrative Agent and the Lead Arrangers, constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
a manually executed counterpart of this Agreement.

            (b) Electronic Execution of Assignments. The words "execution,"
"signed," "signature," and words of like import in any Assignment and Acceptance
shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

            SECTION 8.12 Removal of Lender. Notwithstanding anything herein to
the contrary, the Borrower may, at any time in its sole discretion, remove any
Lender upon 15 Business Days' written notice to such Lender and the
Administrative Agent (the contents of which notice shall be promptly
communicated by the Administrative Agent to each other Lender), such removal to
be effective at the expiration of such 15-day notice period; provided, however,
that no Lender may be removed hereunder (i) at a time when an Event of Default
shall have occurred and be continuing or (ii) after giving effect to the
removal, the Total Aggregate Outstanding Extensions of Credit would exceed the
total of the Revolving Commitments. Each notice by the Borrower under this
Section shall constitute a representation by the Borrower that the removal
described in such notice is permitted under this Section. Concurrently with such
removal, the Borrower shall pay to such removed Lender all amounts owing to such
Lender hereunder and under any other Loan Document in immediately available
funds. Upon full and final payment hereunder of all amounts owing to such
removed Lender, such Lender shall make appropriate entries in its accounts
evidencing payment of all Loans hereunder and releasing the Borrower from all
obligations owing to the removed Lender in respect of the Loans hereunder and
surrender to the Administrative Agent for return to the

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<PAGE>

                                      53

Borrower any Notes of the Borrower then held by it. Effective immediately upon
such full and final payment, such removed Lender will not be considered to be a
"Lender" for purposes of this Agreement except for the purposes of any provision
hereof that by its terms survives the termination of this Agreement and the
payment of the amounts payable hereunder. Effective immediately upon such
removal, the Commitments of such removed Lender shall immediately terminate and
such Lender's participation share in any outstanding Letters of Credit shall
immediately terminate and such participation share shall be divided among the
remaining Lenders according to their Pro Rata Share. Such removal will not,
however, affect the Commitments of any other Lender hereunder.

            SECTION 8.13 Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes or CAF Notes (if any), or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the Notes or CAF Notes (if any) in the courts of
any jurisdiction.

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

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

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

                                 CENTERPOINT ENERGY RESOURCES CORP., as Borrower

                                 By /s/ Marc Kilbride
                                    --------------------------------------------
                                    Title: Vice President And Treasurer

<PAGE>

                                 CITIGROUP GLOBAL MARKETS INC., as Lead Arranger

                                 By /s/ Judith Green
                                   ---------------------------------------------
                                   Title: Managing Director

<PAGE>

                            BARCLAYS CAPITAL, the Investment Banking Division of
                            Braclays Bank PLC, as Lead Arranger

                            By /s/ Sydney Dennis
                               -------------------------------------------------
                               Title: Director
<PAGE>

                              BANC OF AMERICA SECURITIES LLC, as Lead Arranger

                              By [Illegible]
                                 -------------------------------------------
                                 Title: [Illegible]
<PAGE>

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

                        By /s/ Judith Green
                          ------------------------
                          Title: Vice President
<PAGE>

                            BARCLAYS BANK PLC., as Co-Syndication Agent
                            and Issuing Bank

                            By /s/ Sydney Dennis
                               ----------------------------------------
                               Title: Director
<PAGE>

                                  BANK OF AMERICA, N.A., as Co-Syndication Agent
                                  and Issuing Bank

                                  By  /s/ Kevin P. Bertelsen
                                      ------------------------------------------
                                      Title: Vice President
<PAGE>

                                  CREDIT SUISSE, CAYMAN ISLANDS BRANCH,as Lender

                                  By /s/ Thomas R. Cantello
                                     ---------------------------
                                     Title: Vice President

                                  By /s/ Gregory S. Richards
                                     ---------------------------
                                     Title:  Associate
<PAGE>

                                  DEUTSCHE BANK AG NEW YORK BRANCH, as Lender

                                  By /s/ David J. Bell
                                     ----------------------------------
                                  Title: Managing Director

                                  By /s/ Marcus Tarkington
                                     ----------------------------------
                                  Title: Director
<PAGE>

                                  JPMORGAN CHASE BANK, N.A., as Lender

                                  By /s/ Robert W. Traband
                                     ------------------------
                                     Title: Vice President
<PAGE>

                                  THE ROYAL BANK OF SCOTLAND PLC, as Lender

                                  By /s/ Belinda Wheeler
                                     ------------------------
                                  Title: Vice President
<PAGE>

                                  WACHOVIA BANK, NATIONAL ASSOCIATION, as Lender

                                  By /s/ Larry Gross
                                     ------------------------
                                  Title: Assistant Vice President
<PAGE>

                                  ROYAL BANK OF CANADA, as Lender

                                  By /s/ Linda Phaken
                                     ------------------------
                                     Title: Authorized Signatory
<PAGE>

                                  KEYBANK NATIONAL ASSOCIATION, as Lender

                                  By /s/ Kevin D. Smith
                                     ------------------------
                                     Title: Vice President
<PAGE>

                                  WELLS FARGO BANK, N.A., as Lender

                                  By /s/ Steve Melton
                                     ------------------------
                                     Title: Vice President
<PAGE>

                                  THE BANK OF TOKYO-MITSUBISHI, LTD., as Lender

                                  By /s/ D. Barnell
                                     ------------------------
                                     Title: Vice President & Manager
<PAGE>

                                  SUNTRUST BANK, as Lender

                                  By /s/ Kelley Brunson
                                     ------------------------
                                     Title: Vice President
<PAGE>

                                  HSBC BANK USA, NATIONAL ASSOCIATION, as Lender

                                  By /s/ Jose Aldeanueva
                                     ------------------------
                                     Title: Vice President
<PAGE>

                                  ABN AMRO BANK N.V., as Lender

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

                                  By /s/ Todd D. Vaubel
                                     ------------------------
                                     Title: Assistant Vice President
<PAGE>

                                                                      SCHEDULE I
                                                      APPLICABLE LENDING OFFICES
<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------------------------------
LENDER'S NAME                        DOMESTIC OFFICE                                  EURODOLLAR OFFICE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                                              <C>
Citibank, N.A.                       Two Penns Way, Suite 200                         Two Penns Way, Suite 200
                                     New Castle, DE 19720                             New Castle, DE 19720
                                     Attn: Jackie Caine                               Attn: Jackie Caine
                                     Reference: CenterPoint Energy Resources          Reference: CenterPoint Energy Resources
-----------------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank                  1111 Fannin, 10th Floor                          1111 Fannin, 10th Floor
                                     Houston, TX 77002                                Houston, TX 77002
                                     Account Name: Utilities Clearing Account         Account Name: Utilities Clearing Account
                                     Attn: Janene English                             Attn: Janene English
                                     Reference: CenterPoint Energy Resources Corp.    Reference: CenterPoint Energy Resources Corp.
-----------------------------------------------------------------------------------------------------------------------------------
Bank of America, N.A.                901 Main Street                                  901 Main Street
                                     Dallas, Texas 75202                              Dallas, Texas 75202
                                     Account Name: Credit Services                    Account Name: Credit Services
                                     Reference: CenterPoint Energy Resources Corp.    Reference: CenterPoint Energy Resources Corp.
-----------------------------------------------------------------------------------------------------------------------------------
ABN AMRO Bank, N.V.
                                     Melanie Dziobas                                  Melanie Dziobas
                                     540 West Madison Street                          540 West Madison Street
                                     Suite 2621                                       Suite 2621
                                     Chicago, IL 60661                                Chicago, IL 60661

                                     Scott Donaldson                                  Scott Donaldson
                                     4400 Post Oak Parkway                            4400 Post Oak Parkway
                                     Suite 5500                                       Suite 5500
                                     Houston, TX 77027                                Houston, TX 77027
-----------------------------------------------------------------------------------------------------------------------------------
Barclays Capital                     Nicholas Bell                                    Nicholas Bell
                                     200 Park Avenue, 4th Floor                       200 Park Avenue, 4th Floor
                                     New York, NY 10166                               New York, NY 10166
-----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse, Cayman Islands        Brian Caldwell                                   Brian Caldwell
Branch                               Eleven Madison Avenue                            Eleven Madison Avenue
                                     New York, NY 10010                               New York, NY 10010
-----------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG New York Branch     60 Wall Street                                   60 Wall Street
                                     New York, NY 10005                               New York, NY 10005
-----------------------------------------------------------------------------------------------------------------------------------
HSBC Bank USA, National              Jose Aldeanueva                                  Jose Aldeanueva
Association                          452 Fifth Avenue, 5th Floor                      452 Fifth Avenue, 5th Floor
                                     New York, NY 10018                               New York, NY 10018
-----------------------------------------------------------------------------------------------------------------------------------
Royal Bank of Canada                 Compton Singh                                    Compton Singh
                                     One Liberty Plaza, 3rd Floor                     One Liberty Plaza, 3rd Floor
                                     New York, NY 10006-1404                          New York, NY 10006-1404
-----------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank                        Linda Stanley                                    Tina Marie Edwards
                                     303 Peachtree Street, 10th Floor                 303 Peachtree Street, 10th Floor
                                     Atlanta, GA 30303                                Atlanta, GA 30303
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------------------------------
LENDER'S NAME                        DOMESTIC OFFICE                                  EURODOLLAR OFFICE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                                              <C>
The Bank of Tokyo-Mitsubishi, Ltd.   Larry Marchbanks                                 Larry Marchbanks
                                     1100 Louisiana, #2800                            1100 Louisiana, #2800
                                     Houston, TX 77002                                Houston, TX 77002
-----------------------------------------------------------------------------------------------------------------------------------
The Royal Bank of Scotland plc       Michael Keating                                  Michael Keating
                                     101 Park Avenue                                  101 Park Avenue
                                     New York, NY 10178                               New York, NY 10178
-----------------------------------------------------------------------------------------------------------------------------------
Wachovia Bank, National              Lawrence N. Gross                                Lawrence N. Gross
Association                          191 Peachtree Street NE                          191 Peachtree Street NE
                                     Suite 2800                                       Suite 2800
                                     Atlanta, GA 30303                                Atlanta, GA 30303
-----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Bank, N.A.               Steve Melton                                     Steve Melton
                                     1445 Ross Avenue                                 1445 Ross Avenue
                                     Suite 2320                                       Suite 2320
                                     Dallas, TX 75202-2812                            Dallas, TX 75202-2812
-----------------------------------------------------------------------------------------------------------------------------------
KeyBank National Association         601 108th Avenue N.E., 5th Floor                 601 108th Avenue N.E., 5th Floor
                                     Bellevue, WA 98004                               Bellevue, WA 98004
                                     Account Name: KCIB Loan Services                 Account Name: KCIB Loan Services
                                     Attn: Melissa Pelham                             Attn: Melissa Pelham
                                     Reference: CenterPoint Energy                    Reference: CenterPoint Energy
-----------------------------------------------------------------------------------------------------------------------------------
</Table>

<PAGE>

                                                                     SCHEDULE II
                                                          LEAD ARRANGERS ADDRESS

CITIGROUP GLOBAL MARKETS, INC.
Two Penns Way, Suite 200
New Castle, DE 19720
Attn: Jackie Caine
Reference: CenterPoint Energy Resources

BARCLAYS CAPITAL
Nicholas Bell
200 Park Avenue, 4th Floor
New York, NY 10166

BANC OF AMERICA SECURITIES, LLC
901 Main Street
Dallas, Texas 75202
Attn.: Jacqueline Archuleta
Reference: CenterPoint Energy Resources Corp.

<PAGE>

                                                                    SCHEDULE III
                            COMMITMENT PERCENTAGES & LETTER OF CREDIT COMMITMENT

--------------------------------------------------------------------------------
Institution                                     Allocation
--------------------------------------------------------------------------------
Citibank, N.A.                                 $ 40,000,000           10.00%
Barclays Bank PLC                                40,000,000           10.00%
Bank of America, N.A.                            40,000,000           10.00%
Credit Suisse, Cayman Islands Branch             33,000,000            8.25%
Deutsche Bank AG New York Branch                 33,000,000            8.25%
JPMorgan Chase Bank, N.A.                        33,000,000            8.25%
The Royal Bank of Scotland plc                   33,000,000            8.25%
Wachovia Bank, National Association              33,000,000            8.25%
The Bank of Tokyo-Mitsubishi, Ltd.               25,000,000            6.25%
ABN AMRO Bank N.V.                               15,000,000            3.75%
HSBC Bank USA, National Association              15,000,000            3.75%
KeyBank National Association                     15,000,000            3.75%
Royal Bank of Canada                             15,000,000            3.75%
SunTrust Bank                                    15,000,000            3.75%
Wells Fargo Bank, N.A.                           15,000,000            3.75%
--------------------------------------------------------------------------------
Total                                          $400,000,000          100.00%
--------------------------------------------------------------------------------

LETTER OF CREDIT COMMITMENT

--------------------------------------------------------------------------------
          INSTITUTION                                   COMMITMENT
--------------------------------------------------------------------------------
Citibank, N.A.                              $50,000
--------------------------------------------------------------------------------
Barclay's Bank PLC                          $50,000
--------------------------------------------------------------------------------
Bank of America, N.A.                       $50,000
--------------------------------------------------------------------------------
TOTAL                                       $150,000
--------------------------------------------------------------------------------
<PAGE>

                                                             EXHIBIT A - FORM OF
                                                                 PROMISSORY NOTE

U.S.$_______________              Dated:  __________ __, [___]

            FOR VALUE RECEIVED, the undersigned, CENTERPOINT ENERGY RESOURCES
CORP., a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the
order of _________________________ (the "Lender") for the account of its
Applicable Lending Office on the Termination Date (each as defined in the Credit
Agreement referred to below) the principal sum of U.S.$[amount of the Lender's
Commitment in figures] or, if less, the aggregate principal amount of the
Revolving Advances and the Letter of Credit Advances made by the Lender to the
Borrower pursuant to the Credit Agreement dated as of June 30, 2005 among the
Borrower, the Lenders listed on the signature pages thereto, Citigroup Global
Markets Inc., Banc of America Securities LLC and Barclays Capital, the
investment banking division of Barclays Bank PLC, as Lead Arrangers, Citibank,
N.A., as Administrative Agent for the Lenders, Barclays Bank PLC and Bank of
America, N.A. as Co-Syndication Agents and Citibank, N.A., Barclays Bank PLC and
Bank of America, N.A. as Issuing Banks (as amended or modified from time to
time, the "Credit Agreement"; the terms defined therein being used herein as
therein defined) outstanding on the Termination Date.

            The Borrower promises to pay interest on the unpaid principal amount
of each Revolving Advance and Letter of Credit Advance from the date of such
Revolving Advance and Letter of Credit Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.

            Both principal and interest are payable in lawful money of the
United States of America to Citibank, N.A., as Administrative Agent, at Two
Penns Way, Suite 200, New Castle, Delaware, 19720, in same day funds. Each
Revolving Advance owing to the Lender by the Borrower pursuant to the Credit
Agreement, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.

            This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of Revolving Advances and the Letter
of Credit Advances by the Lender to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from each such
Revolving Advance and Letter of Credit Advance being evidenced by this
Promissory Note, and (ii) contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for prepayments on
account of principal hereof prior to the maturity hereof upon the terms and
conditions therein specified.

                                         CENTERPOINT ENERGY RESOURCES CORP.

                                         By __________________________________
                                            Title:

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
                             AMOUNT OF PRINCIPAL      UNPAID PRINCIPAL
DATE   AMOUNT OF ADVANCE       PAID OR PREPAID             BALANCE           NOTATION MADE BY
<S>    <C>                   <C>                      <C>                    <C>
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
-----  -----------------     -------------------      ----------------       ----------------
</TABLE>

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                             EXHIBIT B - FORM OF
                                                             NOTICE OF BORROWING

Citibank, N.A., as Administrative Agent
for the Lenders parties
to the Credit Agreement
referred to below
390 Greenwich Street
New York, NY 10013

Attention:  ____________________

                                     [DATE]

Ladies and Gentlemen:

            The undersigned, CENTERPOINT ENERGY RESOURCES CORP., refers to the
Credit Agreement, dated as of June 30, 2005 (as amended or modified from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, the Lenders listed on the signature
pages thereto, Citigroup Global Markets Inc., Banc of America Securities LLC and
Barclays Capital, the investment banking division of Barclays Bank PLC, as Lead
Arrangers, Barclays Bank PLC and Bank of America, N.A., as Co-Syndication
Agents, Citibank, N.A., Barclays Bank PLC and Bank of America, N.A., as Issuing
Banks and Citibank, N.A., as Administrative Agent for said Lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement
that the undersigned hereby requests a Revolving Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Borrowing (the "Proposed Borrowing") as required by Section
2.02(a) of the Credit Agreement:

            (i) The Business Day of the Proposed Revolving Borrowing is
      _______________, 20__.

            (ii) The Type of Revolving Advances comprising the Proposed
      Revolving Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

            (iii) The aggregate amount of the Proposed Revolving Borrowing is
      $_______________.

            (iv) [The initial Interest Period for each Eurodollar Rate Advance
      made as part of the Proposed Revolving Borrowing is __________
      [week][month][s].]

            (v) All or a portion of the Proposed Revolving Borrowing [will][will
      not] be used to repay commercial paper.

            The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Revolving
Borrowing:

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

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

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                         Very truly yours,

                                         CENTERPOINT ENERGY RESOURCES CORP.

                                         By__________________________
                                           Title:(1)

-------------
(1)   Signatory must be a Financial Officer, as defined in the Credit Agreement.

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                             EXHIBIT C - FORM OF
                                                       ASSIGNMENT AND ACCEPTANCE

            Reference is made to the Credit Agreement dated as of June 30, 2005
(as amended or modified from time to time, the "Credit Agreement") among
CenterPoint Energy Resources Corp., a Delaware corporation (the "Borrower"), the
Lenders (as defined in the Credit Agreement), Citigroup Global Markets Inc.,
Banc of America Securities LLC and Barclays Capital, the investment banking
division of Barclays Bank PLC, as Lead Arrangers, Barclays Bank PLC and Bank of
America, N.A., as Co-Syndication Agents, Citibank, N.A., Barclays Bank PLC and
Bank of America, N.A., as Issuing Banks and Citibank, N.A., as Administrative
Agent for the Lenders (the "Administrative Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.

            The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:

            1. The Assignor hereby sells and assigns to the Assignee, and the
      Assignee hereby purchases and assumes from the Assignor, an interest in
      and to the Assignor's rights and obligations under the Credit Agreement as
      of the date hereof (other than in respect of CAF Advances and CAF Notes)
      equal to the percentage interest specified on Schedule 1 hereto of all
      outstanding rights and obligations under the Credit Agreement (other than
      in respect of CAF Advances and CAF Notes). After giving effect to such
      sale and assignment, the Assignee's Commitment and the amount of the
      Revolving Advances and Letter of Credit Advances owing to the Assignee
      will be as set forth on Schedule 1 hereto.

            2. The Assignor (i) represents and warrants that it is the legal and
      beneficial owner of the interest being assigned by it hereunder and that
      such interest is free and clear of any adverse claim; (ii) makes no
      representation or warranty and assumes no responsibility with respect to
      any statements, warranties or representations made in or in connection
      with the Credit Agreement or the execution, legality, validity,
      enforceability, genuineness, sufficiency or value of the Credit Agreement
      or any other instrument or document furnished pursuant thereto; (iii)
      makes no representation or warranty and assumes no responsibility with
      respect to the financial condition of the Borrower or the performance or
      observance by the Borrower of any of its obligations under the Credit
      Agreement or any other instrument or document furnished pursuant thereto;
      and (iv) attaches the Note (if any) held by the Assignor and requests that
      the Administrative Agent exchange such Note for a new Note payable to the
      order of the Assignee in an amount equal to the Commitment assumed by the
      Assignee pursuant hereto or new Notes payable to the order of the Assignee
      in an amount equal to the Commitment assumed by the Assignee pursuant
      hereto and the Assignor in an amount equal to the Commitment retained by
      the Assignor under the Credit Agreement, respectively, as specified on
      Schedule 1 hereto.

            3. The Assignee (i) confirms that it has received a copy of the
      Credit Agreement, together with copies of the financial statements
      referred to in Section 4.01 thereof and such other documents and
      information as it has deemed appropriate to make its own credit analysis
      and decision to enter into this Assignment and Acceptance; (ii) agrees
      that it will, independently and without reliance upon the Administrative
      Agent, the Assignor or any other Lender and based on such documents and
      information as it shall deem appropriate at the time, continue to make its
      own credit decisions in taking or not taking action under the Credit
      Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints
      and authorizes the Administrative Agent to take such action as the
      Administrative Agent on its behalf and to exercise such powers and
      discretion under the Credit Agreement as are delegated to the
      Administrative Agent by the terms thereof, together with such powers and
      discretion as are reasonably incidental thereto; (v) agrees that it will
      perform in accordance with their terms all of the obligations that by the
      terms of the Credit Agreement are required to be performed by it as a
      Lender; and (vi) attaches any U.S. Internal Revenue Service forms required
      under Section 2.16 of the Credit Agreement.

            4. Following the execution of this Assignment and Acceptance, it
      will be delivered to the Administrative Agent for acceptance and recording
      by the Administrative Agent. The effective date for this Assignment and
      Acceptance (the "Effective Date") shall be the date of acceptance hereof
      by the Administrative Agent, unless otherwise specified on Schedule 1
      hereto.

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

            5. Upon such acceptance and recording by the Administrative Agent,
      as of the Effective Date, (i) the Assignee shall be a party to the Credit
      Agreement and, to the extent provided in this Assignment and Acceptance,
      have the rights and obligations of a Lender thereunder and (ii) the
      Assignor shall, to the extent provided in this Assignment and Acceptance,
      relinquish its rights and be released from its obligations under the
      Credit Agreement.

            6. Upon such acceptance and recording by the Administrative Agent,
      from and after the Effective Date, the Administrative Agent shall make all
      payments under the Credit Agreement and the Notes (if any) in respect of
      the interest assigned hereby (including, without limitation, all payments
      of principal, interest and facility fees with respect thereto) to the
      Assignee. The Assignor and Assignee shall make all appropriate adjustments
      in payments under the Credit Agreement and the Notes (if any) for periods
      prior to the Effective Date directly between themselves.

            7. This Assignment and Acceptance shall be governed by, and
      construed in accordance with, the laws of the State of New York.

            8. This Assignment and Acceptance may be executed in any number of
      counterparts and by different parties hereto in separate counterparts,
      each of which when so executed shall be deemed to be an original and all
      of which taken together shall constitute one and the same agreement.
      Delivery of an executed counterpart of Schedule 1 to this Assignment and
      Acceptance by telecopier shall be effective as delivery of a manually
      executed counterpart of this Assignment and Acceptance.

            IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                   SCHEDULE 1
                                       TO
                            ASSIGNMENT AND ACCEPTANCE
<TABLE>
<S>                                                            <C>                    <C>
Percentage interest assigned:                                                         _____%

Assignee's Commitment:                                         $_______________

Aggregate outstanding principal amount of Revolving Advances
assigned:                                                      $_______________

Letter of Credit Commitment Assigned:                          $_______________

Letter of Credit Commitment Retained:                          $_______________

Principal amount of Note payable to Assignee:                  $_______________

Principal amount of Note payable to Assignor:                  $_______________

Effective Date(1):  _______________, 20__
</TABLE>

                                               [NAME OF ASSIGNOR], as Assignor

                                               By __________________________
                                                  Title:

                                               Dated:  _______________, 20__

                                               [NAME OF ASSIGNEE], as Assignee

                                               By ___________________________
                                                  Title:

                                               Domestic Lending Office:
                                                      [Address]

                                               Eurodollar Lending Office:
                                                      [Address]

Accepted [and Approved](2) this

__________ day of _______________, 20__

CITIBANK, N.A., as Administrative Agent [and
Issuing Bank](2)

By ___________________________________
   Title:

----------------------
(1)   This date should be no earlier than five Business Days after the delivery
      of this Assignment and Acceptance to the Administrative Agent.

(2)   Required if the Assignee is an Eligible Assignee solely by reason of
      clause (iii) of the definition of "Eligible Assignee".

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

[BARCLAYS BANK PLC, as Issuing Bank](2)

By ___________________________________
   Title:

[BANK OF AMERICA, N.A., as Issuing Bank](2)

By ___________________________________
   Title:

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

[Approved this __________ day of _______________, 20__

CENTERPOINT ENERGY RESOURCES CORP.

By   _______________________________________](1)
     Title:

------------------
(1)   Required if the Assignee is an Eligible Assignee solely by reason of
      clause (iii) of the definition of "Eligible Assignee".

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                                             EXHIBIT D - FORM OF
                                                                        CAF NOTE

U.S.$_______________                Dated:  _______________, 200_

            FOR VALUE RECEIVED, the undersigned, CENTERPOINT ENERGY RESOURCES
CORP., a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the
order of _________________________ (the "Lender") for the account of its
Applicable Lending Office (as defined in the Credit Agreement dated as of June
30, 2005 among the Borrower, the Lenders listed on the signature pages thereto,
Citigroup Global Markets Inc., Banc of America Securities LLC and Barclays
Capital, the investment banking division of Barclays Bank PLC, as Lead
Arrangers, Barclays Bank PLC and Bank of America, N.A., as Co-Syndication
Agents, Citibank, N.A., Barclays Bank PLC and Bank of America, N.A., as Issuing
Banks and Citibank, N.A., as Administrative Agent for the Lenders (as amended or
modified from time to time, the "Credit Agreement"; the terms defined therein
being used herein as therein defined)), on _______________, 200_, the principal
amount of U.S.$_______________.

            The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

            Interest Rate: _____% per annum (calculated on the basis of a year
of 360 days for the actual number of days elapsed).

            Both principal and interest are payable in lawful money of the
United States of America to _________________________ for the account of the
Lender at the office of _________________________, at _________________________
in same day funds.

            This Promissory Note is one of the CAF Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events.

            The Borrower hereby waives presentment, demand, protest and notice
of any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.

            This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                              CENTERPOINT ENERGY RESOURCES CORP.

                                              By ____________________________
                                                   Title:

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                             EXHIBIT E - FORM OF
                                                         COMPETITIVE BID REQUEST

Citibank, N.A.,
As Administrative Agent for the
Lenders parties to the Credit Agreement (as defined below)
390 Greenwich Street
New York, NY 10013

Ladies and Gentlemen:

            Reference is made to the Credit Agreement, dated as of June 30, 2005
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the undersigned, the Lenders listed on the signature pages
thereto, Citigroup Global Markets Inc., Banc of America Securities LLC and
Barclays Capital, the investment banking division of Barclays Bank PLC, as Lead
Arrangers, Barclays Bank PLC and Bank of America, N.A., as Co-Syndication
Agents, Citibank, N.A., Barclays Bank PLC and Bank of America, N.A., as Issuing
Banks and Citibank, N.A., as Administrative Agent for said Lenders. Terms
defined in the Credit Agreement are used herein as therein defined.

            This is a Competitive Bid Request pursuant to Section 2.05 of the
Credit Agreement requesting quotes for the following:

<TABLE>
<S>                            <C>                   <C>                  <C>
Aggregate Principal Amount     $___________       $___________         $___________

Effective Date of CAF Advance   ___________        ___________          ___________

Type of CAF Advance(1)          ___________        ___________          ___________

Maturity Date(2)                ___________        ___________          ___________

Interest Payment Dates          ___________        ___________          ___________
</TABLE>

                                         Very truly yours,

                                         CENTERPOINT ENERGY RESOURCES CORP.,
                                            as Borrower

                                         By ________________________________
                                            Title:

Dated:_____________________

-----------------
(1)   Fixed Rate Advance or CAF Eurodollar Rate Advance.

(2)   A period of at least 15 days and no longer than 180 days.

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                             EXHIBIT F - FORM OF
                                                                 COMPETITIVE BID

Citibank, N.A.
As Administrative Agent for the
Lenders parties to the Credit Agreement (as defined below)
390 Greenwich Street
New York, NY 10013

Ladies and Gentlemen:

            Reference is made to the Credit Agreement, dated as of June 30, 2005
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the undersigned, the Lenders listed on the signature pages
thereto, Citigroup Global Markets Inc., Banc of America Securities LLC and
Barclays Capital, the investment banking division of Barclays Bank PLC, as Lead
Arrangers, Barclays Bank PLC and Bank of America, N.A., as Co-Syndication
Agents, Citibank, N.A., Barclays Bank PLC and Bank of America, N.A., as Issuing
Banks and Citibank, N.A., as Administrative Agent for said Lenders. Terms
defined in the Credit Agreement are used herein as therein defined.

            In accordance with Section 2.05(b) of the Credit Agreement, the
undersigned Lender offers to make a CAF Advance thereunder in the following
amounts with the following maturity dates:

Effective Date of CAF Advance: ___________________, 200_

Aggregate Maximum Amount:  $__________________

<TABLE>
<CAPTION>
Maturity Date 1             Maturity Date 2           Maturity Date 3
---------------             ---------------           ---------------
<S>                         <C>                       <C>
Maximum Amount $            Maximum Amount $          Maximum Amount $

Rate(1) Amount              Rate Amount               Rate Amount

Rate Amount                 Rate Amount               Rate Amount
</TABLE>

            The undersigned hereby confirms that it is prepared to extend credit
to the Borrower upon acceptance by the Borrower of this bid in accordance with
Section 2.05(d) of the Credit Agreement.

                                                 Very truly yours,

                                                 [NAME OF BIDDING LENDER]

                                                 By __________________________
                                                 Name:
Dated:____________________                       Title:
                                                 Telephone No.:
                                                 Fax:

-----------------------
(1)   In the case of CAF Eurodollar Rate Advances, insert CAF Margin; in the
      case of Fixed Rate Advances, insert fixed rate bid.

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                             EXHIBIT G - FORM OF
                                                    COMPETITIVE BID CONFIRMATION

Citibank, N.A.
As Administrative Agent for the
Lenders parties to the Credit Agreement (as defined below)
390 Greenwich Street
New York, NY 10013

Ladies and Gentlemen:

            Reference is made to the Credit Agreement, dated as of June 30, 2005
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the undersigned, the Lenders listed on the signature pages
thereto, Citigroup Global Markets Inc., Banc of America Securities LLC and
Barclays Capital, the investment banking division of Barclays Bank PLC, as Lead
Arrangers, Barclays Bank PLC and Bank of America, N.A., as Co-Syndication
Agents, Citibank, N.A., Barclays Bank PLC and Bank of America, N.A., as Issuing
Banks and Citibank, N.A., as Administrative Agent for said Lenders. Terms
defined in the Credit Agreement are used herein as therein defined.

            In accordance with Section 2.05(d) of the Credit Agreement, the
undersigned accepts and confirms the offers by the Lender[s] to make CAF
Advances to the undersigned on ___________, 200_ under said Section 2.05(d) in
the [respective] amount[s] set forth on the attached list of CAF Advances
offered.

            By delivery of this Competitive Bid Confirmation and the acceptance
of any or all of the CAF Advances offered by the Lenders in response to this
Competitive Bid Confirmation, the undersigned shall be deemed to have
represented and warranted that the relevant conditions to making CAF Advances in
Section 3.03 of the Credit Agreement have been satisfied with respect to such
CAF Advances.

                                            Very truly yours,

                                            CENTERPOINT ENERGY RESOURCES CORP.,
                                              as Borrower

                                            By _________________________
                                               Title:

Dated: __________________

[Borrower to attach CAF Advances offer list prepared by the Administrative Agent
with accepted amount entered by the Borrower to the right of each CAF Advance
offer]

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                              EXHIBIT H- FORM OF
                                             NOTICE OF LETTER OF CREDIT ISSUANCE

                       NOTICE OF LETTER OF CREDIT ISSUANCE

      This Notice of Letter of Credit Issuance, dated as of ____________ __,
20__, sets forth the request of the undersigned to ___________________ (the
"Issuing Bank") to issue for the account party identified below its irrevocable
Letter of Credit pursuant to the Credit Agreement dated as of June 30, 2005
among CenterPoint Energy Resources Corp. (the "Borrower"), the initial lenders
named therein as Initial Lenders, Citigroup Global Markets Inc., Barclays
Capital, the investment banking division of Barclays Bank PLC, and Banc of
America Securities LLC, as Lead Arrangers, and Barclays Bank PLC and Bank of
America, N.A. as Co-Syndication Agents, Citibank, N.A., Barclays Bank PLC and
Bank of America, N.A., as Issuing Banks, and Citibank, N.A., as the
Administrative Agent (the "Credit Agreement"), the provisions of which Credit
Agreement are incorporated herein by reference. Capitalized terms used but not
otherwise defined in this Notice of Letter of Credit Issuance have the same
meanings as in the Credit Agreement.

      The Borrower hereby requests that the Issuing Bank issue a Letter of
Credit (format attached) in the amount set forth below for the benefit of the
beneficiary identified below.

            1.    Beneficiary: __________________, Address; Attention:
                  _____________________; Fax (___)___-____; Phone (___)
                  ___-____.

            2.    Account party: CenterPoint Energy Resources Corp.

            3.    Amount: U.S.$___________.

            4.    Requested date of issuance: ___________ __, 20__

            5.    Stated termination date: _______ __, 20__
                  [indicate whether Letter of Credit is to have evergreen
                  provisions]

            6.    Purpose of letter of credit: ______________________

            7.    Requirement for drawing: Original letter of credit, sight
                  draft marked "Drawn under ________________________ Letter of
                  Credit No. _________ dated ________". [additional requirements
                  to be added]

            8.    Letter of credit is not transferable.

            9.    Aggregate amount of Letters of Credit previously issued and
                  outstanding under the Credit Agreement is $____________.
                  (Aggregate L/C Obligations, including amount of requested
                  Letter of Credit, may not exceed $150,000,000.)

      By each of the delivery of this Notice of Letter of Credit Issuance and
the acceptance of the issuance of the Letter of Credit referred to above, the
Borrower shall be deemed to have represented and warranted that the relevant
conditions to such issuance specified in Article III of the Credit Agreement
have been satisfied with respect to the issuance requested hereby.

      IN WITNESS WHEREOF, the undersigned has caused this Notice of Letter of
Credit Issuance to be duly executed and delivered to Issuing Bank by its officer
thereunto duly authorized as of the date first set forth above.

                                       CENTERPOINT ENERGY RESOURCES CORP.

                                       Date:

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                       By: ______________________

                                           Name:
                                           Title:

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                                              EXHIBIT I- FORM OF
                                                            ASSUMPTION AGREEMENT

                              ASSUMPTION AGREEMENT

      Reference is made to the Credit Agreement dated as of June 30, 2005 (as
amended or modified from time to time, the "Credit Agreement") among CenterPoint
Energy Resources Corp., a Delaware corporation (the "Borrower"), the Lenders (as
defined in the Credit Agreement), Citigroup Global Markets Inc., Banc of America
Securities LLC and Barclays Capital, the investment banking division of Barclays
Bank PLC, as Lead Arrangers, Barclays Bank PLC and Bank of America, N.A., as
Co-Syndication Agents, Citibank, N.A., Barclays Bank PLC and Bank of America,
N.A., as Issuing Banks and Citibank, N.A., as Administrative Agent for the
Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement are
used herein with the same meaning. Pursuant to Section 2.19 of the Credit
Agreement [_______] ("Assuming Lender") desires to participate in the Commitment
Increase on the terms and conditions set forth below.

      Assuming Lender agrees as follows:

            1. The Assuming Lender hereby assumes an interest in and to all
      rights and obligations under the Credit Agreement as of the date hereof
      (other than in respect of CAF Advances and CAF Notes) equal to the amount
      specified on Schedule 1 hereto. After giving effect to the assumption, the
      Assuming Lender's Revolving Commitment, Letter of Credit Commitment and
      Commitment Percentage and the amount of the Revolving Advances owing to
      the Assuming Lender will be as set forth on Schedule 1 hereto.

            2. The Assuming Lender (a) confirms that it has received a copy of
      the Credit Agreement, together with copies of the financial statements
      referred to in Section 4.01 thereof and such other documents and
      information as it has deemed appropriate to make its own credit analysis
      and decision to enter into this Assumption Agreement; (b) agrees that it
      will, independently and without reliance upon the Administrative Agent, or
      any other Lender and based on such documents and information as it shall
      deem appropriate at the time, continue to make its own credit decisions in
      taking or not taking action under the Credit Agreement; (c) confirms that
      it is an Eligible Assignee; (d) appoints and authorizes the Administrative
      Agent to take such action as the Administrative Agent on its behalf and to
      exercise such powers and discretion under the Credit Agreement as are
      delegated to the Administrative Agent by the terms thereof, together with
      such powers and discretion as are reasonably incidental thereto; (e)
      agrees that it will perform in accordance with their terms all of the
      obligations that by the terms of the Credit Agreement are required to be
      performed by it as a Lender; and (f) attaches any U.S. Internal Revenue
      Service forms required under Section 2.16 of the Credit Agreement.

            3. Following the execution of this Assumption Agreement it will be
      delivered to the Administrative Agent for acceptance and recording by the
      Administrative Agent. The effective date for this Assumption Agreement
      (the "Effective Date") shall be the Increase Date listed on Schedule 1
      hereto.

            4. Upon such acceptance and recording by the Administrative Agent,
      as of the Effective Date, the Assuming Lender shall be a party to the
      Credit Agreement and, to the extent provided in this Assumption Agreement,
      have the rights and obligations of a Lender thereunder.

            5. This Assumption Agreement shall be governed by, and construed in
      accordance with, the laws of the State of New York.

            6. This Assumption Agreement may be executed in any number of
      counterparts and by different parties hereto in separate counterparts,
      each of which when so executed shall be deemed to be an original and all
      of which taken together shall constitute one and the same agreement.
      Delivery of an executed counterpart of Schedule 1 to this Assumption
      Agreement by telecopier shall be effective as delivery of a manually
      executed counterpart of this Assumption Agreement.

            IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be executed by their officers thereunto duly authorized as of the
date specified thereon.

                     CERC 5-Year Revolving Credit Agreement

<PAGE>

                                  [NAME OF ASSUMING LENDER], as Assuming Lender

                                  By ______________________________
                                     Title:

                                  Dated:  _______________, 20__

                                  Domestic Lending Office:
                                           [Address]

                                  Eurodollar Lending Office:
                                           [Address]

                                  CENTERPOINT ENERGY RESOURCES CORP.

                                  By _______________________________
                                  Title:

Accepted [and Approved](1) this

__________ day of _______________, 20__

CITIBANK, N.A., as Administrative Agent [and as Issuing Bank](1)

By __________________________
Title:

[BARCLAYS BANK PLC, as Issuing Bank](1)

By __________________________
   Title:

[BANK OF AMERICA, N.A., as Issuing Bank](1)

By __________________________
  Title:

-----------------------
(1)   Required if the Assignee is an Eligible Assignee solely by reason of
      clause (iii) of the definition of "Eligible Assignee".

                     CERC 5-Year Revolving Credit Agreement
<PAGE>

                                   SCHEDULE 1
                                       TO
                              ASSUMPTION AGREEMENT

<TABLE>
<S>                                                         <C>
Assuming Lender's Commitment:                               $_______________

Principal amount of Note payable to Assuming Lender:        $_______________

Increase Date:  _______________, 20__
</TABLE>

                     CERC 5-Year Revolving Credit Agreementexv10w2

 

July 1, 2005

MMA Mortgage Investment Corporation

2177 Youngman Avenue

St. Paul, Minnesota 55116

Attention: Gary A. Mentesana

                    Executive Vice President

     Re: Credit Agreement

Gentlemen:

     Glaser Financial Group, Inc. (“Glaser”) has entered into a Credit Agreement, dated as of
September 30, 2003 (as thereafter amended, the “Existing Credit Agreement”) with U.S. Bank National
Association (the “Bank”), and Glaser has executed and delivered certain pledge and security
agreement and other documents (the “Existing Loan Documents”) in connection with the Existing
Credit Agreement.

     MMA Mortgage Investment Corporation, a Florida corporation (the “Company”) has acquired all of
the stock of Glaser, and has merged with Glaser pursuant to the statutes of the state of its
incorporation, with the Company being the surviving entity and the owner of all of the assets
formerly owned by Glaser and undertaking all of the liabilities and obligations that were formerly
liabilities and obligations of Glaser. Such liabilities and obligations include all obligations of
Glaser under the Existing Credit Agreement and the Existing Loan Documents.

     The Company and the Bank wish to amend and restate the Existing Agreement to read as follows
and the Bank has agreed to extend this credit on the following terms and conditions:

A. Commitments

     (1) The maximum commitment (the ‘Revolving Commitment’) of the Bank for revolving credit
loans (the ‘Revolving Loans’) is $255,000,000. The Revolving Loans shall be (i) Warehousing
Advances if described in B(1) below, (ii) Investment Advances if described in B(2) below, (iii)
Bond Purchase Advances if described in B(6) below, (iv) the GFW Loan if described in B(7) below, or
(v) Bridge Advances if described in B(8) below. The Revolving Loans made under the Revolving
Commitment shall be evidenced by a promissory note of the Company in the form of Exhibit
A-1 (the “Revolving Note”). Each Revolving Loan shall mature, and shall become due and payable
in full, on such final maturity date as the Company and the Bank shall agree upon in writing at the
time such Revolving Loan is made, provided that the final maturity date of any Revolving
Loan shall not be later than the date which is 90 days after the date on which such Revolving Loan
is advanced by the Bank, and provided, further that the principal amount of all
Revolving Loans shall mature not later than September 30, 2005. The sum of the Revolving Loans
outstanding plus the Fannie Mae Collateral Loans (as hereinafter defined) outstanding shall not
exceed the Revolving Commitment at any time.

 

 

     The Company may, at any time, upon no less than 30 days’ prior written notice to the Bank,
reduce the Revolving Commitment, with any such reduction in a minimum amount of $1,000,000 or an
integral multiple thereof. Upon reduction in the Revolving Commitment pursuant to this paragraph,
the Company shall pay to the Bank the amount, if any, by which the aggregate unpaid principal
amount of outstanding Revolving Loans plus Fannie Mae Collateral Loans exceeds the Revolving
Commitment as so reduced or as otherwise reduced hereunder (including without limitation by
reductions, if any, under the definition of Revolving Commitment herein). Amounts so paid cannot
be reborrowed.

     (2) The maximum commitment (the “P & I Commitment”) of the Bank for revolving credit loans
under this Section A(2) (the “P & I Loans”) is $500,000 in aggregate principal amount at any time
outstanding. All P & I Loans made under the P & I Commitment shall be evidenced by a promissory
note of the Company in the form of Exhibit A-2 (the “P & I Note”). The outstanding
principal balance of all P & I Loans shall not exceed the P & I Borrowing Base at any time. The P
& I Loans shall be repaid so that the outstanding principal balance shall be $0 for not less than
10 consecutive days commencing on and following the first business day of each month. The Company
shall request each P & I Loan not later than 11:00 a.m., Minneapolis time, on the date it is
requested to be made, which request shall be accompanied by a P & I Borrowing Certificate, as
defined in Section I, which may be submitted by telecopy (with the original to be sent in due
course). All P & I Loans shall mature not later than September 30, 2005.

     (3) The Bank shall, at the request of the Company (subject to delivery of the Fannie Mae
Collateral Loan Note and the Servicing Pledge Agreement, and pledge of servicing rights thereunder,
as provided below) make revolving credit loans under this Section A(3) (the “Fannie Mae Collateral
Loans”; the Revolving Loans, P & I Loans and Fannie Mae Collateral Loans are collectively called
the “Loans”) in amount of up to $10,000,000 in aggregate principal amount at any time outstanding.
All Fannie Mae Collateral Loans shall be evidenced by a promissory note of the Company in the form
of Exhibit A-3 (the “Fannie Mae Collateral Loan Note”; the Revolving Note, P & I Note and
the Fannie Mae Collateral Loan Note are collectively called the “Notes”). All Fannie Mae
Collateral Loans shall mature not later than September 30, 2005.

B. Collateral and Use of Loan Proceeds

     (1) The Revolving Loans that are Warehousing Advances shall be used to finance such mortgage
loans made by the Company as are acceptable to the Bank and are pledged and delivered to the Bank
under the Amended and Restated Mortgage Loan Pledge Agreement, dated as of July 1, 2005 (as
thereafter amended, modified, supplemented, restated or replaced called the “Mortgage Loan Pledge
Agreement”) as security for all Loans and the Note. It is understood that each of these mortgage
loans will be reviewed by the Bank and must meet the Bank’s criteria for the warehousing of
multifamily housing mortgage loans, including satisfactory evidence:

(a) of a take-out commitment from Fannie Mae (“Fannie Mae”) or Freddie Mac (“Freddie Mac”)
acceptable to the Bank; or

2

 

(b) of conformance of the loans to requirements for inclusion in a pool supporting a
Government National Mortgage Association (“GNMA”) mortgage-backed security, endorsement to
insure such loans by the United States Department of Housing and Urban Development (“HUD”),
and an acceptable take-out commitment from an investor acceptable to the Bank for the
proposed GNMA mortgage-backed security.

The maximum amount to be advanced by the Bank with respect to any such mortgage loan shall be an
amount equal to 99% of the lesser of (a) the origination cost thereof (i.e., original
principal amount thereof less any “points” or other discount charged by the Company) and (b) either
(i) the weighted average (calculated in respect of all loans subject to the relevant commitment)
purchase price (not to exceed par) therefor under the applicable Fannie Mae or Freddie Mac take-out
commitment, or (ii) the weighted average (calculated in respect of all loans contemplated to form
the relevant supporting pool) purchase price, calculated as a percentage of par (not to exceed
100%), under the relevant commitment to purchase a GNMA mortgage-backed security, multiplied by the
principal amount of the loan. Any such mortgage loan shall be deemed to have been pledged and
delivered to the Bank:

(i) when the Bank receives the original mortgage note evidencing such mortgage loan, duly
endorsed in blank or assigned, the original copy (or certified copy, if the original is
unavailable) of the recorded mortgage securing such mortgage loan and an assignment thereof
duly executed by the Company, and original copies of all instruments and documents
evidencing or securing such mortgage loan, together with such other items as may be required
to be furnished by the Company in connection with the sale or refinancing of such mortgage
loan, or the relevant mortgage-backed security, under the applicable take-out commitment.
If relevant, this should include the original copy of the applicable HUD insurance
endorsement.

or

(ii) If acceptable to the Bank in a given instance, when the Bank has received a copy of an
escrow agreement in form and substance satisfactory to the Bank, signed by the closing agent
and the legal counsel for the Company with respect to such mortgage loan, evidencing the
closing agent’s or Company’s legal counsel’s agreement to deliver to the Bank the documents
described in such escrow letter after the first funding of such mortgage loan.

The Bank shall have no obligation to make or continue a Warehousing Advance unless it receives and
continues to hold a perfected first priority security interest in the instruments and documents
evidencing and securing the mortgage loan financed by such Warehousing Advance. All Warehousing
Advances made with respect to any mortgage loan shall be repaid in full upon (x) the date 90 days
after the making of any Warehouse Advance, or (y) immediately, if any documents described in any
such escrow letter are not delivered as required thereunder.

     (2) The Revolving Loans that are Investment Advances shall be used solely to purchase
Permitted Investments, which Permitted Investments will be pledged and delivered to the Bank under
the Amended and Restated Investment Pledge Agreement, dated as of July 1, 2005 (as

3

 

thereafter amended, modified, supplemented, restated or replaced called the “Investment Pledge
Agreement”) as security for all Loans and the Notes. The principal amount of any Investment
Advance shall not exceed the purchase price of the Permitted Investments that shall be purchased
with the proceeds of such Investment Advance. To the extent possible, the Company shall only
request and borrow Investment Advances that will be Balance Supported Loans under D. In addition
to other limitations on the amount of the Revolving Loans, outstanding Revolving Loans that are
Investment Advances shall not exceed, at any time, the lesser of (i) the Revolving Commitment, or
(ii) $55,000,000.

     The term “Permitted Investments” shall mean the following, in each case not subject to any
lien, security interest, right of offset, or other encumbrance (except in favor of the Bank): (i)
bank deposits held in the Company’s name at the Bank or repurchase obligations of the Bank having a
term of not more than 90 days with respect to securities issued or fully guaranteed by the United
States Government, (ii) securities with remaining maturities of 90 days or less issued or fully
guaranteed by the United States Government or other securities with remaining maturities of 90 days
or less issued or fully guaranteed by any state, political subdivision or taxing authority
(provided that such other securities are rated at least A by Standard & Poor’s Ratings Group or
Moody’s Investors Service, Inc.), and (iii) commercial paper with remaining maturities of 90 days
or less of a domestic issuer rated as least A-1 by Standard & Poor’s Ratings Group or P-1 by
Moody’s Investors Service, Inc.

     (3) The P & I Loans shall be used to finance advances by the Company (“P & I Advances”) of
principal and interest to or for the benefit of holders of mortgage-backed securities, the mortgage
pools of which are serviced or sub-serviced by the Company. All rights of reimbursement in respect
of P & I Advances will be pledged to the Bank under the Amended and Restated P & I Advance Pledge
Agreement, dated as of July 1, 2005 (as thereafter amended, modified, supplemented, restated or
replaced called the “P & I Advance Pledge Agreement”). All Loans shall be secured by all rights of
the Company in respect of the P & I Advances, including, without limitation, all rights of the
Company to reimbursement for the P & I Advances from any source or in any form, including
reimbursement by Investors or other holders of mortgage-backed securities, payments due from
mortgagors and proceeds of mortgage insurance and guaranty claims or other proceeds of foreclosure
or other realizations or recoveries on defaulted mortgage loans. The maximum amount of the P & I
Loans (the “P & I Borrowing Base”) shall be 90% of the amount of all P & I Advances that are: (a)
made in respect of mortgage loans which are less than 90 days delinquent, and (b) made under
service contracts under which the Company is obligated to advance such funds.

     (4) The Fannie Mae Collateral Loans shall be used solely to purchase investments approved by
Fannie Mae, which shall be held as assets of the Company to satisfy requirements of Fannie Mae
under the Fannie Mae Delegated Underwriter and Servicer Program, or which may be deposited by the
Company with Fannie Mae or its custodian in connection with the performance of the Company’s
obligations under the Fannie Mae Delegated Underwriter and Servicer Program.

     (5) The Loans may hereafter be secured by a first priority security interest in servicing
rights pledged to the Bank under the Amended and Restated Servicing Pledge Agreement, in

4

 

form and substance satisfactory to the Bank (the “Servicing Pledge Agreement”; the Mortgage Loan
Pledge Agreement, Investment Pledge Agreement, P & I Advance Pledge Agreement and Servicing Pledge
Agreement are collectively called the “Pledge Agreements”). The Company agrees that it shall at
all times have pledged servicing rights under the Servicing Pledge Agreement (“Pledged Servicing
Rights”) other than the Fannie Mae servicing portfolio, which servicing rights are acceptable to
the Bank for such purpose so that the principal amount of the Fannie Mae Collateral Loans shall not
exceed, at any time, 67% of the fair market value of the Pledged Servicing Rights (for such
purpose, “fair market value” meaning the value of such Pledged Servicing Rights as determined by
the most recent appraisal by an independent appraiser satisfactory to the Bank, adjusted as deemed
requisite by the Bank for changes in market value of servicing rights, generally, since the time of
such appraisal).

     (6) The Revolving Loans that are Bond Purchase Advances have been used solely to purchase
bonds of the following issues (the ‘Bonds’):

(a) Multifamily Housing Revenue Refunding Bonds, Series 1996A (Park Boulevard Towers
Project) issued by the City of St. Louis Park, Minnesota; and

(b) Refinancing of Tax-Exempt Bonds issued by the City of Eden Prairie, Minnesota (Sterling
Pond).

The Bonds have been pledged and delivered to the Bank under the Investment Pledge Agreement, as
security for all Loans and the Notes. The principal amount of any Bond Purchase Advance shall not
exceed 98% of the cost of acquiring the Bonds, and the principal amount of all Bond Purchase
Advances to funds such acquisitions shall not exceed (i) $15,600,000 for the Bonds identified in
(a) above, (ii) $5,400,000 for the Bonds identified in (b) above, and (iii) $21,000,000 for all
Bonds. Notwithstanding the parenthetical phrase in the definition of ‘Pledged Investments’, the
Bonds need not be Permitted Investments.

     The Bank shall have no obligation to make or continue a Bond Purchase Advance unless it
receives and continues to hold a perfected first priority security interest in the Bonds purchased
by such Bond Purchase Advance, and the Company shall comply with the requirements of the Investment
Pledge Agreement respecting perfection of the Bank’s security interest in the Bonds. All Bond
Purchase Advances shall be repaid in full upon (x) the date 90 days after the making of such Bond
Purchase Advance, or (y) immediately, if the Bank shall not be, and remain, perfected by a first
priority security interest in the relevant Bonds.

     The Bank shall release the Bonds, or any portion of the Bonds, from the Pledge under the
Investment Pledge Agreement and from the Notice to Securities Intermediary and Control Agreement
entered into by and between the Company, the Bank and Piper Jaffray Companies in connection
herewith (the “Control Agreement”) upon payment by the Company of the amount of the Bond Purchase
Advance made to fund purchase of such Bonds, provided, that if an Event of Default has
occurred and continued hereunder, the Bank will so release such Bonds upon payment by the Company
of the greater of (i) the amount of the Bond Purchase Advance made to fund purchase of such Bonds,
or (ii) the proceeds of sale or disposition by the Company of such Bonds. The Company is expressly
authorized by the Bank to waive provisions of the Bonds or

5

 

documents pertaining to the Bond which restrict prepayment of the Bonds and to waive any prepayment
penalty applicable to payment of the Bonds. The Bank will work with the Company to provide all
notices and consents to Piper Jaffray Companies necessary to allow the Company to refund or sell
the Bonds and repay the Bond Purchase Advance.

     (7) GFW Sublimit. The Bank has made a Warehousing Advance on or before December 31,
2004 (the “GFW Loan”), to finance a mortgage loan by the Company to GFW Properties, LLC, a
Minnesota limited liability company (“GFW”). The GFW Loan shall be a Revolving Loan and a
Warehousing Advance, and shall be subject to all of the provisions applicable thereto (including
without limitation all provisions of B(1)), except, that:

(a) it is not subject to the requirements of Section B(1)(a) and (b);

(b) the maximum amount to be advanced by the Bank with respect to the GFW Loan was in
an amount, not to exceed $4,500,000, equal to 98% of the lesser of (i) the origination cost
thereof, or (ii) the Company’s good faith estimate of the purchase price that would be paid
for the GFW Loan under a Freddie Mac take-out commitment (if such take-out commitment
applied);

(c) the Company has certified in writing to the Bank (i) that the GFW Loan would meet
underwriting standards of Freddie Mac, as understood by the Company, with the exception that
Freddie Mac would decline to purchase a loan from an affiliate of the originator, (ii) the
amount of the Company’s estimate of the purchase price that would apply, as described in (b)
above;

(d) the Company has provided to the Bank a letter or other writing by Freddie Mac or by
another lender acceptable to the Bank, indicating interest or willingness of Freddie Mac or
such other lender to purchase or refinance the GFW Loan (in the case of Freddie Mac, subject
to the exception that it would not purchase the GFW Loan from the Company because GFW is an
affiliate of the Company); and

(e) The provisions in the last sentence of Section B(1) respecting repayment of the
Warehouse Advance 90 days after the making of such Advance shall not apply to the GFW Loan,
but the Company shall repay the GFW Loan not later than September 30, 2005.

     (8) Bridge Advance Sublimit. The Company has requested, and the Bank has agreed, to
make Warehousing Advances (the “Bridge Advances”), to finance mortgage loans by the Company that
meet all requirements for mortgage loans financed under this Agreement (such mortgage loans are
called “Bridge Mortgage Loans”) and which Bridge Advances shall comply with all requirements for
funding of mortgage loans by Warehousing Advances (including pledge of the Bridge Mortgage Loans
under the Mortgage Loan Pledge Agreement), except:

(a) The Bridge Advances shall not be subject to the requirements of Section B(1)(a) and
(b) and the Company shall not be required to deliver items required for sale or refinancing
under a take-out commitment (as specified in Section B(1)(i)).

6

 

(b) Each Bridge Mortgage Loan shall meet the underwriting guidelines of Fannie Mae,
Freddie Mac or another investor acceptable to the Bank for permanent loans (except for
guidelines pertaining to the amount of permanent loans in relation to rental income of a
property on a stabilized basis).

(c) The maximum amount of the Bridge Advances outstanding at any time shall not exceed
$10,000,000, and the Bridge Advances shall be deemed to be Revolving Loans and Warehousing
Loans under this Agreement (and such $10,000,000 amount does not increase the amount of the
Revolving Commitment).

(d) The maximum amount to be advanced by the Bank with respect to each Bridge Mortgage
Loan shall not exceed an amount equal to 95% of outstanding principal balance of the Bridge
Mortgage Loan.

(e) The provisions in the last sentence of Section B(1) respecting repayment of the
Warehouse Advance 90 days after the making of such Advance shall not apply to the Bridge
Advances, but the Company shall repay:

(i) on the date 180 days after the making of any Bridge Advance, the amount of
the excess of such Bridge Advance over 90% of the outstanding principal balance of
the Bridge Mortgage Loan financed by such Bridge Advance; and

(ii) the full amount of any Warehousing Advance shall be paid on or before the
date 730 days after the making of such Warehousing Advance (subject to the maturity
date of all Revolving Loans as provided in A(1), unless such maturity date is
extended from time to time).

(f) The Company shall provide to the Bank, quarterly within 30 days after the end of each
fiscal quarter, an updated status report on all Bridge Mortgage Loans.

C. Facility Fees

     The Company shall pay to the Bank a fee at a rate of 0.125% per annum on the portion of the
Revolving Commitment and 0.150% per annum on the portion of the P & I Commitment. In lieu of
paying all or any portion of such fees, the Company may maintain Average Daily Available Deposits
(as defined below) with the Bank during each month in an amount that would produce earnings credits
to pay such fees (or any portion thereof), at the earnings credit rate per annum established by the
Bank for non-interest bearing demand deposits from time to time. All of such accrued and unpaid
fees shall be calculated on the basis of actual days elapsed in a year of 360 days and payable on
the first day of each calendar month.

D. Pricing

Interest on Loans shall accrue at whichever of the following fluctuating rates per annum is
designated by the Company at the time each such Loan is advanced:

7

 

(a) For Revolving Loans and Fannie Mae Collateral Loans:

(i) for Balance Supported Loans (as hereinafter defined):

(1) 1.375% for Revolving Loans that are Bond Purchase Advances;

(2) 0.750% for Revolving Loans that are Investment Advances;

(3) 1.750% for Revolving Loans that are Bridge Advances; and

(4) 1.250% for all other Revolving Loans and Fannie Mae Collateral Loans;

(ii) for all Revolving Loans and Fannie Mae Collateral Loans that are not Balance
Supported Loans either (x) the Prime Rate (as hereinafter defined) per annum, or (y)
the Floating LIBOR Rate (as hereinafter defined) plus

(1) 1.375% for Revolving Loans that are Bond Purchase Advances;

(2) 0.750% for Revolving Loans that are Investment Advances;

(3) 1.750% for Revolving Loans that are Bridge Advances; and

(4) 1.250% for all other Revolving Loans and Fannie Mae Collateral Loans;

(b) For P & I Loans: (i) for Balance Supported Loans (as hereinafter defined), 1.50% per
annum, (ii) for all other P & I Loans that are not Balance Supported Loans, either (x) the
Prime Rate (as hereinafter defined) plus 0.50% per annum, or (y) the Floating LIBOR Rate (as
hereinafter defined) plus 1.50% per annum, as selected by the Company upon its request for
such Loan.

If any portion of the principal of or interest on any Loan is not paid when due, such past due
principal and such past due interest, to the extent permitted by applicable law, shall bear
interest until such past due amount is paid in full at a rate per annum equal to the Prime Rate
plus 3.00% per annum.

     The term “Balance Supported Loans” means a portion of all Loans outstanding during
each calendar month equal to the Average Daily Available Deposits maintained by the Company with
the Bank during such month in excess of those required to compensate the Bank for the facility fee
provided in Part C above (with balances being attributed first to the facility fee, and
second, to the extent exceeding those required for the facility fee to the Balance
Supported Loans). For purposes of the foregoing “Average Daily Available Deposits” shall
mean, with respect to a calendar month, the average daily amount of Available Deposits on deposit
with the Bank during such calendar month, and “Available Deposits” shall mean, at the time
of determination, interest-free collected deposit balances maintained by the Company with the Bank,
in excess of those which the Bank determines to be necessary to support other banking services
provided to the Company and to compensate the Bank for costs of maintaining reserves and insurance
of the Federal Deposit Insurance Corporation (or any successor), which services and costs are not
covered by cash payments by the Company. The Bank shall determine all of the foregoing, and notify
the Company of the amount of the Loans deemed to be Balance Supported Loans on a monthly basis.

8

 

     The term “Floating LIBOR Rate” means an annual rate equal to the one-month LIBOR rate
quoted by Bank from Telerate Page 3750 or any successor thereto, which shall be that one-month
LIBOR rate in effect and reset each New York Banking Day, adjusted for any reserve requirement and
any subsequent costs arising from a change in government regulation. The term “New York Banking
Day” means any day (other than a Saturday or Sunday) on which commercial banks are open for
business in New York, New York. Bank’s internal records of applicable interest rates shall be
determinative in the absence of manifest error.

     The term “Prime Rate” means the rate of interest from time to time announced by the
Bank as its “prime rate.” For purposes of determining any interest rate which is based on the
Prime Rate, such interest rate shall be adjusted each time that the prime rate changes.

     Interest on all Loans shall be calculated on the basis of the actual number of days elapsed in
a year of 360 days.

     Reduction of Balance Supported Rates. In the event that the Company maintains Average
Daily Available Deposits applied to any month that exceed the amount that would cause all
outstanding Loans to be deemed Balance Supported Loans (such excess is called “Excess Available
Deposits”), the Bank shall reduce the rate of interest to not less than 0.125% per annum (called a
“Reduced Fixed Rate”), which Reduced Fixed Rate shall apply to some or all of the Balance Supported
Loans. The Excess Available Deposits required for the Reduced Fixed Rate shall be calculated in
accordance with the following formula:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	AEAD

	 	=
	 	ILF
	 	x
	 	 	360	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	ECR x RF
	 	 	 	 	n	 	 	 

In such formula:

“AEAD” means the daily average amount of Excess Available Deposits required to support such
reduced rate of interest.

“ILF” means the interest loss factor, calculated to equal the remainder of (i) the amount of
interest that would have accrued during such month on the relevant Balance Supported Loans
at the rates applicable under Section D(a) and (b), less (ii) the amount of interest
that accrued during such month on the relevant Balance Supported Loans at the Reduced Fixed
Rate.

“ECR” means the earnings credit rate per annum established by the Bank for non-interest
bearing demand deposits from time to time.

 “RF” means a reserve factor equal to the number one (1) minus the percentage (expressed as a
decimal, rather than a percentage) stipulated by Regulation D of the Board of Governors of
the Federal Reserve as the highest marginal percentage of net demand deposits required to be
maintained as reserves by the Bank.

9

 

“n” means the number of days in the relevant month.

     The Bank shall determine at its sole discretion (a) the Balance Supported Loans to which the
Reduced Fixed Rate shall apply, (b) the amount of Average Excess Available Deposits applied to any
month, which it shall determine based on internally-prepared account analysis and on timing and
carry-over conventions that it shall establish for such purpose from time to time. The Bank shall
notify the Company of application of a Reduced Fixed Rate on Balance Supported Loans based on such
determinations.

E. Payment of Notes

     Interest accrued under the Notes and fees shall be payable on the first day of each month and
at maturity. The Bank may charge the Company’s Account No. 1 602 3360 5452 maintained with the
Bank for payments of interest due under the Notes and for fees.

     Principal of the Revolving Note shall be payable upon termination of the Revolving Commitment
pursuant to part A or part H of this Agreement, on any maturity date established for any particular
Revolving Loan, and on the final maturity date for all Revolving Loans set forth in A(1). The
Company shall cause the purchaser to transfer the entire purchase price for each mortgage loan
financed as described in B(1) that is purchased by it by wire transfer to the Bank in immediately
available funds at U.S. Bank National Association, 800 Nicollet Mall, Minneapolis, Minnesota 55402,
ABA No. 0910-0002-2, for credit to MMA Mortgage Investment Corporation, Collateral Account 1 902
7206 2927 (the “Collateral Account”). Such purchase price shall be applied to the Revolving Note.

     Principal of the P & I Note shall be payable upon termination of the P & I Commitment pursuant
to part A or part H of this Agreement, on or before the first business day of each month, in order
to comply with the clean-up requirement of Section A(2), and on the final maturity date for all P &
I Loans set forth in A(2). The Company shall cause all proceeds of reimbursement of all P & I
Advances to be transferred to the Bank by wire transfer at U.S. Bank National Association, 800
Nicollet Mall, Minneapolis, Minnesota 55402, ABA No. 0910-0002-2, for credit to the Collateral
Account. Such proceeds shall be applied to the P & I Note.

F. Representations and Warranties

     To induce the Bank to extend the Revolving Commitment and to make Loans thereunder, the
Company represents, covenants and warrants to the Bank that:

     (1) The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of Florida and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and proposed to be conducted, to
execute, deliver, pay and perform this Agreement, the Pledge Agreements and the Notes
(collectively, the “Loan Documents”) and to carry out the transactions contemplated hereby and
thereby.

10

 

     (2) The Company is in good standing wherever necessary to carry on its business and operations
and in all jurisdictions in which the failure to be in good standing would permanently preclude the
Company from enforcing its rights with respect to any material asset or expose the Company to any
material liability.

     (3) The execution, delivery, payment and performance by the Company of the Loan Documents have
been duly authorized by all necessary corporate action by the Company.

     (4) The execution, delivery, payment and performance by the Company of the Loan Documents do
not (i) violate any provision of law applicable to the Company, the Articles of Incorporation or
Bylaws of the Company or any order, judgment or decree of any court or other agency of government
binding on the Company, (ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) in any material respect a default under any material contractual obligation
of the Company, (iii) result in or require the creation or imposition of any lien, security
interest, charge or encumbrance of any nature whatsoever upon any of its properties or assets
except the security interest granted to the Bank under the Pledge Agreements, or (iv) require any
approval of shareholders or any approval or consent of any person or entity under any contractual
obligation of the Company other than approvals or consents which have been obtained.

     (5) The execution, delivery, payment and performance by the Company of the Loan Documents do
not require any registration with, consent or approval of, or notice to, or other action to, with
or by, any Federal, state or other governmental authority or regulatory body or other Person except
those that have been obtained.

     (6) The Loan Documents are the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors’ rights generally.

     (7) The Company and Glaser have heretofore delivered to the Bank the audited financial
statements of the Company and Glaser as at December 31, 2004, and their respective unaudited
financial statements as at March 31, 2005. Said financial statements were prepared in accordance
with GAAP and fairly present the financial condition of the Company and Glaser as at the dates and
for the periods therein indicated. As of the date or dates of the execution and delivery of the
Loan Documents by the Company, the Company and Glaser have no contingent obligations, contingent
liabilities, liabilities for taxes or other outstanding financial obligations which are material in
the aggregate and which are not reflected in said financial statements or in the notes thereto.

     (8) Since December 31, 2004, there has been no materially adverse change in the business,
operations, properties, assets or condition (financial or otherwise) of Glaser or of the Company.

     (9) The Company has good, sufficient and legal title to all the properties and assets
reflected in its financial statements as at December 31, 2004 (including all Collateral pledged

11

 

pursuant to the Pledge Agreements, hereinafter referred to as the “Collateral”) and all assets held
by the Company on the date hereof but acquired subsequent to the date of such financial statements,
except for assets not constituting Collateral which are (a) disposed of in the ordinary course of
business, or (b) as would not have a Material Adverse Effect (as hereinafter defined). All such
properties and assets are free and clear of liens, security interests and encumbrances except as
permitted hereunder. The pledge and assignment of the Collateral pursuant to the Pledge Agreements
creates a valid security interest in the Collateral and the lien on the Collateral created by the
Pledge Agreements will be a first priority lien thereon, superior to any other liens, security
interests or encumbrances.

     (10) There is no action, suit, proceeding or arbitration (whether or not purportedly on behalf
of the Company) at law or in equity or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign,
pending or, to the knowledge of the Company, threatened against or affecting the Company or its
properties that would have a material adverse effect upon the business, operations, properties,
assets or condition (financial or otherwise) of the Company (a “Material Adverse Effect”), and
there is no basis known to the Company for any action, suit or proceeding which would have a
Material Adverse Effect. The Company is not (i) in violation of any applicable law which violation
has or will have a Material Adverse Effect or (ii) subject to or in default with respect to any
final judgment, writ, injunction, decree, rule or regulation of any court or Federal, state,
municipal or other governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which has or will have a Material Adverse Effect. There is no action, suit,
proceeding or investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company which questions the validity or the enforceability of the Loan Documents or
the transactions contemplated thereby.

     (11) All tax returns and reports of the Company required to be filed by it have been timely
filed, and all taxes, assessments, fees and other governmental charges upon the Company and upon
its properties, assets, income and franchises which are due and payable have been paid when due and
payable, except those which are being contested by the Company in good faith and by appropriate
proceedings and which, if determined adversely to the Company, would not have a Material Adverse
Effect. The Company knows of no proposed tax assessment against it that would have a Material
Adverse Effect.

     (12) The Company is not a party to or subject to any contractual obligation or charter or
other internal restriction that has or will have a Material Adverse Effect.

     (13) The Company is not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any contractual obligation of the Company, and no
condition exists which, with the giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or indirect, of such default or defaults, if
any, would not have a Material Adverse Effect. To the best knowledge of the Company, the other
parties to any contractual obligation of the Company are not in default thereunder, except where
the consequences, direct or indirect, of such default or defaults, if any, would not have a
Material Adverse Effect.

12

 

     (14) The Company is not subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
to any Federal or state statute or regulation limiting its ability to incur Indebtedness for money
borrowed.

     (15) The Company is not engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System). No part of the
proceeds of any Loan will be used to purchase any margin stock.

     (16) No material Indebtedness of the Company is in default. For purposes of this Agreement,
the term “Indebtedness” means all obligations of the Company which, in accordance with GAAP
consistently applied, should be classified as liabilities on its balance sheet, and shall include
all guaranties by the Company of Indebtedness of third parties, provided, that Indebtedness
shall not include trade accounts payable arising in the ordinary course of business.

     (17) Each employee benefit plan (“Plan”), as such term is defined in Section 3 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), maintained for the benefit of
employees, officers or directors of the Company complies with all material applicable requirements
of ERISA and of the Internal Revenue Code of 1986, as amended (the “Code”), and with all material
applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No reportable event (as defined in Section 4043(b), subdivision (5), (6) or
(9) of ERISA) (a “Reportable Event”) has occurred with respect to any Plan. The Company has not
engaged in any prohibited transaction (as defined in Section 406 of ERISA or Section 4975 of the
Code) which (i) has not been corrected within the correction period applicable to it under Section
502(i) of ERISA or Section 4975(b) of the Code or (ii) for which an exemption is not applicable or
has not been obtained under Section 408 of ERISA or Section 4975 of the Code. The Company has
satisfied all of the funding standards applicable to such Plans, and there exists no event or
condition which would permit the institution of proceedings to terminate any Plan under Section
4042 of ERISA. The current value of such Plans’ benefits guaranteed under Title IV of ERISA does
not exceed the current value of the Plans’ assets allocable to such benefits.

     (18) The Company is eligible and is in good standing as a Fannie Mae-approved
seller/servicer, Freddie Mac-approved issuer/servicer, GNMA-approved issuer/servicer, and Federal
Housing Authority (“FHA”) approved mortgagee. The Company has maintained all other rights,
privileges, licenses, approvals, franchises, properties and assets necessary in the normal conduct
of its business, including, without limitation, approvals with respect to GNMA, Fannie Mae, Freddie
Mac, HUD and FHA.

G. Covenants

     From the date of this Agreement and for so long as the Revolving Commitment is in effect or
any sums are owing from the Company to the Bank under the Loan Documents, the Company agrees that
it will:

13

 

     (1) Furnish to the Bank within 120 days after the end of each of the Company’s fiscal years,
the Company’s audited financial statements, prepared in accordance with generally accepted
accounting principles (“GAAP”) and certified by an accounting firm selected by the Company and
reasonably satisfactory to the Bank.

     (2) Furnish to the Bank within 45 days after the end of each of the Company’s fiscal quarters
a copy of the Company’s unaudited financial statements, prepared in accordance with GAAP and
certified by an authorized financial officer of the Company.

     (3) (a) Furnish to the Bank with each financial statement required under clauses (1) and (2)
of this Part G a compliance certificate in the form attached hereto as Exhibit B; and (b)
promptly notify the Bank in writing of the occurrence of any Event of Default when the same becomes
known to the President or any other executive officer of the Company.

     (4) Furnish to the Bank within 30 days after the end of each fiscal quarter of the Company
such information concerning the Servicing Portfolio (as hereinafter defined) and the mortgage loans
included therein as may from time to time be reasonably requested by the Bank, including, without
limitation, the following: unpaid principal balance of the mortgage loans included in the Servicing
Portfolio by state, loan type and investor, coupon rate and servicing fee, delinquency and
foreclosure status and designating which servicing rights in the Servicing Portfolio, if any, are
‘Pledged Servicing Rights’ as provided in Section B(5)(a) hereof.

     (5) Furnish to the Bank promptly upon receipt by the Company thereof copies of each audit or
report prepared by GNMA, Freddie Mac or Fannie Mae on the Company.

     (6) Maintain (a) its corporate existence in good standing under the laws of the jurisdiction
of its incorporation and (b) its right to carry on its business and operations in each jurisdiction
in which the character of the properties owned or leased by it or the business conducted by it
makes such qualification necessary and the failure to be in good standing would permanently
preclude the Company from enforcing its rights with respect to any material assets or expose the
Company to any material liability.

     (7) Comply with all applicable laws, rules, regulations and orders (including without
limitation Regulation X of the Board of Governors of the Federal Reserve System), the failure to be
in compliance with which would have a materially adverse effect on the financial condition of the
Company, such compliance to include, without limitation, paying before the same become delinquent
all taxes, assessments and governmental charges imposed upon it or upon its property except to the
extent contested in good faith by appropriate proceedings and for which any reserves required by
GAAP have been established.

     (8) Maintain each of its Plans in compliance with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code.

     (9) Keep and maintain all of its property and assets in good order and repair, subject to
ordinary wear and tear, and keep its assets and business fully covered by insurance with

14

 

reputable and financially sound insurance companies against such hazards (including, without
limitation, product liability and interruption of business operations) and in such amounts as is
required by the terms of any law or as is customarily maintained by businesses similarly situated.

     (10) Upon reasonable prior notice during regular business hours, permit any person designated
by the Bank in writing, at the Bank’s expense, to visit and inspect any of the properties,
corporate books and financial records of the Company and discuss its affairs and finances with the
principal officers of the Company and its independent public accountants.

     (11) Not permit its Servicing Portfolio at any time to be less than $2,700,000,000. The term
“Servicing Portfolio” means, as of a date of determination, the aggregate unpaid principal balance
of mortgage loans owned by persons or entities other than the Company, excluding mortgage loans
serviced by the Company under a subservicing agreement and excluding construction mortgage loans,
unless such construction mortgage loans will (under applicable documents) be converted to permanent
loans that will be serviced by the Company.

     (12) Not permit its Adjusted Tangible Net Worth (as hereinafter defined) to be less than
$27,000,000 at any time. The term “Adjusted Tangible Net Worth” means the total of (a) net worth,
determined in accordance with GAAP consistently applied, plus (b) an amount equal to
seventy five percent (75%) of the Fair Market Value of the Company’s Servicing Portfolio,
minus (c) any advances or loans to or investments in shareholders, officers or entities
that are controlled by shareholders or officers, minus (d) organizational costs net of
accumulated amortization, minus (e) servicing contracts net of accumulated amortization,
and minus (f) other items treated as intangible assets under GAAP. The term “Fair Market
Value” shall mean the current fair market value of the Servicing Portfolio as determined by the
Bank based on appraisals of independent appraisers satisfactory to the Bank (if such appraisals
present a range of values, the Bank shall apply the midpoint of such values to determine the Fair
Market Value).

     (13) [Reserved].

     (14) Not permit the ratio of

(a) the remainder of: (i) Earnings Before Interest, Depreciation and Amortization (as
hereinafter defined) for the period of four consecutive fiscal quarters of the Company,
less (ii) any non-cash revenues included in (a)(i) above pursuant to application of FAS 125
or any similar requirement of GAAP;

to

(b) the sum of (i) mandatory principal payments of Indebtedness of the Company; plus (ii)
the interest expense of the Company (determined in accordance with GAAP), each of the same
four-quarter period

to be less than 1.15 to 1.00. The term “Earnings Before Interest, Depreciation and
Amortization” means the net income of the Company for each such four-quarter period before
deductions for interest expense, depreciation and amortization, all as determined

15

 

in accordance with GAAP consistently applied, excluding therefrom (a) nonoperating gains
(including without limitation, extraordinary or unusual gains, gains arising from the sale
of assets other than inventory and other nonrecurring gains) during such period and (b)
similar nonoperating losses (including, without limitation, losses arising from the sale of
assets other than inventory and other nonrecurring losses) during such period.

     (15) Observe and comply, and require each obligor under each mortgage loan financed with the
proceeds of a Loan, to the extent provided in the documents evidencing and securing the mortgage
loan, to observe and comply, with all laws, rules, regulations and orders of any government or
government agency relating to health, safety, pollution, hazardous materials or other environmental
matters to the extent non-compliance could result in a material liability or otherwise have a
material adverse effect on the Company or such obligor or the real estate and other property
securing any such mortgage loan; give the Bank prompt written notice of the receipt by the Company
of any notice of violation received from any government or government agency as to any
environmental matter or the commencement of any judicial or administrative proceeding relating to
health, safety or environmental matters (a) in which an adverse determination or result could
result in the revocation of or have a material adverse effect on any operating permits, air
emission permits, water discharge permits, hazardous waste permits or other permits held by the
Company or any such obligor which are material to the operations of the Company or any such obligor
or the real estate or other property securing any such mortgage loan), or (b) which will or
threatens to impose a material liability on the Company or any such obligor or which will require a
material expenditure by the Company or any such obligor to cure any alleged problem or violation;
and require each such obligor to the extent provided in the documents evidencing and securing the
mortgage loan, to give prompt written notice to the Company of the receipt by such obligor of any
such notice of violation and of the commencement of any such proceeding with respect to such
obligor or its property.

     (16) Maintain its eligibility and be in good standing as an Fannie Mae-approved
seller/servicer, Freddie Mac-approved issuer/servicer, GNMA-approved issuer/servicer, and Federal
Housing Authority (“FHA”) approved mortgagee. Maintain all other rights, privileges, licenses,
approvals, franchises, properties and assets necessary in the normal conduct of its business,
including, without limitation, approvals with respect to GNMA, Fannie Mae, Freddie Mac, HUD and
FHA.

     (17) Upon request of the Bank, but in all cases not less frequently than annually, deliver to
the Bank an evaluation of the Company’s Servicing Portfolio by an independent third-party provider
selected by the Company and acceptable to the Bank, stating the fair market value of the Company’s
Servicing Portfolio.

H. Events of Default: Remedies

Any of the following shall be an Event of Default hereunder:

     (1) The Company shall fail to make any principal payment on the Notes when due;

16

 

     (2) The Company shall fail to make any interest payment on the Notes within 5 days after the
due date therefor;

     (3) Any representation, warranty or statement of fact made by the Company herein, in any other
Loan Document or in any certificate, schedule, statement, report, notice or writing furnished by
the Company to the Bank pursuant to the terms of this Agreement or any other Loan Document shall be
untrue in any material respect as of the date thereof;

     (4) The Company shall fail to perform or observe any term, covenant or agreement contained in
clause (11), (12), (13) or (14) of part G of this Agreement;

     (5) The Company shall fail to perform or observe any other term, covenant or agreement
contained herein or in any other Loan Document, and such failure shall continue for thirty (30)
days;

     (6) The Company shall become insolvent or shall fail generally to pay its debts as they mature
or shall apply for, shall consent to, or shall acquiesce in the appointment of a custodian, trustee
or receiver thereof or for a substantial part of the property thereof; or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver shall be appointed for the
Company or for a substantial part of the property thereof and such appointment is not revoked or
rescinded within 60 days after such appointment is made; or the Company shall make an assignment
for the benefit of creditors;

     (7) The Company shall be voluntarily or involuntarily dissolved or shall be the subject of any
bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or
insolvency law; or any dissolution or liquidation proceeding shall be instituted by or against the
Company and, if instituted against the Company, shall be consented to or acquiesced in by the
Company, shall not have been dismissed within 60 days or an order for relief shall have been
entered against the Company;

     (8) Judgments against the Company for the payment of money totaling in excess of $1,000,000
shall be outstanding for a period of thirty (30) days without a stay of execution.

     (9) The maturity of any Indebtedness of the Company (other than Indebtedness under this
Agreement) in aggregate amounts exceeding $3,000,000 shall be accelerated, or the Company shall
fail to pay any such Indebtedness in aggregate amounts exceeding $3,000,000 when due or, in the
case of such Indebtedness payable on demand, when demanded, or any event shall occur or condition
shall exist and shall continue for more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or permitting (any required notice having been given and grace
period having expired) the holder of any such Indebtedness in aggregate amounts exceeding
$3,000,000 or any trustee or other Person acting on behalf of such holder to cause, such
Indebtedness in aggregate amounts exceeding $3,000,000 to become due prior to its stated maturity
or to realize upon any collateral given as security therefor;

     (10) Municipal Mortgage & Equity LLC shall cease to own, directly or indirectly, all of the
voting stock of the Company; or

17

 

     (11) Any Loan Document shall not be, or shall cease to be, binding in accordance with their
terms.

     If (a) any Event of Default described in clause (6) or clause (7) of this part H shall occur,
the Revolving Commitment shall automatically terminate and the outstanding principal of the Notes,
the accrued interest thereon and all other obligations of the Company to the Bank under this
Agreement and the Notes, shall automatically become immediately due and payable or (b) any other
Event of Default shall occur and be continuing, then, the Bank may do all of the following: (i)
declare the Revolving Commitment terminated, whereupon the Revolving Commitment shall be terminated
and (ii) declare the outstanding principal of the Notes, the accrued interest thereon and all other
obligations of the Company to the Bank under the Loan Documents to be forthwith due and payable,
whereupon the Notes, all accrued interest thereon and all such obligations shall immediately become
due and payable, in each case without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived, anything in the Loan Documents to the contrary
notwithstanding.

     As additional security for the payment of the obligations described in the Loan Documents and
any other obligations of the Company to the Bank of any nature whatsoever (collectively, the
“Obligations”), the Company grants to the Bank a security interest in, a lien on, and an express
contractual right to set off against, all deposit accounts and all deposit account balances, cash
and any other property of the Company now or hereafter maintained with, or in the possession of,
the Bank and the right to refuse to allow withdrawals from any such account or of any such property
(collectively, “Setoff”). The Bank may, at any time upon the occurrence of an default or Event of
Default hereunder (notwithstanding any notice requirements or grace/cure periods under this or
other agreements between the Company and the Bank) Setoff against the Obligations whether or not
the Obligations (including future installments) are then due or have been accelerated, all without
any advance or contemporaneous notice or demand of any kind to the Company, such notice and demand
being expressly waived.

I. Other Conditions

     (1) Effectiveness of this Agreement as a restatement and amendment to the Existing Credit
Agreement, and the making of any Loan by the Bank hereunder shall be subject to the satisfaction of
the conditions precedent that the Bank shall have received all of the following, in form and
substance satisfactory to the Bank, each duly executed and the following shall have occurred:

(a) The Notes (provided, that the Fannie Mae Collateral Loan Note shall be
delivered only as a condition to the making of the Fannie Mae Collateral Loans, and not the
other Loans hereunder).

(b) The Amended and Restated Mortgage Loan Pledge Agreement.

(c) The Amended and Restated Investment Pledge Agreement.

18

 

(d) The Amended and Restated P & I Pledge Agreement.

(e) The Amended and Restated Servicing Pledge Agreement (as a condition to the
making of the Fannie Mae Collateral Loans, and not the other Loans hereunder).

(f) Financing statements required by the Bank in connection with the foregoing
Pledge Agreements, and lien searches showing that the interests granted thereunder are
first-priority security interests.

(g) A copy of the approval resolution of the Company, certified by the Secretary or an
Assistant Secretary of the Company, together with a certificate showing the names and
titles, and bearing the signatures of, the officers of the Company authorized to execute
the Loan Documents and to request Loans hereunder.

(h) Copies of the Company’s Articles of Incorporation and By-Laws with all amendments
thereto, certified by the Secretary or an Assistant Secretary of the Company and copies of
the Articles of Merger between Glaser and the Company.

(i) A good standing certificate of the Company.

(i) An opinion of the Company’s counsel, in form and substance satisfactory to the Bank.

(i) In the instance of each type of Advance, information concerning the use of such Advance
and the Collateral for such Advance, together with pledge and delivery of such Collateral,
as required by the Bank, including transmittal letters and certificates in the form required
by the Bank from time to time.

(j) The acquisition of the stock of Glaser by the Company shall have occurred and Glaser
shall have merged with and into the Company, with the Company being the surviving entity and
owing all assets formerly owned by Glaser and assuming all liabilities and obligations of
Glaser.

(k) A Compliance Certificate as of the date of closing, demonstrating that on a pro-forma
basis, after giving effect to the merger of Glaser and the Company, the Company will be in
compliance with all financial requirements of this Agreement and no Event of Default, and no
event has occurred which with the giving of notice or passage of time or both would mature
into an Event of Default hereunder, has occurred and is continuing.

     (2) The obligation of the Bank to make any Loan hereunder, including the first, shall be
subject to the satisfaction of the condition precedent that on the date of such Loan the following
statements shall be true (the request by the Company for such Loan shall be deemed to constitute a
representation and warranty by the Company that (a), (b) and (c) are true):

(a) Before and after giving effect to such Loan, the representation and warranties
contained in part F shall be true and correct, as though made on the date of such Loan;

19

 

(b) No Event of Default, as hereinafter defined, has occurred and is continuing, or would
result from such Loan, and no event has occurred which with the giving of notice or passage
of time or both would mature into an Event of Default hereunder;

(c) No material adverse change shall have occurred in the condition, financial or
otherwise, of the Company; and

(d) The Bank shall have received the Collateral securing the relevant Advance and shall
have a perfected first priority security interest in such Collateral under the relevant
Pledge Agreement.

J. Other Provisions

     (1) The parties hereto agree that this Agreement shall be binding upon and inure to the
benefit of their respective heirs, successors in interest and assigns including any holder of the
Note, provided, however, that the Company may not assign or transfer its interest
hereunder without the prior written consent of the Bank.

     (2) Any notices required or contemplated hereunder shall be effective upon the placing
thereof in the United States mails, certified mail and with return receipt requested, postage
prepaid, and addressed as follows:

If to Company: To the address on the first page hereof

with copies to:

MMA Mortgage Investment Corporation

33 N. Garden Ave., Ste 1200

Clearwater, FL 33755

Attention: Terry Meyers

and

MMA Mortgage Investment Corporation

621 E. Pratt St. Ste 300

Baltimore, MN 21202

Attention: General Counsel

If to Bank:

U.S. Bank National Association

BC-MN-H03B

800 Nicollet Mall

Minneapolis, Minnesota 55402

Attention: Mortgage Banking Division

20

 

     (3) No failure to delay on the part of Bank in exercising any right, power or privilege
hereunder and no course of dealing between the Company and Bank shall operate as a waiver thereof;
nor shall any single or partial exercise or any right, power, or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or privilege.

     (4) All accounting terms not otherwise specifically defined in this Agreement shall be
construed in accordance with generally accepted accounting principles consistently applied .

     (5) Neither this Agreement nor any provision hereof may be modified, waived, discharged or
terminated orally or by course of conduct, but only by an instrument in writing signed by the
parties hereto.

     (7) The Company shall reimburse the Bank on demand for any reasonable out-of-pocket expenses
(including reasonable attorneys’ fees and expenses) incurred in connection with the preparation,
review and amendment of the Loan Documents and in attempting to enforce the obligations of the
Company under the Loan Documents, which obligations shall survive the termination of this
Agreement.

     (8) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL
BANKS.

     (9) AT THE OPTION OF THE BANK, THIS AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE COMPANY
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH
FORUMS IS NOT CONVENIENT. IN THE EVENT THE COMPANY COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR
VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS AGREEMENT, THE BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO
ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED
UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

     (10) THE COMPANY AND THE BANK EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT,
AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

21

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first above.

	 	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Randy S. Baker	 	 
	 

	 	 	 	     Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	MMA MORTGAGE INVESTMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

22

 

Exhibit A-1

REVOLVING NOTE

			
	$255,000,000
	 	July 1, 2005

Minneapolis, Minnesota

     FOR VALUE RECEIVED, MMA MORTGAGE INVESTMENT CORPORATION, a Minnesota corporation, hereby
promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION (the “Bank”) at its main office at
800 Nicollet Mall, Minneapolis, Minnesota 55402, the principal sum of TWO HUNDRED FIFTY FIVE
MILLION DOLLARS ($255,000,000) or the aggregate unpaid principal balance of all Revolving Loans
made by the Bank hereunder pursuant to a letter agreement dated as of July 1, 2005, between the
undersigned and the Bank (as the same has been and may hereafter be amended, modified,
supplemented, extended, renewed or restated from time to time, the “Agreement”), whichever is less,
and to pay interest from the date hereof on the unpaid balance hereof at the rates per annum and at
such times as are provided in the Agreement. Principal of this Note shall be payable at such times
as is provided in the Agreement.

     This note is the Revolving Note and one of the Notes referred to in the Agreement. This note
is subject to prepayment in whole or in part and its maturity is subject to acceleration in each
case upon the terms provided in the Agreement. This note is secured by certain collateral referred
to in the Agreement.

     This note shall be construed in accordance with the law of the State of Minnesota, without
giving effect to conflict of laws principles thereof. In the event of default hereunder, the
undersigned agrees to pay all reasonable costs and expenses of collection, including reasonable
attorneys’ fees.

     This note replaces and supersedes, and evidences indebtedness formerly evidenced by, a note of
the undersigned dated as of November 18, 2003, executed and delivered by Glaser Financial Group,
Inc., a corporate predecessor of the undersigned, in the principal amount of $128,000,000.
Delivery and acceptance of this Note does not evidence repayment or novation of such indebtedness.

	 	 	 	 	 	 	 
	 	 	MMA MORTGAGE INVESTMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

Exhibit A-2

P & I NOTE

			
	$500,000
	 	July 1, 2005

Minneapolis, Minnesota

     FOR VALUE RECEIVED, MMA MORTGAGE INVESTMENT CORPORATION, a Minnesota corporation, hereby
promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION (the “Bank”) at its main office at
800 Nicollet Mall, Minneapolis, Minnesota 55402, the principal sum of FIVE HUNDRED THOUSAND DOLLARS
($500,000) or the aggregate unpaid principal balance of all P & I Loans made by the Bank hereunder
pursuant to a letter agreement dated as of July 1, 2005, between the undersigned and the Bank (as
the same has been and may hereafter be amended, modified, supplemented, extended, renewed or
restated from time to time, the “Agreement”), whichever is less, and to pay interest from the date
hereof on the unpaid balance hereof at the rates per annum and at such times as are provided in the
Agreement. Principal of this Note shall be payable at such times as is provided in the Agreement.

     This note is the P & I Note and one of the Notes referred to in the Agreement. This note is
subject to prepayment in whole or in part and its maturity is subject to acceleration in each case
upon the terms provided in the Agreement. This note is secured by certain collateral referred to
in the Agreement.

     This note shall be construed in accordance with the law of the State of Minnesota, without
giving effect to conflict of laws principles thereof. In the event of default hereunder, the
undersigned agrees to pay all reasonable costs and expenses of collection, including reasonable
attorneys’ fees.

     This note replaces and supersedes, and evidences indebtedness formerly evidenced by, a note of
the undersigned dated as of September 30, 2002, executed and delivered by Glaser Financial Group,
Inc., a corporate predecessor of the undersigned, in the principal amount of $500,000. Deliver and
acceptance of this Note does not evidence repayment or novation of such indebtedness.

	 	 	 	 	 	 	 
	 	 	MMA MORTGAGE INVESTMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

Exhibit A-3

Fannie Mae Collateral Loan Note

			
	$10,000,000
	 	July 1, 2005

Minneapolis, Minnesota

     FOR VALUE RECEIVED, MMA MORTGAGE INVESTMENT CORPORATION, a Minnesota corporation, hereby
promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION (the “Bank”) at its main office at
800 Nicollet Mall, Minneapolis, Minnesota 55402, the principal sum of TEN MILLION DOLLARS
($10,000,000) or the aggregate unpaid principal balance of all Fannie Mae Collateral Loans made by
the Bank hereunder pursuant to a letter agreement dated as of July 1, 2005, between the undersigned
and the Bank (as the same has been and may hereafter be amended, modified, supplemented, extended,
renewed or restated from time to time, the “Agreement”), whichever is less, and to pay interest
from the date hereof on the unpaid balance hereof at the rates per annum and at such times as are
provided in the Agreement. Principal of this Note shall be payable at such times as is provided in
the Agreement.

     This note is the Fannie Mae Collateral Loan Note and one of the Notes referred to in the
Agreement. This note is subject to prepayment in whole or in part and its maturity is subject to
acceleration in each case upon the terms provided in the Agreement. This note is secured by
certain collateral referred to in the Agreement.

     This note shall be construed in accordance with the law of the State of Minnesota, without
giving effect to conflict of laws principles thereof. In the event of default hereunder, the
undersigned agrees to pay all reasonable costs and expenses of collection, including reasonable
attorneys’ fees.

     This note replaces and supersedes, and evidences indebtedness formerly evidenced by, a note of
the undersigned dated as of September 30, 2002, executed and delivered by Glaser Financial Group,
Inc., a corporate predecessor of the undersigned, in the principal amount of $10,000,000. Deliver
and acceptance of this Note does not evidence repayment or novation of such indebtedness.

	 	 	 	 	 	 	 
	 	 	MMA MORTGAGE INVESTMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

EXHIBIT B

Compliance Certificate

U.S. Bank National Association

BC-MN-H03B

800 Nicollet Mall

Minneapolis, Minnesota 55402

Attention: Randy S. Baker

                    Vice President

     Gentlemen:

We submit this Certificate to you in accordance with the terms of Part G(3)(a) of the Letter
Agreement dated as of July 1, 2005, between you and us, as the same may be amended, restated,
modified or supplemented from time to time (the “Agreement”). Each capitalized term used herein
has the same meaning ascribed to such term in the Agreement.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	The undersigned hereby certifies that as of the close of business on:	 	 	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	The following computations pertain to the fiscal quarter ending: 	 	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	1.	 	 	Minimum Servicing Portfolio required by Part G(11)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(a) Servicing Portfolio Unpaid Principal Balance	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(b) Minimum Servicing Portfolio Unpaid Principal Balance required by Part G(11)	 	$2,700,000,000
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	3.	 	 	Minimum Adjusted Tangible Net Worth required by Part G(12)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(a) net worth (GAAP consistently applied):	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	plus	 	 
	 	 	 	 	(b) seventy five percent (75%) of the Fair Market Value of the Company’s Servicing Portfolio:	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	minus	 	 
	 	 	 	 	(c) any advances or loans to or investments	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	in shareholders, officers or entities that are controlled by shareholders or officers:	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	minus	 	 
	 	 	 	 	(d) organizational costs net of accumulated amortization:	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	minus	 	 
	 	 	 	 	(e) servicing contracts net of accumulated amortization:	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	minus	 	 
	 	 	 	 	(f) other items treated as intangible assets under GAAP:	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total:	 	$______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Minimum Adjusted Tangible Net Worth required Part G(12)	 	$27,000,000
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	3.	 	 	[Reserved]	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	4.	 	 	Interest Coverage Ratio required by Part G(14)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(a) Earnings Before Interest, Depreciation and Amortization consisting of:	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(i)	 	Net Income/Loss	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(ii)	 	Depreciation	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(iii)	 	Amortization	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(iv)	 	Interest Expense	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	less	 	(v)	 	non-cash revenues included in Net income/Loss pursuant
to application of FAX 125 or any similar requirement of GAAP	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Total	 	______	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(b)	 	Mandatory Principal Payments	 	 	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Interest Expense	 	 	 	______
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Total	 	______	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(c)	 	Minimum Interest
Coverage Ratio as required by Part G(14)	 	1.15 to 1.00	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(d)	 	Actual Ratio: [(a) divided by (b)]	 	______	 	 

	B.	 	As of the date hereof, there exists no Event of Default and no event has occurred which with
the giving of notice or passage of time or both would mature into an Event of Default under
the Agreement.

Date Submitted: _________, ____.

	 	 	 	 	 	 	 
	 	 	MMA MORTGAGE INVESTMENT CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

Opinion of Counsel

U.S. Bank National Association

U.S. Bank Place

BC-MN-H03B

800 Nicollet Mall

Minneapolis, Minnesota 55402

Attention: Randy S. Baker

                    Vice President

Ladies/Gentlemen:

     We have acted as counsel for MMA Mortgage Investment Corporation (the “Company”), and we are
delivering to you this opinion of counsel upon which you may rely, in connection with a letter
agreement, dated as of July 1, 2005, entered into between the Company and your Bank (the “Credit
Agreement”), and the transactions and other Loan Documents described therein. Unless otherwise
defined herein, capitalized terms used herein shall have the respective meanings assigned to such
terms in the Credit Agreement.

     In so acting, we, as counsel for the Company, have made such factual inquiries, and have
examined or caused to be examined such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion and, upon the basis of such inquiries and
examinations, advise you that, in our opinion:

     (1) The Company is a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation, and is duly qualified and in good standing as a foreign
corporation in all other jurisdictions in which its present operations or properties require such
qualification.

     (2) The Company has full corporate power and authority to own and operate its properties and
assets, carry on its business as presently conducted, and enter into and perform its to obligations
under the Loan Documents.

     (3) The execution and delivery of the Loan Documents to which the Company is a party, the
performance by the Company of its obligations thereunder, and the borrowing by the Company under
the Credit Agreement, have been duly authorized by all necessary corporate action, and all of said
Loan Documents have been duly executed and delivered on behalf of the Company and constitute valid
and binding obligations of the Company, enforceable in accordance with their respective terms.

     (4) There is no provision in the Company’s Articles of Incorporation or By-Laws, nor any
provision in any indenture, mortgage, contract or agreement to which the Company is a party or by
which it or its properties may be bound, nor any law, statute, rule or regulation, nor any

 

 

writ, order or decision of any court or governmental instrumentality binding on the Company which
would be contravened by the execution and delivery of the Loan Documents to which the Company is a
party, nor do any of the foregoing prohibit the Company’s performance of any term, provision,
condition, covenant or any other obligation of the Company contained therein.

     (5) There are no actions, suits or proceedings pending or, to the best of our knowledge after
due inquiry, threatened against or affecting the Company before any court or arbitrator or by or
before any administrative agency or government authority, which, if adversely determined, could
constitute an Adverse Event.

     (6) Neither the making nor performance of the Loan Documents, nor the borrowing(s) under the
Credit Agreement, requires the consent or approval of any governmental instrumentality.

     (7) The Company is not a “holding company”, a “subsidiary company” of a “holding company” or
an “affiliate” of a “holding company”, within the meaning of the Public Utility Holding Company Act
of 1935, as amended.

     (8) The Company is not an “investment company” or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended.

     (9) The Company is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and, to the best of our knowledge after due inquiry, no part of the
proceeds of any loan under the Credit Agreement will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any margin stock.

Very truly yours,

 

 

[Suggested Form of Board of Directors’ Resolutions—

Revolving Credit Agreement]

CERTIFICATE

     I,
__________, do hereby certify that I am the duly elected and qualified
Secretary and the keeper of the records and corporate seal of MMA MORTGAGE INVESTMENT CORPORATION,
a corporation organized and existing under the laws of the State of [State] and that the following
is a true and correct copy of certain resolutions duly adopted at a meeting of the Board of
Directors thereof, convened and held in accordance with law and the by-laws of said corporation,
and that such resolutions are now in full force and effect, unamended, unaltered and unrepealed:

     WHEREAS, there has been presented to this meeting a form of Credit Agreement (the “Credit
Agreement”) between this Corporation and U.S. Bank National Association (the “Bank”) providing for,
among other things, loans from time to time to this Corporation up to the amount of $255,000,000
(as such amount may be changed from time to time by amendments, as provided herein);

     NOW, THEREFORE, BE IT RESOLVED, that the [insert officers and the number necessary to
act] of this Corporation is/are authorized to execute and deliver a Credit Agreement between
this Corporation and the Bank, substantially in the form of the Credit Agreement presented to this
meeting, except such changes of the terms and provisions thereof as the officer(s) executing such
Credit Agreement on behalf of this Corporation shall deem proper, such execution to be conclusive
evidence that such officer(s) deem(s) all of the terms and provisions thereof to be proper;

     FURTHER RESOLVED, that the [insert officers and the number necessary to act]of this
Corporation is/are authorized to Company from time to time on behalf of this Corporation amounts
permitted to be borrowed by this Corporation under the Credit Agreement and to designate officers,
agents or employees to borrow such amounts and to set rates of interest if applicable, to execute
and deliver on behalf of this Corporation a promissory note or notes, substantially in the form
provided for in the Credit Agreement, and to execute all amendments, waivers, modifications,
supplements to, and restatements of, the Credit Agreement from time to time as such officers shall
deem proper (including without limitation amendments changing the amounts available for borrowing
under the Credit Agreement), such execution by such officer(s) to be conclusive evidence that such
officer(s) deem(s) all of the terms and provisions thereof to be proper;

     FURTHER RESOLVED, that each and every officer of this Corporation is authorized to take such
action from time to time on behalf of this Corporation as he may deem necessary, advisable or
proper in order to carry out and perform the obligations of this Corporation under the Credit
Agreement and other agreements and documents executed and delivered by this Corporation pursuant to
or in connection with the Credit Agreement.

     FURTHER RESOLVED, that the Secretary or any other officer of this Corporation is authorized to
certify to the Bank a copy of these resolutions and the names and signatures of this Corporation’s
officers or employees hereby authorized to act hereunder, and the Bank is hereby

 

 

authorized to rely upon such certificate until formally advised by a like certificate of any change
therein, and is hereby authorized to rely on any such additional certificates.

     I FURTHER CERTIFY THAT the following persons have been appointed or elected and are now acting
as officers or employees of said corporation in the capacity set before their respective names:

     NAME                    TITLE                    SIGNATURE

 

 

 

     I FURTHER CERTIFY THAT the Articles of Incorporation attached hereto as Exhibit A and
the Bylaws attached hereto as Exhibit B are, respectively, true, complete and correct
copies of this Corporation’s Articles of Incorporation, duly filed with the Secretary of State of
the State of ___, and the Bylaws of this Corporation, which Articles and Bylaws have been
duly adopted by this Corporation and are presently in full force and effect. Attached hereto as
Exhibit C are the Articles of Merger between this Corporation and Glaser Financial Group,
Inc., duly filed with the Secretary of State of the State of ___,

     IN WITNESS WHEREOF, I have subscribed my name as Secretary as of July 1, 2005.

	 	 	 
	 

	 	 
	 

	 	Secretary
	 

	 	MMA MORTGAGE INVESTMENT CORPORATION

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