Document:

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                                  MASTER LEASE

         THIS LEASE (this "Lease") is made as of August 4, 2000 (the "Effective
Date"), by and between FDA PROPERTIES, INC., a Delaware corporation ("Lessor"),
whose address is 7657 Anagram Drive, Eden Prairie, Minnesota 55344, and FAMOUS
DAVE'S OF AMERICA, INC., a Minnesota corporation ("Lessee"), whose address is
7657 Anagram Drive, Eden Prairie, Minnesota 55344.

                                   WITNESSETH:

         THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:

         1. CERTAIN DEFINED TERMS. The following terms shall have the following
meanings for all purposes of this Lease:

         "Action" has the meaning set forth in Section 24.A(iv).

         "ADA" has the meaning set forth in Section 16.C.

         "Additional Rental" has the meaning set forth in Section 5.B.

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

         "Applicable Regulations" has the meaning set forth in Section 16.A.

         "Base Annual Rental" means $414,681.24.

         "Base Monthly Rental" means an amount equal to 1/12 of the applicable
Base Annual Rental.

         "Business Day" means a day on which banks located in Phoenix, Arizona
are open for business other than Saturday, Sunday or a legal holiday, ending at
5:00 p.m. Phoenix, Arizona time.

         "Capital Lease" has the meaning set forth in Section 55.

         "Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.

         "De Minimis Amounts" shall mean, with respect to any given level of
Hazardous Materials, that level or quantity of Hazardous Materials in any form
or combination of forms the
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use, storage or release of which does not constitute a violation of any
Environmental Laws and is customarily employed in the ordinary course of, or
associated with, similar businesses located in the state in which the Premises
is located.

         "Debt" has the meaning set forth in Section 55.

         "Default Rate" means 15% per annum or the highest rate permitted by
law, whichever is less.

         "Depreciation and Amortization" has the meaning set forth in Section
55.

         "Environmental Insurer" means American International Specialty Lines
Insurance Company or such other environmental insurance company as Lender shall
select in its sole discretion.

         "Environmental Laws" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to Hazardous Materials and/or the protection of human
health or the environment, by reason of a Release or Threatened Release of
Hazardous Materials or relating to liability for or costs of Remediation or
prevention of Releases. "Environmental Laws" includes, but is not limited to,
the following statutes, as amended, any successor thereto, and any regulations
rulings, orders or decrees promulgated pursuant thereto, and any state or local
statutes, ordinances, rules, regulations and the like addressing similar issues:
the Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Materials
Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. "Environmental Laws"
also includes, but is not limited to, any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law: conditioning transfer of property upon a negative declaration or
other approval of a Governmental Authority of the environmental condition of the
property; requiring notification or disclosure of Releases or other
environmental condition of the Premises to any Governmental Authority or other
person or entity, whether or not in connection with transfer of title to or
interest in property; imposing conditions or requirements relating to Hazardous
Materials in connection with permits or other authorization for lawful activity;
relating to nuisance, trespass or other causes of action related to Hazardous
Materials; relating to the handling and disposal of solid or hazardous waste;
and relating to wrongful death, personal injury, or property or other damage in
connection with the physical condition or use of the Premises by reason of the
presence of Hazardous Materials in, on, under or above the Premises.

         "Environmental Liens" has the meaning set forth in Section 16.E.

         "Equipment Payment Amount" has the meaning set forth in Section 55.

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         "Event of Default" has the meaning set forth in Section 23.

         "Fixed Charge Coverage Ratio" has the meaning set forth in Section 55.

         "Franchise Finance" means Franchise Finance Corporation of America, a
Delaware corporation, and its successors and assigns.

         "GAAP" means generally accepted accounting principles consistently
applied.

         "Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority of the United States, the State or any political
subdivision thereof.

         "Gross Sales" has the meaning set forth in Section 55.

         "Hazardous Materials" means (i) any toxic substance or hazardous waste,
substance, solid waste, or related material, or any pollutant or contaminant;
(ii) radon gas, asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which contains
dielectric fluid containing levels of polychlorinated biphenyls in excess of
federal, state or local safety guidelines, whichever are more stringent, or any
petroleum product; (iii) any substance, gas, material or chemical which is or
may be defined as or included in the definition of "hazardous substances,"
"toxic substances," "hazardous materials," "hazardous wastes," "regulated
substances" or words of similar import under any Environmental Laws; and (iv)
any other chemical, material, gas or substance the exposure to or release of
which is or may be prohibited, limited or regulated by any Governmental
Authority that asserts or may assert jurisdiction over the Premises or the
operations or activity at the Premises, or any chemical, material, gas or
substance that does or may pose a hazard to the health and/or safety of the
occupants of the Premises or the owners and/or occupants of property adjacent to
or surrounding the Premises.

         "Indemnified Parties" means Lessor, Environmental Insurer and Lender
and their directors, officers, shareholders, partners, members, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns, including, but not limited
to, any successors by merger, consolidation or acquisition of all or a
substantial portion of the assets and business of Lessor, Lender or
Environmental Insurer, as applicable.

         "Interest Expense" has the meaning set forth in Section 55.

         "Lease FCCR Payment" has the meaning set forth in Section 23.A(xii).

         "Lease Term" shall have the meaning described in Section 4.

         "Lender" means FFCA Funding Corporation, a Delaware corporation.

         "Loan Agreement" means the Loan Agreement dated as of the date of this
Lease in effect between Lessor and Lender, as such agreement may be amended from
time to time.

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         "Loan Documents" means, collectively, the Loan Agreement, the Notes,
the Mortgages, the UCC-1 Financing Statements and all other documents,
instruments and agreements executed in connection therewith or contemplated
thereby, all as amended and supplemented.

         "Loan FCCR Payment" has the meaning set forth in Section 23.A(xii).

         "Losses" means any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense).

         "Memorandum of Lease" means the Memorandum of Lease dated as of the
date of this Lease between Lessor and Lessee with respect to the Premises. A
duplicate original Memorandum of Lease will be executed and recorded in the
applicable real property records for each of the Premises. Each Memorandum of
Lease will contain the legal description for the related Premises.

         "Mortgages" means the mortgages or deeds of trust, assignments of rents
and leases, security agreements and fixture filings dated as of even date
herewith executed by Lessor for the benefit of Lender with respect to the
Premises, as such instrument may be amended, restated and/or supplemented from
time to time.

         "Net Amount" has the meaning set forth in Section 21.B.

         "Net Income" has the meaning set forth in Section 55.

         "Notes" means the promissory notes dated as of the date of this Lease
executed by Lessor and payable to Lender with respect to each Premises, as such
notes may be amended, restated and/or substituted from time to time.

         "Operating Lease Expense" has the meaning set forth in Section 55.

         "Partial Taking" has the meaning set forth in Section 21.D.

         "Permitted Concept" means a Famous Dave's restaurant or other
restaurant or retail concept approved in writing by Lender and Lessor in their
reasonable discretion.

         "Person" means any individual, corporation, partnership, limited
liability company, trust, unincorporated organization, Governmental Authority or
any other form of entity.

         "Personalty" has the meaning set forth in Section 29.

         "Premises" means the parcel or parcels of real estate corresponding to
the FFCA File Numbers and addresses identified on Exhibit A and legally
described in Exhibit A-1 attached hereto, all rights, privileges and
appurtenances associated therewith, and all buildings, fixtures and other
improvements.

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         "Release" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.

         "Remediation" means any response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Material, any actions to prevent, cure or mitigate any
Release, any action to comply with any Environmental Laws or with any permits
issued pursuant thereto, any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other analysis, or any
evaluation relating to any Hazardous Materials.

         "Securitization" shall have the meaning set forth in the Loan
Agreement.

         "Securitized Loan Pool" means any pool or group of loans that are a
part of any Securitization.

         "State" means the state in which the Premises are located.

         "Substitute Premises" shall have the meaning set forth in the Loan
Agreement.

         "Successor Lessor" has the meaning set forth in Section 24.

         "Taking" has the meaning set forth in Section 21.A.

         "Temporary Taking" has the meaning set forth in Section 21.C.

         "Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding the Premises which
may result from such Release.

         "Total Taking" has the meaning set forth in Section 21.B.

         "UCC-1 Financing Statements" means such UCC-1 Financing Statements
executed and delivered by Lessee for the benefit of Lessor with respect to the
Premises.

         2. DEMISE OF PREMISES. In consideration of the rentals and other sums
to be paid by Lessee and of the other terms, covenants and conditions on
Lessee's part to be kept and performed, Lessor hereby leases to Lessee, and
Lessee hereby takes and hires, the Premises.

         3. CHARACTERIZATION OF LEASE. A. Lessor and Lessee intend that:

         (i) this Lease constitutes a single master lease of all, but not less
than all, of the Premises and that Lessor and Lessee have executed and delivered
this Lease with the understanding that this Lease constitutes a unitary,
unseverable instrument pertaining to all, but not less than all, of the
Premises, and that neither this Lease nor the duties, obligations or rights of
Lessee may be allocated or otherwise divided among the Premises by Lessee;

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                  (ii) this Lease is a "true lease" and not a financing lease,
         capital lease, mortgage, equitable mortgage, deed of trust, trust
         agreement, security agreement or other financing or trust arrangement,
         and the economic realities of this Lease are those of a true lease, and
         the parties agree to execute such other documents to confirm this Lease
         is a true lease; and

                  (iii) the business relationship created by this Lease and any
         related documents is solely that of a long-term commercial lease
         between landlord and tenant and has been entered into by both parties
         in reliance upon the economic and legal bargains contained herein.

         B. Lessor and Lessee acknowledge and agree that the Lease Term,
including any term extensions provided for in this Lease, is less than the
remaining economic life of each of the Premises.

         C. Lessee waives any claim or defense based upon the characterization
of this Lease as anything other than a true lease, and Lessee stipulates and
agrees not to challenge the validity, enforceability or characterization of the
lease of the Premises as a true lease and further stipulates and agrees that
nothing contained in this Lease creates or is intended to create a joint
venture, partnership (either de jure or de facto), equitable mortgage, trust,
financing device or arrangement, security interest or the like. Lessee shall
support the intent of the parties that the lease of the Premises pursuant to
this Lease is a true lease and does not create a joint venture, partnership
(either de jure or de facto), equitable mortgage, trust, financing device or
arrangement, security interest or the like, if, and to the extent that, any
challenge occurs.

         D. Lessee waives any claim or defense based upon the characterization
of this Lease as anything other than a master lease of all of the Premises, and
Lessee stipulates and agrees not to challenge the validity, enforceability or
characterization of the lease of the Premises as a unitary, unseverable
instrument pertaining to the lease of all, but not less than all, of the
Premises. Lessee shall support the intent of the parties that this Lease is a
unitary, unseverable instrument pertaining to the lease of all, but not less
than all, of the Premises.

         E. The expressions of intent set forth in this Section are a material
inducement to Lessor entering into this Lease.

         4. LEASE TERM. The Lease Term shall commence as of the Effective Date
and shall expire on the date which is twenty years and six months after the last
day of the month in which the Effective Date occurs unless terminated sooner as
provided in this Lease. The time period during which this Lease shall actually
be in effect is referred to herein as the "Lease Term."

         5. RENTAL AND OTHER PAYMENTS. A. If the Effective Date is a date other
than the first day of the month, Lessee shall pay Lessor on the Effective Date
the Base Monthly Rental prorated on the basis of the ratio that the number of
days from the Effective Date through the last day in the month containing the
Effective Date bears to the number of days in such month. Thereafter, on or
before the first day of each succeeding calendar month, Lessee shall pay Lessor
in advance the Base Monthly Rental.

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         B. All sums of money required to be paid by Lessee under this Lease
which are not specifically referred to as rent ("Additional Rental") shall be
considered rent although not specifically designated as such. Lessor shall have
the same remedies for nonpayment of Additional Rental as those provided herein
for the nonpayment of Base Annual Rental.

         6. REPRESENTATIONS AND WARRANTIES OF LESSOR. The representations and
warranties of Lessor contained in this Section are being made to induce Lessee
to enter into this Lease and Lessee has relied and will continue to rely upon
such representations and warranties. Lessor represents and warrants to Lessee as
follows:

                  A. Organization, Authority and Status of Lessor. (i) Lessor
         has been duly organized and is validly existing and in good standing
         under the laws of the State of Delaware and is qualified to do business
         in any jurisdiction where such qualification is required. All necessary
         action has been taken to authorize the execution, delivery and
         performance by Lessor of this Lease and the other documents,
         instruments and agreements provided for herein. Lessor is not a
         "foreign limited liability company", "foreign corporation", "foreign
         partnership", "foreign trust" or "foreign estate" as such terms are
         defined in the Internal Revenue Code and the regulations promulgated
         thereunder. Lessor's United States tax identification number is
         correctly set forth on the signature page of this Lease.

                  (ii) The person who has executed this Lease on behalf of
         Lessor is duly authorized so to do.

                  B. Enforceability. This Lease constitutes the legal, valid and
         binding obligation of Lessor, enforceable against Lessor in accordance
         with its terms.

                  C. Litigation. There are no suits, actions, proceedings or
         investigations pending, or to the best of its knowledge, threatened
         against or involving Lessor before any arbitrator, or Governmental
         Authority which might reasonably result in any material adverse change
         in the contemplated business, condition, worth or operations of Lessor.

                  D. Absence of Breaches or Defaults. Lessor is not in default,
         beyond the passage of any applicable notice and cure periods, under any
         document, instrument or agreement to which Lessor is a party or by
         which Lessor or any of Lessor's property is subject or bound. The
         authorization, execution, delivery and performance of this Lease and
         the documents, instruments and agreements provided for herein will not
         result in any breach of or default under any other document, instrument
         or agreement to which Lessor is a party or by which Lessor, the
         Premises or any of Lessor's property is subject or bound.

         7. REPRESENTATIONS AND WARRANTIES OF LESSEE. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and warrants to Lessor as
follows:

                  A. Organization, Authority and Status of Lessee. (i) Lessee
         has been duly organized or formed, is validly existing and in good
         standing under the laws of its state of

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         formation and is qualified to do business in any jurisdiction where
         such qualification is required. All necessary action has been taken to
         authorize the execution, delivery and performance by Lessee of this
         Lease and of the other documents, instruments and agreements provided
         for herein. Lessee is not a "foreign limited liability company",
         "foreign corporation", "foreign partnership", "foreign trust" or
         "foreign estate", as those terms are defined in the Internal Revenue
         Code and the regulations promulgated thereunder. Lessee's United States
         tax identification number is correctly set forth on the signature page
         of this Lease.

                           (ii) The person who has executed this Lease on behalf
         of Lessee is duly authorized to do so.

                  B. Enforceability. This Lease constitutes the legal, valid and
         binding obligation of Lessee, enforceable against Lessee in strict
         accordance with all of its terms.

                  C. Litigation. There are no suits, actions, proceedings or
         investigations pending, or to the best of its knowledge, threatened
         against or involving Lessee or the Premises before any arbitrator or
         Governmental Authority which might reasonably result in any material
         adverse change in the contemplated business, condition, worth or
         operations of Lessee or the Premises.

                  D. Absence of Breaches or Defaults. Lessee is not in default
         under any other document, instrument or agreement to which Lessee is a
         party or by which Lessee, the Premises or any of Lessee's property is
         subject or bound. The authorization, execution, delivery and
         performance of this Lease and the documents, instruments and agreements
         provided for herein will not result in any breach of or default under
         any document, instrument or agreement to which Lessee is a party or by
         which Lessee, the Premises or any of Lessee's property is subject or
         bound.

                  E. Licenses and Permits. Lessee has obtained all required
         licenses and permits, both governmental and private, to use and operate
         the Premises as a Permitted Concept.

                  F. Financial Condition; Information Provided to Lessor. The
         financial statements, all financial data and all other documents and
         information heretofore delivered to Lessor or Lender by or with respect
         to Lessee and/or the Premises in connection with this Lease and/or
         relating to Lessee and/or the Premises are true, correct and complete
         in all material respects, and there have been no amendments to such
         financial statements, financial data and other documents and
         information since the date such financial statements, financial data,
         documents and other information were prepared or delivered to Lessor or
         Lender, and no material adverse change has occurred to any such
         financial statements, financial data, documents and other information
         not disclosed in writing to Lessor and Lender.

                  G. True Lease. Lessee intends for this Lease to be a "true
         lease" and not a financing lease, capital lease, mortgage, equitable
         mortgage, deed of trust, trust agreement, security agreement or other
         financing or trust arrangement, and the economic realities of this
         Lease are those of a true lease. The term of this Lease is less than
         the remaining economic life of the Premises. Lessee waives any claim or
         defense based upon the characterization of

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         this Lease as anything other than a true lease, and Lessee stipulates
         and agrees not to challenge the validity, enforceability or
         characterization of the lease of the Premises as a true lease and
         further stipulates and agrees that nothing contained in this Lease
         creates or is intended to create a joint venture, partnership,
         equitable mortgage, trust, financing device or arrangement, security
         interest or the like. Lessee shall support the intent of the parties
         that the lease of the Premises pursuant to this Lease is a true lease
         and does not create a joint venture, partnership, equitable mortgage,
         trust, financing device or arrangement, security interest or the like,
         if, and to the extent that, any challenge occurs.

                  H. Liabilities of Lessor. Lessee is not liable for any
         indebtedness for money borrowed by Lessor and has not guaranteed any of
         the debts or obligations of Lessor.

         8. NONCONSOLIDATION COVENANTS. Lessee covenants to Lessor for so long
as this Lease is in effect that:

                  (i) The annual financial statements of Lessee, including
         consolidated financial statements, if any, shall contain notes stating
         that (a) all of Lessor's assets are owned by Lessor and (b) Lessor is a
         separate entity with its own separate creditors which will be entitled
         to be satisfied out of Lessor's assets.

                  (ii) Lessee will not assume liability for any indebtedness for
         money borrowed by Lessor and does not, and will not, guarantee any of
         the debts or obligations of Lessor. Lessee will not hold itself out as
         being liable for any obligations or indebtedness of Lessor.

                  (iii) Lessee shall not and shall use its best efforts to cause
         its affiliates not to hold Lessor out to the public or to any
         individual creditors as being a unified entity with assets and
         liabilities in common with Lessee except that Lessor may be included in
         Lessee's or its affiliates' reports under the Securities Exchange Act
         of 1934, as amended, and its and their consolidated financial
         statements, as appropriate, provided such statements adequately
         disclose the ownership by Lessor of the Premises and that the Premises
         are available first to satisfy any creditors of Lessor.

                  (iv) Lessee shall conduct its business so as not to mislead
         others as to the separate identity of Lessor, and particularly will
         avoid the appearance of conducting business on behalf of Lessor.
         Without limiting the generality of the foregoing, no oral and written
         communications of Lessee, including, without limitation, letters,
         invoices, purchase orders, contracts, statements and loan applications,
         will be made in the name of Lessor which to the extent that to do
         otherwise would materially bear upon the maintenance of Lessor's
         separate identity.

                  (v)      Lessee will not act in Lessor's name.

                  (vi) Where necessary and appropriate, Lessee shall disclose
         the independent business status of Lessor to creditors of Lessee, if
         any.

                  (vii) The resolutions, agreements and other instruments of
         Lessee, if any, underlying the transactions described in this Lease
         will be maintained by Lessee.

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                  (viii) All transactions between Lessee and Lessor will be no
         less fair to each party than they could obtain on an arm's-length
         basis.

                  (ix) The books, records and accounts of Lessee shall at all
         times be maintained in a manner permitting the assets and liabilities
         of Lessor to be easily separated and readily ascertained from those of
         Lessee.

                  (x) Lessee will not direct, or otherwise control, the ongoing
         business decisions of Lessor.

                  (xi) Lessee will not file or cause to be filed a voluntary or
         involuntary petition in bankruptcy on behalf of or against Lessor, nor
         seek substantive consolidation of the assets and liabilities of Lessor
         and Lessee in any bankruptcy or insolvency proceeding during the Lease
         Term and for a period of 91 days after the Lease Term.

         9. RENTALS TO BE NET TO LESSOR. The Base Annual Rental payable
hereunder shall be net to Lessor, so that this Lease shall yield to Lessor the
rentals specified during the Lease Term, and that all costs, expenses and
obligations of every kind and nature whatsoever relating to the Premises shall
be performed and paid by Lessee.

         10. TAXES AND ASSESSMENTS. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments (or the applicable installments of such taxes and assessments) of
every type or nature assessed against or imposed upon the Premises or Lessee
during the Lease Term which affect in any manner the net return realized by
Lessor under this Lease, including without limitation, the following:

                  A. All taxes and assessments upon the Premises or any part
         thereof and upon any Personalty and improvements located on the
         Premises, whether belonging to Lessor or Lessee, or any tax or charge
         levied in lieu of such taxes and assessments;

                  B. All taxes, charges, license fees and or similar fees
         imposed by reason of the use of the Premises by Lessee; and

                  C. All excise, transaction, privilege, license, sales, use and
         other taxes upon the rental or other payments hereunder, the leasehold
         estate of either party or the activities of either party pursuant to
         this Lease.

         All taxing authorities shall be instructed to send all tax and
assessment invoices to Lessor. After recording the information on such invoices,
Lessor shall forward such invoices to Lessee for payment. Within 30 days after
each tax and assessment payment is required by this Section to be paid, Lessee
shall provide Lessor with evidence satisfactory to Lessor that such payment was
made in a timely fashion. Lessee may, at its own expense, contest or cause to be
contested (in the case of any item involving more than $10,000.00, after prior
written notice to Lessor), by appropriate legal proceedings conducted in good
faith and with due diligence, the amount or validity or application, in whole or
in part, of any item specified in the foregoing subsection A or lien therefor,
provided that (i) such proceeding shall suspend the collection thereof from the
Premises or any interest therein, (ii) neither the Premises nor any interest
therein would be

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in any danger of being sold, forfeited or lost by reason of such proceedings,
(iii) no Event of Default is occurring, and (iv) Lessee shall have deposited
with Lessor adequate reserves for the payment of the taxes, together with all
interest and penalties thereon, unless paid in full under protest, or Lessee
shall have furnished the security as may be required in the proceeding or as may
be required by Lessor to insure payment of any contested taxes.

         11. UTILITIES. Lessee shall contract, in its own name, for and pay when
due all charges for the connection and use of water, gas, electricity,
telephone, garbage collection, sewer use and other utility services supplied to
the Premises during the Lease Term. Under no circumstances shall Lessor be
responsible for any interruption of any utility service.

         12. INSURANCE. Throughout the Lease Term Lessee shall maintain with
respect to the Premises, at its sole expense, the following types and amounts of
insurance (which may be included under a blanket insurance policy if all the
other terms hereof are satisfied), in addition to such other insurance as Lessor
may reasonably require from time to time:

                  A. Insurance against loss, damage or destruction by fire and
         other casualty, including theft, vandalism and malicious mischief,
         flood (if the Premises is in a location designated by the Federal
         Emergency Management Administration as a Special Flood Hazard Area),
         earthquake (if the Premises is in an area subject to destructive
         earthquakes within recorded history), boiler explosion (if there is any
         boiler upon the Premises), plate glass breakage, sprinkler damage (if
         the Premises has a sprinkler system), all matters covered by a standard
         extended coverage endorsement, all matters covered by a special
         coverage endorsement commonly known as an "all-risk" endorsement and
         such other risks as Lessor may reasonably require, insuring the
         Premises for not less than 100% of their full insurable replacement
         cost.

                  B. Comprehensive general liability and property damage
         insurance, including a products liability clause, covering Lessor and
         Lessee against bodily injury liability, property damage liability and
         automobile bodily injury and property damage liability, including
         without limitation any liability arising out of the ownership,
         maintenance, repair, condition or operation of the Premises or
         adjoining ways, streets or sidewalks and, if applicable, insurance
         covering Lessor and Lessee against liability arising from the sale of
         liquor, beer or wine on the Premises. Such insurance policy or policies
         shall contain a broad form contractual liability endorsement under
         which the insurer agrees to insure Lessee's obligations under Section
         18 hereof to the extent insurable, and a "severability of interest"
         clause or endorsement which precludes the insurer from denying the
         claim of Lessee or Lessor because of the negligence or other acts of
         the other, shall be in amounts of not less than $1,000,000.00 per
         injury and occurrence with respect to any insured liability, whether
         for personal injury or property damage, or such higher limits as Lessor
         may reasonably require from time to time, and shall be of form and
         substance satisfactory to Lessor.

                  C. State Worker's Compensation insurance in the statutorily
         mandated limits, employer's liability insurance with limits not less
         than $500,000.00 or such greater amount as Lessor may from time to time
         require and such other insurance as may be necessary to comply with
         applicable laws.

                                       11
<PAGE>   12
                  D. Business income insurance or rental interruption insurance,
         as requested by Lessor, equal to 100% of the Base Annual Rental for a
         period of not less than six months.

                  All insurance policies shall:

                           (i) Provide for a waiver of subrogation by the
                  insurer as to claims against Lessor, its employees and agents
                  and provide that such insurance cannot be unreasonably
                  cancelled, invalidated or suspended on account of the conduct
                  of Lessee, its officers, directors, employees or agents;

                           (ii) Provide that any "no other insurance" clause in
                  the insurance policy shall exclude any policies of insurance
                  maintained by Lessor and that the insurance policy shall not
                  be brought into contribution with insurance maintained by
                  Lessor;

                           (iii) Contain a standard without contribution
                  mortgage clause endorsement in favor of Lender and any other
                  lender designated by Lessor or Lender;

                           (iv) Provide that the policy of insurance shall not
                  be terminated, cancelled or substantially modified without at
                  least thirty (30) days' prior written notice to Lessor, Lender
                  and to any lender covered by any standard mortgage clause
                  endorsement;

                           (v) Provide that the insurer shall not have the
                  option to restore the Premises if Lessor elects to terminate
                  this Lease in accordance with the terms hereof;

                           (vi) Be issued by insurance companies licensed to do
                  business in the State and which are rated A:VI or better by
                  Best's Insurance Guide or are otherwise approved by Lessor;
                  and

                           (vii) Provide that the insurer shall not deny a claim
                  because of the negligence of Lessee, anyone acting for Lessee
                  or any subtenant or other occupant of the Premises.

         It is expressly understood and agreed that the foregoing minimum limits
of insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All insurance policies (with the exception
of worker's compensation insurance to the extent not available under statutory
law) shall designate Lessor, Lender and any other mortgagee of Lessor as
additional insureds as their interests may appear and shall be payable as set
forth in Section 21 hereof. All such policies shall be written as primary
policies, with deductibles not to exceed 10% of the amount of coverage. Any
other policies, including any policy now or hereafter carried by Lessor or
Lender, shall serve as excess coverage. Lessee shall procure policies for all
insurance for periods of not less than one year and shall provide to Lessor and
any lender of Lessor certificates of insurance or, upon Lessor's request,
duplicate originals of insurance

                                       12
<PAGE>   13
policies evidencing that insurance satisfying the requirements of this Lease is
in effect at all times.

         13. TAX AND INSURANCE IMPOUND. Upon the occurrence of an Event of
Default, Lessor may require Lessee to pay to Lessor sums which will provide an
impound account (which shall not be deemed a trust fund) for paying up to the
next one year of taxes, assessments and/or insurance premiums. Upon such
requirement, Lessor will estimate the amounts needed for such purposes and will
notify Lessee to pay the same to Lessor in equal monthly installments, as nearly
as practicable, in addition to all other sums due under this Lease. Should
additional funds be required at any time, Lessee shall pay the same to Lessor
within ten (10) days of demand. Lessee shall advise Lessor of all taxes and
insurance bills which are due and shall cooperate fully with Lessor in assuring
that the same are paid. Lessor may deposit all impounded funds in accounts
insured by any federal or state agency and may commingle such funds with other
funds and accounts of Lessor. Interest or other gains from such funds, if any,
shall be the sole property of Lessor. Upon the occurrence of an Event of Default
by Lessee, Lessor may apply all impounded funds against any sums due from Lessee
to Lessor. Lessor shall give to Lessee an annual accounting showing all credits
and debits to and from such impounded funds received from Lessee.

         14. PAYMENT OF RENTAL AND OTHER SUMS. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Base Monthly Rental,
any Additional Rental and impound payments, if any, are transferred by wire or
other means directly from Lessee's bank account to such account as Lessor may
designate; provided, however, upon notice from Lender to Lessee and Lessor
delivered in the manner set forth in Section 27, Lessee shall deliver all
payments of Base Monthly Rental as specified in such notice from Lender and
Lessor hereby acknowledges that Lessee shall receive full credit hereunder for
any payments so made to Lender as if such payment had been made to Lessor. Any
delinquent payment (that is, any payment not made within five calendar days
after the date when due) shall, in addition to any other remedy of Lessor, incur
a late charge of 5% (which late charge is intended to compensate Lessor for the
cost of handling and processing such delinquent payment and should not be
considered interest) and bear interest at the Default Rate, such interest to be
computed from and including the date such payment was due through and including
the date of the payment; provided, however, in no event shall Lessee be
obligated to pay a sum of late charge and interest higher than the maximum legal
rate then in effect.

         15. USE. A. Lessee shall use the Premises solely for the operation of a
Permitted Concept and for no other purpose. Lessee shall occupy the Premises
promptly following the Effective Date and, except as set forth below and except
during periods when the Premises is untenantable by reason of fire or other
casualty or condemnation (provided, however, during all such periods while the
Premises is untenantable, Lessee shall strictly comply with the terms and
conditions of Section 21 of this Lease), Lessee shall at all times during the
Lease Term occupy the Premises and shall diligently operate its business on the
Premises. Lessee may cease diligent operation of business at the Premises for a
period not to exceed 90 days and may do so only once within any five-year period
during the Lease Term. If Lessee does discontinue operation as permitted by this
Section, Lessee shall (i) give written notice to Lessor within 10 days after

                                       13
<PAGE>   14
Lessee elects to cease operation, (ii) provide adequate protection and
maintenance of the Premises during any period of vacancy and (iii) pay all costs
necessary to restore the Premises to their condition on the day operation of the
business ceased at such time as the Premises is reopened for Lessee's business
operations or other substituted use approved by Lessor as contemplated below.
Notwithstanding anything herein to the contrary, Lessee shall pay the Base
Monthly Rental on the first day of each month during any period in which Lessee
discontinues operation.

         Lessee shall not, by itself or through any assignment, sublease or
other type of transfer, convert the Premises to an alternative use during the
Lease Term without Lessor's consent, which consent shall not be unreasonably
withheld. Lessor may consider any or all of the following in determining whether
to grant its consent, without being deemed to be unreasonable: (i) whether the
rental paid to Lessor would be equal to or greater than the anticipated rental
assuming continued existing use, (ii) whether the proposed rental to be paid to
Lessor is reasonable considering the converted use of the Premises and the
customary rental prevailing in the community for such use, (iii) whether the
converted use will be consistent with the highest and best use of the Premises,
and (iv) whether the converted use will increase Lessor's risks or decrease the
value of the Premises.

         B. Notwithstanding the provisions of the foregoing Section 15.A, Lessee
may cease continuous operation of its business on a Premises for up to 120 days
if Lessee, in the exercise of its reasonable business judgment, determines in
good faith that the business at such Premises cannot be operated economically as
evidenced by an affidavit so stating signed by an officer of Lessee ("Uneconomic
Operations"). If Lessee does not, in good faith, permanently reopen the Premises
for operation as a Permitted Concept within 120 days of cessation, then, Lessee
shall, on or prior to the last day of the 120-day period, substitute the
Premises in accordance with Section 58 of this Lease. If Lessee fails to
substitute the Premises as contemplated in this Section B in accordance with the
requirements of Section 13 of the Loan Agreement, such failure shall be an Event
of Default under this Lease and shall entitle Lessor to immediately exercise all
remedies available at law or in equity and as set forth in this Lease.

         16. COMPLIANCE WITH LAWS, RESTRICTIONS, COVENANTS AND ENCUMBRANCES. A.
Lessee's use and occupation of the Premises, and the condition thereof, shall,
at Lessee's sole cost and expense, comply fully with (i) all applicable
statutes, regulations, rules, ordinances, codes, licenses, permits, orders and
approvals of each Governmental Authority, including, without limitation, all
health, building, fire, safety and other codes, ordinances and requirements and
all applicable standards of the National Board of Fire Underwriters, and all
policies or rules of common law, in each case, as amended, and any judicial or
administrative interpretation thereof, including any judicial order, consent,
decree or judgment applicable to Lessee (collectively, "Applicable
Regulations"), and (ii) all restrictions, covenants and encumbrances of record
with respect to the Premises.

         B. Lessee will not permit any act or condition to exist on or about the
Premises which will increase any insurance rate thereon, except when such acts
are required in the normal course of its business and Lessee shall pay for such
increase.

                                       14
<PAGE>   15
         C. Without limiting the generality of the other provisions of this
Section, Lessee agrees that it shall be responsible for complying in all
respects with the Americans with Disabilities Act of 1990, as such act may be
amended from time to time, and all regulations promulgated thereunder
(collectively, the "ADA"), as it affects the Premises, including, but not
limited to, making required "readily achievable" changes to remove any
architectural or communications barriers, and providing auxiliary aids and
services within the Premises. Lessee further agrees that any and all alterations
made to the Premises during the Lease Term will comply with the requirements of
the ADA. All plans for alterations which must be submitted to Lessor under the
provisions of Section 18 must include a statement from a licensed Architect or
Engineer certifying that they have reviewed the plans, and that the plans comply
with all applicable provisions of the ADA. Any subsequent approval or consent to
the plans by the Lessor shall not be deemed to be a representation of Lessor's
part that the plans comply with the ADA, which obligation shall remain with
Lessee. Lessee agrees that it will defend, indemnify and hold harmless the
Indemnified Parties from and against any and all Losses caused by, incurred or
resulting from Lessee's failure to comply with its obligations under this
Section.

         D. Lessee represents and warrants to Lessor and Environmental Insurer
as follows:

                  (i) The Premises and Lessee are not in violation of, or
         subject to, any existing, pending or to the best of Lessee's knowledge
         threatened investigation or inquiry by any Governmental Authority or to
         any remedial obligations under any Environmental Laws, and this
         representation and warranty would continue to be true and correct
         following disclosure to each Governmental Authority of all relevant
         facts, conditions and circumstances, if any, pertaining to the
         Premises. If any such investigation or inquiry is subsequently
         initiated, Lessee will promptly notify Lessor.

                  (ii) Lessee has not obtained and is not required to obtain any
         permits, licenses or similar authorizations to construct, occupy,
         operate or use any buildings, improvements, fixtures and equipment
         forming a part of the Premises by reason of any Environmental Laws.

                  (iii) No Hazardous Materials have been used, handled,
         manufactured, generated, produced, stored, treated, processed,
         transferred, disposed of or otherwise Released by Lessee, and to the
         best of Lessee's knowledge, by any third party in, on, under, from or
         about the Premises, except in De Minimis Amounts.

                  (iv) The Premises do not contain Hazardous Materials other
         than in De Minimis Amounts in full compliance with all Environmental
         laws.

                  (v) To the best of Lessee's knowledge, there is no threat of
         any Release migrating to the Premises.

                  (vi) There is no present, or to the best of Lessee's
         knowledge, past non-compliance with Environmental Laws, or with permits
         issued pursuant thereto, in connection with the Premises.

                                       15
<PAGE>   16
                  (vii) Lessee has not received any written or oral notice or
         other communication from any person or entity (including but not
         limited to a Governmental Authority) relating to Hazardous Materials or
         Remediation thereof, of possible liability of any person or entity
         pursuant to any Environmental Law, other environmental conditions in
         connection with the Premises, or any actual or potential administrative
         or judicial proceedings in connection with any of the foregoing.

                  (viii) Lessee has truthfully and fully provided to Lessor, in
         writing, any and all information relating to environmental conditions
         in, on, under or from the Premises that is known to Lessee and that is
         contained in Lessee's files and records, including but not limited to
         any reports relating to Hazardous Materials in, on, under or from the
         Premises.

         E. Lessee covenants to Lessor and Environmental Insurer during the
Lease Term that: (i) all uses and operations on or of the Premises, whether by
Lessee or any other person or entity, shall be in compliance with all
Environmental Laws and permits issued pursuant thereto; (ii) there shall be no
Releases in, on, under or from the Premises, except in De Minimis Amounts; (iii)
there shall be no Hazardous Materials or Regulated Substances in, on, or under
the Premises, except in De Minimis Amounts; (iv) Lessee shall keep the Premises
free and clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Lessee or any other
person or entity (the "Environmental Liens"); (v) Lessee shall, at its sole cost
and expense, fully and expeditiously cooperate in all activities pursuant to
subsection (1) below, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (vi)
Lessee shall, at its sole cost and expense, perform any environmental site
assessment or other investigation of environmental conditions in connection with
the Premises as may be reasonably requested by Lessor (including but not limited
to sampling, testing and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas), and share with
Lessor and Environmental Insurer the reports and other results thereof, and
Lessor, Environmental Insurer and the other Indemnified Parties shall be
entitled to rely on such reports and other results thereof; (vii) Lessee shall,
at its sole cost and expense, comply with all reasonable written requests of
Lessor to (1) reasonably effectuate Remediation of any condition (including but
not limited to a Release) in, on, under or from the Premises; (2) comply with
any Environmental Law; (3) comply with any directive from any Governmental
Authority; and (4) take any other reasonable action necessary or appropriate for
protection of human health or the environment; (viii) Lessee shall not do or
allow any tenant or other user of the Premises to do any act that materially
increases the dangers to human health or the environment, poses an unreasonable
risk of harm to any person or entity (whether on or off the Premises), impairs
or may impair the value of the Premises, is contrary to any requirement of any
insurer, constitutes a public or private nuisance, constitutes waste, or
violates any covenant, condition, agreement or easement applicable to the
Premises; and (ix) Lessee shall immediately notify Lessor in writing of (A) any
presence of Releases or Threatened Releases in, on, under, from or migrating
towards the Premises; (B) any non-compliance with any Environmental Laws related
in any way to the Premises; (C) any actual or potential Environmental Lien; (D)
any required or proposed Remediation of environmental conditions relating to the
Premises; and (E) any written or oral notice or other communication which Lessee
becomes aware from any source whatsoever (including but not limited to a
Governmental Authority) relating in any way to Hazardous Materials or
Remediation thereof, possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in

                                       16
<PAGE>   17
connection with the Premises, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this Section.

         F. Lessee shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses (excluding Losses arising out of any of the Indemnified
Parties' gross negligence or willful misconduct) and costs of Remediation
(whether or not performed voluntarily), engineers' fees, environmental
consultants' fees, and costs of investigation (including but not limited to
sampling, testing, and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas) imposed upon or
incurred by or asserted against any Indemnified Parties, and directly or
indirectly arising out of or in any way relating to any one or more of the
following: (i) any presence of any Hazardous Materials in, on, above, or under
the Premises; (ii) any past or present Release or Threatened Release in, on,
above, under or from the Premises; (iii) any activity by Lessee, any person or
entity affiliated with Lessee or any other tenant or other user of the Premises
in connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from the Premises of any Hazardous
Materials at any time located in, under, on or above the Premises; (iv) any
activity by Lessee, any person or entity affiliated with Lessee or any other
tenant or other user of the Premises in connection with any actual or proposed
Remediation of any Hazardous Materials at any time located in, under, on or
above the Premises, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including but not limited to any removal,
remedial or corrective action; (v) any past, present or threatened
non-compliance or violations of any Environmental Laws (or permits issued
pursuant to any Environmental Law) in connection with the Premises or operations
thereon, including but not limited to any failure by Lessee, any person or
entity affiliated with Lessee or any other tenant or other user of the Premises
to comply with any order of any Governmental Authority in connection with any
Environmental Laws; (vi) the imposition, recording or filing or the threatened
imposition, recording or filing of any Environmental Lien encumbering the
Premises; (vii) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Section;
(viii) any past, present or threatened injury to, destruction of or loss of
natural resources in any way connected with the Premises, including but not
limited to costs to investigate and assess such injury, destruction or loss;
(ix) any acts of Lessee, any person or entity affiliated with Lessee or any
other tenant or user of the Premises in arranging for disposal or treatment, or
arranging with a transporter for transport for disposal or treatment, of
Hazardous Materials owned or possessed by Lessee, any person or entity
affiliated with Lessee or any other tenant or other user of the Premises, at any
facility or incineration vessel owned or operated by another person or entity
and containing such or similar Hazardous Materials; (x) any acts of Lessee, any
person or entity affiliated with Lessee or any other tenant or other user of the
Premises, in accepting any Hazardous Materials for transport to disposal or
treatment facilities, incineration vessels or sites selected by Lessee, any
person or entity affiliated with Lessee or any other tenant or other user of the
Premises, from which there is a Release, or a Threatened Release of any
Hazardous Material which causes the incurrence of costs for Remediation; (xi)
any personal injury, wrongful death, or property damage arising under any
statutory or common law or tort law theory, including but not limited to damages
assessed for the maintenance of a private or public nuisance or for the
conducting of an abnormally dangerous activity on or near the Premises; and
(xii) any misrepresentation or inaccuracy in any representation

                                       17
<PAGE>   18
or warranty or material breach or failure to perform any covenants or other
obligations pursuant to this Section.

         G. Upon reasonable prior notice, Lessor, Lender, any other lender to
Lessor, Environmental Insurer and any other person or entity designated by
Lessor, including but not limited to any receiver, any representative of a
Governmental Authority, and any environmental consultant, shall have the right,
but not the obligation, to enter upon the Premises at all reasonable times
(including, without limitation, in connection with a proposed sale or conveyance
of the Premises or a proposed financing or refinancing secured by the Premises
or in connection with the exercise of any remedies set forth in this Lease, the
Mortgages or the other Loan Documents or for any other commercially reasonable
purpose) to assess any and all aspects of the environmental condition of the
Premises and its use, including but not limited to conducting any environmental
assessment or audit (the scope of which shall be determined in Lessor's sole and
absolute discretion) and taking samples of soil, groundwater or other water,
air, or building materials, and conducting other invasive testing. Lessee shall
cooperate with and provide access to Lessor, Lender, Environmental Insurer and
any such person or entity designated by Lessor. Any such assessment or
investigation shall be at Lessee's sole cost and expense. Notwithstanding the
foregoing, any such assessment or investigation ordered for the purpose of
Lender's assignment of the Loan (as defined in the Loan Agreement) shall be at
Lender's cost and expense.

         H. The obligations of Lessee and the rights and remedies of Lessor
under the foregoing subsections D through G shall survive the termination,
expiration and/or release of this Lease.

         I. In addition to the other requirements of this Section, Lessee shall,
at all times throughout the Lease Term, comply with all Applicable Regulations.

         17. CONDITION OF PREMISES; MAINTENANCE. Lessee has inspected, or had
the opportunity to inspect, the Premises and hereby accepts the Premises "AS IS"
and "WHERE IS" with no representation or warranty of Lessor as to the condition
thereof. The Premises shall be kept in good, clean, sanitary and working
condition; and Lessee shall at all times at its own expense maintain, repair and
replace, as necessary, the Premises, including all portions of the Premises,
whether or not the Premises were in such condition on the Effective Date.

         18. WASTE; ALTERATIONS AND IMPROVEMENTS. Lessee shall not commit actual
or constructive waste upon the Premises. During the Lease Term, Lessee shall not
alter the exterior, structural, plumbing or electrical elements of the Premises
in any manner without the consent of Lessor, which consent shall not be
unreasonably withheld or conditioned; provided, however, Lessee may undertake
nonstructural alterations to the Premises costing less than $50,000.00 without
Lessor's consent. If Lessor's consent is required hereunder and Lessor consents
to the making of any such alterations, the same shall be made by Lessee at
Lessee's sole expense by a licensed contractor and according to plans and
specifications approved by Lessor and subject to such other conditions as Lessor
shall require. Any work at any time commenced by Lessee on the Premises shall be
prosecuted diligently to completion, shall be of good workmanship and materials
and shall comply fully with all the terms of this Lease. Upon completion of any
alterations, Lessee shall promptly provide Lessor with (i) evidence of full

                                       18
<PAGE>   19
payment to all laborers and materialmen contributing to the alterations, (ii) an
architect's certificate certifying the alterations to have been completed in
conformity with the plans and specifications, (iii) a certificate of occupancy
(if the alterations are of such a nature as would require the issuance of a
certificate of occupancy), and (iv) any other documents or information
reasonably requested by Lessor. Lessee shall execute and file or record, as
appropriate, a "Notice of Non-Responsibility," or any equivalent notice
permitted under applicable law in the state where the Premises is located. Any
addition to or alteration of the Premises shall be deemed a part of the Premises
and belong to Lessor, and Lessee shall execute and deliver to Lessor such
instruments as Lessor may require to evidence the ownership by Lessor of such
addition or alteration.

         19. INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
harmless each of the Indemnified Parties from and against any and all Losses
(excluding Losses suffered by an Indemnified Party arising out of such
Indemnified Party's gross negligence or willful misconduct) caused by, incurred
or resulting from Lessee's operations of or relating in any manner to the
Premises, whether relating to their original design or construction, latent
defects, alteration, maintenance, use by Lessee or any person thereon,
supervision or otherwise, or from any breach of, upon an Event of Default under,
or failure to perform, any term or provision of this Lease by Lessee, its
officers, employees, agents or other persons. It is expressly understood and
agreed that Lessee's obligations under this Section shall survive the expiration
or earlier termination of this Lease for any reason.

         20. QUIET ENJOYMENT. So long as Lessee shall pay the rental and other
sums herein provided and shall keep and perform all of the terms, covenants and
conditions on its part herein contained, Lessee shall have, subject and
subordinate to Lessor's rights herein, the right to the peaceful and quiet
occupancy of the Premises.

         21. CONDEMNATION OR DESTRUCTION. A. In case of a taking of all or any
part of the Premises or the commencement of any proceedings or negotiations
which might result in a taking for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of condemnation or eminent
domain or by agreement between Lessor, Lessee and those authorized to exercise
such right ("Taking"), Lessee will promptly give written notice thereof to
Lessor, generally describing the nature and extent of such Taking and including
copies of any documents or notices received in connection therewith.

         B. In case of a Taking of the whole of any of the Premises, other than
for temporary use ("Total Taking"), this Lease shall terminate with respect to
such Premises as of the date of the Total Taking, but this Lease shall otherwise
continue in full force and effect with respect to the remaining Premises. From
and after the date of a Total Taking, the Base Annual Rental shall be reduced by
an amount equal to the product of (i) the net award or payment resulting from
such Total Taking, after deducting all costs, fees and expenses incident to the
collection of such award of payment (the "Net Amount"), and (ii) 11%. If the
date of such Total Taking is other than the first day of a month, the Base
Annual Rental payable for the month in which such Total Taking occurs shall be
apportioned based on such Adjustment as of the date of the Total Taking.
Lessee's obligations to Lessor under Section 18 of this Lease with respect to
such Premises and Lessee's obligation to pay all other sums of money under this
Lease (whether payable to Lessor or to a third-party) which accrue prior to the
date of such Total Taking shall survive the termination of this Lease

                                       19
<PAGE>   20
with respect to such Premises. Total Taking shall include a taking of
substantially all the Premises if, in the sole determination of Lessor, the
remainder of the Premises is not useable and cannot be made useable for the
purposes provided herein. Lessor shall be entitled to receive the entire award
or payment in connection with any taking of the Premises without deduction for
any estate vested in Lessee by this Lease. Lessee hereby expressly assigns to
Lessor all of its right, title and interest in and to every such award or
payment and agrees that Lessee shall not be entitled to any award or payment for
the value of Lessee's leasehold interest in the Lease. Lessee shall be entitled
to claim and receive any award or payment from the condemning authority
expressly granted for the taking of Lessee's Personalty, the interruption of its
business and moving expenses, but only if such claim or award does not adversely
affect or interfere with the prosecution of Lessor's claim for the Taking.
Lessee shall promptly send Lessor copies of all correspondence and pleadings
relating to any such claim.

         C. In case of a temporary use of all or any part of the Premises by a
Taking ("Temporary Taking"), this Lease shall remain in full force and effect
without any reduction of Base Annual Rental, Additional Rental or any other sum
payable hereunder. Except as provided below, Lessee shall be entitled to the
entire award for a Temporary Taking, whether paid by damages, rent or otherwise,
unless the period of occupation and use by the condemning authorities shall
extend beyond the date of expiration of this Lease, in which case the award made
for such Taking shall be apportioned between Lessor and Lessee as of the date of
such expiration. At the termination of any such Temporary Taking, Lessee will,
at its own cost and expense and pursuant to the terms of Section 18 above,
promptly commence and complete the restoration of the Premises; provided,
however, Lessee shall not be required to restore the Premises if the Lease Term
shall expire prior to, or within one year after, the date of termination of the
Temporary Taking, and in such event Lessor shall be entitled to recover all
damages and awards arising out of the failure of the condemning authority to
repair and restore the Premises at the expiration of such Temporary Taking.

         D. In the event of a Taking of less than all of the Premises for other
than a temporary use ("Partial Taking") or of damage or destruction to all or
any part of the Premises, all awards, compensation or damages shall be paid to
Lessor, and Lessor shall have the option to (i) terminate this Lease, provided
that Lessor shall have obtained Lender's prior written consent, by notifying
Lessee within 60 days after Lessee gives Lessor notice of such damage or
destruction or that title has vested in the taking authority or (ii) continue
this Lease in effect, which election may be evidenced by either a notice from
Lessor to Lessee or Lessor's failure to notify Lessee that Lessor has elected to
terminate this Lease within such 60-day period. Lessee shall have a period of 60
days after Lessor's notice that it has elected to terminate this Lease during
which to elect to continue this Lease on the terms herein provided. If Lessee
does not elect to continue this Lease or shall fail during such 60-day period to
notify Lessor of Lessee's intent to continue this Lease, then this Lease shall
terminate as of the last day of the month during which such period expired.
Lessee shall then immediately vacate and surrender the Premises, all obligations
of either party hereunder shall cease as of the date of termination (provided,
however, Lessee's obligations to Lessor under Section 19 and Lessee's
obligations to pay Base Annual Rental, Additional Rental and all other sums
(whether payable to Lessor or a third-party) accruing under this Lease prior to
the date of termination shall survive such termination), the Base Annual Rental
shall be reduced by an amount equal to the product of (i)

                                       20
<PAGE>   21
the Net Award resulting from such Taking and (ii) 11%, and Lessor may retain all
such awards, compensation or damages. If Lessor elects not to terminate this
Lease, or if Lessor elects to terminate this Lease but Lessee elects to continue
this Lease, then this Lease shall continue in full force and effect on the
following terms: (i) all Base Annual Rental, Additional Rental and other sums
and obligations due under this Lease shall continue unabated, and (ii) Lessee
shall promptly commence and diligently prosecute restoration of the Premises to
the same condition, as nearly as practicable, as prior to such partial
condemnation, damage or destruction as approved by Lessor. Lessor shall promptly
make available in installments as restoration progresses an amount up to but not
exceeding the amount of any award, compensation or damages received by Lessor,
upon request of Lessee accompanied by evidence reasonably satisfactory to Lessor
that such amount has been paid or is due and payable and is properly a part of
such costs and that Lessee has complied with the terms of Section 18 above in
connection with the restoration. Lessor shall be entitled to keep any portion of
such award, compensation or damages which may be in excess of the cost of
restoration, and Lessee shall bear all additional costs, fees and expenses of
such restoration in excess of the amount of any such award, compensation or
damages.

         E. Notwithstanding the foregoing, if at the time of any Taking or any
damage or destruction to all or any part of the Premises or at any time
thereafter an Event of Default has occurred and such Event of Default shall be
continuing, Lessor is hereby authorized and empowered but shall not be
obligated, in the name and on behalf of Lessee and otherwise, to file and
prosecute Lessee's claim, if any, for an award on account of such Taking or for
insurance proceeds on account of such damage or destruction and to collect such
award or proceeds and apply the same, after deducting all costs, fees and
expenses incident to the collection thereof, to the curing of such Event of
Default and any other then existing Event of Default under this Lease and/or to
the payment of any amounts owed by Lessee to Lessor under this Lease, in such
order, priority and proportions as Lessor in its discretion shall deem proper.

         F. Notwithstanding the foregoing, nothing in this Section 21 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations in and of this Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.

         22. INSPECTION. Lessor and its authorized representatives shall have
the right, upon giving reasonable notice, to enter the Premises or any part
thereof and inspect the same and make photographic or other evidence concerning
Lessee's compliance with the terms of this Lease. Lessor and its authorized
representatives will use reasonable efforts to minimize any inconvenience or
interference with Lessee's business while conducting such entry and inspection.
Notwithstanding the foregoing, Lessee hereby waives any claim for damages for
any injury or inconvenience to or interference with Lessee's business, any loss
of occupancy or quiet enjoyment of the Premises and any other loss occasioned by
such entry, unless such entry is due to Lessor's or its authorized
representatives' gross negligence or willful misconduct. Lessee shall keep and
maintain at Lessee's chief executive office full, complete and appropriate books
of account and records of Lessee's business relating to the Premises in
accordance with GAAP. To the extent permitted by law, Lessee's books and records
shall at all times be open for inspection by Lessor or Lender, their respective
auditors or other authorized representatives and shall show such

                                       21
<PAGE>   22
information as is reasonably necessary to determine compliance with Lessor's
obligations under the Loan Documents.

         23. DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES AND MEASURE OF DAMAGES.
A. Each of the following shall be an event of default under this Lease (each, an
"Event of Default"):

                  (i) If any representation or warranty of Lessee set forth in
         this Lease is false in any material respect, or if Lessee renders any
         false statement or account;

                  (ii) If any rent or other monetary sum due under this Lease is
         not paid within five days from the date when due; provided, however,
         notwithstanding the occurrence of such an Event of Default, Lessor
         shall not be entitled to exercise its remedies set forth below unless
         and until Lessor shall have given Lessee notice thereof and a period of
         five days from the delivery of such notice shall have elapsed without
         such Event of Default being cured;

                  (iii) If Lessee fails to pay, prior to delinquency, any taxes,
         assessments or other charges the failure of which to pay will result in
         the imposition of a lien against the Premises pursuant to Applicable
         Regulations;

                  (iv) If Lessee becomes insolvent within the meaning of the
         Code, files or notifies Lessor that it intends to file a petition under
         the Code, initiates a proceeding under any similar law or statute
         relating to bankruptcy, insolvency, reorganization, winding up or
         adjustment of debts (collectively, hereinafter, an "Action"), becomes
         the subject of either a petition under the Code or an Action, or is not
         generally paying its debts as the same become due;

                  (v) If Lessee vacates or abandons the Premises subject to the
         terms and conditions of Section 15 above;

                  (vi) If Lessee fails to observe or perform any of the other
         covenants, conditions or obligations of Lessee in this Lease; provided,
         however, if any such failure does not involve the payment of any
         monetary sum, is not willful or intentional, does not place any rights
         or property of Lessor in immediate jeopardy, and is within the
         reasonable power of Lessee to promptly cure after receipt of notice
         thereof, all as determined by Lessor in its reasonable discretion, then
         such failure shall not constitute an Event of Default hereunder, unless
         otherwise expressly provided herein, unless and until Lessor shall have
         given Lessee notice thereof and a period of 30 days shall have elapsed,
         during which period Lessee may correct or cure such failure, upon
         failure of which an Event of Default shall be deemed to have occurred
         hereunder without further notice or demand of any kind being required.
         If such failure cannot reasonably be cured within such 30 day period,
         as determined by Lessor in its reasonable discretion, and Lessee is
         diligently pursuing a cure of such failure, then Lessee shall have a
         reasonable period to cure such failure beyond such 30 day period, which
         shall in no event exceed 120 days after receiving notice of such
         failure from Lessor. If Lessee shall fail to correct or cure such
         failure within such 120-day period, an Event of Default shall be deemed
         to have occurred hereunder without further notice or demand of any kind
         being required;

                                       22
<PAGE>   23
                  (vii) If a final, nonappealable judgment is rendered by a
         court against Lessee which has a material adverse effect on the ability
         to conduct business at the Premises as a Permitted Concept, or which
         does not have a material adverse effect on the ability to conduct
         business at the Premises as a Permitted Concept but which is in the
         amount of $100,000.00 or more, and in either event is not discharged or
         provision made for such discharge within 60 days from the date of entry
         thereof;

                  (viii) If with Lessee's reasonable consent, Lessor shall have
         elected to substitute a Substitute Premises for the Premises in
         accordance with the provisions of Section 13 of the Loan Agreement, the
         failure of Lessee, on or before the date of the closing of such
         substitution, to enter into a lease with Lessor for the Substitute
         Premises on the same terms, conditions and provisions of this Lease;

                  (x) If Lender shall have given Lessor notice of a breach of
         the Fixed Charge Coverage Ratio requirement under the Loan Agreement
         and Lessor shall have notified Lessee that the Fixed Charge Coverage
         Ratio requirement under this Lease has been breached and that Lessor
         has elected to substitute a Substitute Premises for the Premises in
         accordance with the provisions of Section 13 of the Loan Agreement, the
         failure of Lessee, on or before the date of the closing of such
         substitution, to enter into a lease with Lessor for the Substitute
         Premises on the same terms, conditions and provisions of this Lease;

                  (xi) If there is an Event of Default under the Loan Agreement
         which results from a breach or default by Lessor under Section 7.B of
         the Loan Agreement.

                  (xii) If Lender shall have given Lessor notice of a breach of
         the Fixed Charge Coverage Ratio requirement under the Loan Agreement
         and Lessor shall have notified Lessee that the Fixed Charge Coverage
         Ratio requirement under this Lease has been breached and that Lessor is
         making a payment with respect to the applicable Note in order to cure
         Lessor's breach of the Fixed Charge Coverage Ratio requirement under
         the Loan Agreement (the "Loan FCCR Payment"), the failure of Lessee to
         pay to Lessor an amount equal to the Loan FCCR Payment (the "Lease FCCR
         Payment") on or before the date that Lessor is required to pay the Loan
         FCCR Payment to Lender. Promptly after Lessee's payment of the Lease
         FCCR Payment, Lessor and Lessee agree to execute an amendment to this
         Lease in form and substance reasonably acceptable to Lessor and Lessee
         reducing the Base Annual Rental to an equitable amount to be agreed
         upon by Lessor and Lessee in good faith after taking into account the
         Lease FCCR Payment, but in no event shall the reduced Base Annual
         Rental be less than the aggregate debt service amount payable under the
         Notes over a one-year period (after taking into account any reduction
         in such debt service amount after payment of the Loan FCCR Payment).

                  (xiii) If Lessee fails or refuses to sign an estoppel
         certificate as required under Section 25 of this Lease within ten (10)
         days following a request by Lessor.

         B. Upon the occurrence of an Event of Default, with or without notice
or demand, except the notice prior to default required under certain
circumstances by subsection A. above or such other notice as may be required by
statute and cannot be waived by Lessee (all other notices being hereby waived),
Lessor shall be entitled to exercise, at its option, concurrently,

                                       23
<PAGE>   24
successively, or in any combination, all remedies available at law or in equity,
including without limitation, any one or more of the following:

                  (i) To terminate this Lease, whereupon Lessee's right to
         possession of the Premises shall cease and this Lease, except as to
         Lessee's liability, shall be terminated.

                  (ii) To reenter and take possession of the Premises, any or
         all Personalty of Lessee and, to the extent permissible, all
         franchises, licenses, area development agreements, permits and other
         rights or privileges of Lessee pertaining to the use and operation of
         the Premises and to expel Lessee and those claiming under or through
         Lessee, without being deemed guilty in any manner of trespass or
         becoming liable for any loss or damage resulting therefrom, without
         resort to legal or judicial process, procedure or action. No notice
         from Lessor hereunder or under a forcible entry and detainer statute or
         similar law shall constitute an election by Lessor to terminate this
         Lease unless such notice specifically so states. If Lessee shall, after
         default, voluntarily give up possession of the Premises to Lessor,
         deliver to Lessor or its agents the keys to the Premises, or both, such
         actions shall be deemed to be in compliance with Lessor's rights and
         the acceptance thereof by Lessor or its agents shall not be deemed to
         constitute a termination of the Lease. Lessor reserves the right
         following any reentry and/or reletting to exercise its right to
         terminate this Lease by giving Lessee written notice thereof, in which
         event this Lease will terminate as specified in said notice.

                  (iii) To seize all Personalty which Lessee owns or in which it
         has an interest, in which Lessor shall have a landlord's lien and/or
         security interest, and to dispose thereof in accordance with the laws
         prevailing at the time and place of such seizure or to remove all or
         any portion of such property and cause the same to be stored in a
         public warehouse or elsewhere at Lessee's sole expense, without
         becoming liable for any loss or damage resulting therefrom and without
         resorting to legal or judicial process, procedure or action.

                  (iv) To bring an action against Lessee for any damages
         sustained by Lessor or any equitable relief available to Lessor.

                  (v) To relet the Premises or any part thereof for such term or
         terms (including a term which extends beyond the original Lease Term),
         at such rentals and upon such other terms as Lessor, in its sole
         discretion, may determine, with all proceeds received from such
         reletting being applied to the rental and other sums due from Lessee in
         such order as Lessor may, in it sole discretion, determine, which other
         sums include, without limitation, all repossession costs, brokerage
         commissions, attorneys' fees and expenses, employee expenses,
         alteration, remodeling and repair costs and expenses of preparing for
         such reletting. Except to the extent required by applicable law, Lessor
         shall have no obligation to relet the Premises or any part thereof and
         shall in no event be liable for refusal or failure to relet the
         Premises or any part thereof, or, in the event of any such reletting,
         for refusal or failure to collect any rent due upon such reletting, and
         no such refusal or failure shall operate to relieve Lessee of any
         liability under this Lease or otherwise to affect any such liability.
         Lessor reserves the right following any reentry and/or reletting to
         exercise its right to terminate this Lease by giving Lessee written
         notice thereof, in which event this Lease will terminate as specified
         in said notice.

                                       24
<PAGE>   25
                  (vi) To accelerate and recover from Lessee all rent and other
         monetary sums due and owing and scheduled to become due and owing under
         this Lease both before and after the date of such breach for the entire
         original scheduled Lease Term.

                  (vii) To recover from Lessee all costs and expenses, including
         attorneys' fees, court costs, expert witness fees, costs of tests and
         analyses, travel and accommodation expenses, deposition and trial
         transcripts, copies and other similar costs and fees, paid or incurred
         by Lessor as a result of such breach, regardless of whether or not
         legal proceedings are actually commenced.

                  (viii) To immediately or at any time thereafter, and with or
         without notice, at Lessor's sole option but without any obligation to
         do so, correct such breach or default and charge Lessee all costs and
         expenses incurred by Lessor therein. Any sum or sums so paid by Lessor,
         together with interest at the then existing maximum legal rate, but not
         higher than 15% per annum, shall be deemed to be additional rent
         hereunder and shall be immediately due from Lessee to Lessor. Any such
         acts by Lessor in correcting Lessee's breaches or defaults hereunder
         shall not be deemed to cure said breaches or defaults or constitute any
         waiver of Lessor's right to exercise any or all remedies set forth
         herein.

                  (ix) To immediately or at any time thereafter, and with or
         without notice, except as required herein, set off any money of Lessee
         held by Lessor under this Lease against any sum owing by Lessee
         hereunder.

                  (x) To seek any equitable relief available to Lessor,
         including, without limitation, the right of specific performance.

                  All powers and remedies given by this Section to Lessor,
         subject to applicable law, shall be cumulative and not exclusive of one
         another or of any other right or remedy or of any other powers and
         remedies available to Lessor under this Lease, by judicial proceedings
         or otherwise, to enforce the performance or observance of the covenants
         and agreements of Lessee contained in this Lease, and no delay or
         omission of Lessor to exercise any right or power accruing upon the
         occurrence of any Event of Default shall impair any other or subsequent
         Event of Default or impair any rights or remedies consequent thereto.
         Every power and remedy given by this Section or by law to Lessor may be
         exercised from time to time, and as often as may be deemed expedient,
         by Lessor, subject at all times to Lessor's right in its sole judgment
         to discontinue any work commenced by Lessor or change any course of
         action undertaken by Lessor.

         24. MORTGAGES, SUBORDINATION AND ATTORNMENT. Lessor's interest in this
Lease and/or the Premises shall not be subordinate to any liens or encumbrances
placed upon the Premises by or resulting from any act of Lessee, and nothing
herein contained shall be construed to require such subordination by Lessor.
Lessee shall keep the Premises free from any liens for work performed, materials
furnished or obligations incurred by Lessee. NOTICE IS HEREBY GIVEN THAT LESSEE
IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF
TRUST, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF THE
PREMISES AND THE PERSONALTY OR LESSEE'S LEASEHOLD INTEREST THEREIN, AND ANY SUCH
PURPORTED

                                       25
<PAGE>   26
TRANSACTION SHALL BE VOID. FURTHERMORE, ANY SUCH PURPORTED TRANSACTION SHALL BE
DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S RELATIONSHIP WITH LESSEE AND
LESSOR'S OWNERSHIP OF THE PREMISES.

         This Lease at all times shall automatically be subordinate to the
Mortgages and to the lien of any and all ground leases, mortgages and trust
deeds now or hereafter placed upon the Premises by Lessor, and Lessee covenants
and agrees to execute and deliver, upon demand, such further instruments
subordinating this Lease to the lien of any or all such ground leases, mortgages
or trust deeds as shall be desired by Lessor, or any present or proposed
mortgagees or lenders under trust deeds, upon the condition that Lessee shall
have the right to remain in possession and to enjoy the Premises under the terms
of this Lease, notwithstanding any default in any or all such mortgages or trust
deeds, or after foreclosure thereof, so long as there is no Event of Default
under any of the covenants, conditions and agreements contained in this Lease.

         If any mortgagee, receiver, Lender or other secured party elects to
have this Lease and the interest of Lessee hereunder be superior to any such
ground lease, mortgage or trust deed and evidences such election by notice given
to Lessee, then this Lease and the interest of Lessee hereunder shall be deemed
superior to any such ground lease, mortgage or trust deed, whether this Lease
was executed before or after such ground lease, mortgage or trust deed and in
that event such mortgagee, receiver, Lender or other secured party shall have
the same rights with respect to this Lease as if it had been executed and
delivered prior to the execution and delivery of such ground lease, mortgage or
trust deed and had been assigned to such mortgagee, receiver, Lender or other
secured party.

         Although the foregoing provisions shall be self-operative and no future
instrument of subordination shall be required, upon request by Lessor, Lessee
shall execute and deliver whatever instruments may be required for such
purposes, and in the event Lessee fails so to do within 10 days after demand,
Lessee does hereby make, constitute and irrevocably appoint Lessor as its agent
and attorney-in-fact and in its name, place and stead so to do, which
appointment shall be deemed coupled with an interest.

         In the event any purchaser or assignee of Lender at a foreclosure sale
acquires title to the Premises, or in the event Lender or any assignee otherwise
succeeds to the rights of Lessor as landlord under this Lease, Lessee shall
attorn to Lender or such purchaser or assignee, as the case may be (a "Successor
Lessor"), and recognize the Successor Lessor as lessor under this Lease, and, if
the Successor Lessor in its sole discretion elects to recognize Lessee's tenancy
under this Lease, this Lease shall continue in full force and effect as a direct
lease between the Successor Lessor and Lessee, provided that the Successor
Lessor shall only be liable for any obligations of the lessor under this Lease
which accrue after the date that such Successor Lessor acquires title. The
foregoing provision shall be self-operative and effective without the execution
of any further instruments.

         Lessee shall give written notice to any lender of Lessor having a
recorded lien upon the Premises or any part thereof of which Lessee has been
notified of any breach or default by Lessor of any of its obligations under this
Lease and give such lender at least 60 days beyond any notice period to which
Lessor might be entitled to cure such default before Lessee may exercise any
remedy with respect thereto. Upon request by Lessor, Lessee shall also provide
Lessee's

                                       26
<PAGE>   27
most recent audited financial statements to Lessor or any such lender and
certify the continuing accuracy of such financial statements in such manner as
Lessor or such lender may request.

         25. ESTOPPEL CERTIFICATE. At any time, and from time to time, Lessee
shall, promptly and in no event later than 10 days after a request from Lessor,
Lender or any other mortgagee of the Premises, execute, acknowledge and deliver
to Lessor, Lender or any other present or proposed mortgagee or purchaser
designated by Lessor, Lender or any mortgagee of the Premises a certificate in
the form supplied by Lessor, certifying: (i) that Lessee has accepted the
Premises (or, if Lessee has not done so, that Lessee has not accepted the
Premises, and specifying the reasons therefor); (ii) that this Lease is in full
force and effect and has not been modified (or if modified, setting forth all
modifications), or, if this Lease is not in full force and effect, the
certificate shall so specify the reasons therefor; (iii) the commencement and
expiration dates of the Lease Term and the terms of any extension options of
Lessee; (iv) the date to which the rentals have been paid under this Lease and
the amount thereof then payable; (v) whether there are then any existing
defaults by Lessor in the performance of its obligations under this Lease, and,
if there are any such defaults, specifying the nature and extent thereof; (vi)
that no notice has been received by Lessee of any default under this Lease which
has not been cured, except as to defaults specified in the certificate; (vii)
the capacity of the person executing such certificate, and that such person is
duly authorized to execute the same on behalf of Lessee; (viii) that neither
Lessor nor Lender has actual involvement in the management or control of
decision making related to the operational aspects or the day-to-day operations
of the Premises; and (ix) any other information reasonably requested by Lessor,
Lender, or its present or proposed purchaser or mortgagee.

         26. ASSIGNMENT. If Lender shall succeed to the rights of Lessor as
landlord under this Lease, whether through foreclosure of the lien of the
applicable Mortgage, deed-in-lieu of foreclosure or otherwise, Lender, as
lessor, shall have the right to sell or convey the Premises or to assign its
right, title and interest as lessor under this Lease in whole or in part. In the
event of any such sale or assignment other than a security assignment, Lessee
shall attorn to such purchaser or assignee and Lessor shall be relieved, from
and after the date of such transfer or conveyance, of liability for the
performance of any obligation of Lessor contained herein, except for obligations
or liabilities accrued prior to such assignment or sale (provided, however,
nothing in this Section 26 shall impose liability on Lender or such purchaser or
assignee, as lessor, for the obligations of Lessor accruing under this Lease
prior to the time Lender or such purchaser or assignee, as the case may be,
succeeds to Lessor's rights as lessor under this Lease). Otherwise, and except
as permitted pursuant to the Loan Documents, Lessor shall not have the right to
sell or convey the Premises or to assign its right, title and interest as lessor
under this Lease in whole or in part.

         Lessee acknowledges that Lessor has relied both on the business
experience and creditworthiness of Lessee and upon the particular purposes for
which Lessee intends to use the Premises in entering into this Lease. Without
the prior written consent of Lessor (i) Lessee shall not assign, transfer,
convey, pledge or mortgage this Lease or any interest therein, whether by
operation of law or otherwise; (ii) no interest in Lessee shall be assigned,
transferred, conveyed, pledged or mortgaged, whether by operation of law or
otherwise, including, without limitation, a dissolution of Lessee, provided,
however, the foregoing shall not apply to (A) any transfer of stock traded
publicly during such period of time that Lessee is a publicly traded company or
(B) any other transfer of

                                       27
<PAGE>   28
stock that does not result in a change of voting control in Lessee; and (iii)
Lessee shall not sublet all or any part of the Premises. It is expressly agreed
that Lessor may withhold or condition such consent based upon such matters as
Lessor may in its reasonable discretion determine, including, without
limitation, the experience and creditworthiness of any assignee, the assumption
by any assignee of all of Lessee's obligations hereunder by undertakings
enforceable by Lessor, payment to Lessor of any rentals owing under a sublease
which are in excess of the rentals owing hereunder, the transfer to any assignee
of all necessary licenses and franchises to continue operating the Premises for
the purposes herein provided, receipt of such representations and warranties
from any assignee as Lessor may request, including such matters as its
organization, existence, good standing and finances and other matters, whether
or not similar in kind. At the time of any assignment of this Lease which is
approved by Lessor, the assignee shall assume all of the obligations of Lessee
under this Lease pursuant to Lessor's standard form of assumption agreement. No
such assignment nor any subletting of the Premises shall relieve Lessee of its
obligations respecting this Lease. Any assignment, transfer, conveyance, pledge
or mortgage in violation of this paragraph shall be voidable at the sole option
of Lessor.

         27. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Lease shall
be in writing and given by (i) hand delivery, (ii) facsimile (with a copy by
overnight delivery service), (iii) express overnight delivery service or (iv)
certified or registered mail, return receipt requested, and shall be deemed to
have been delivered upon (a) receipt, if hand delivered, (b) transmission, if
delivered by facsimile, (c) the next Business Day, if delivered by express
overnight delivery service, or (d) the third Business Day following the day of
deposit of such notice with the United States Postal Service, if sent by
certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:

              If to Lessee:        Famous Dave's of America, Inc.
                                   7657 Anagram Drive
                                   Eden Prairie, MN 55344
                                   Attention: Chief Financial Officer
                                   Telephone: (612) 294-1305
                                   Telecopy:  (612) 294-1323

              If to Lessor:        FDA Properties, Inc.
                                   7657 Anagram Drive
                                   Eden Prairie, MN 55344
                                   Attention:Chief Financial Officer
                                   Telephone: (612) 294-1305
                                   Telecopy:  (612) 294-1323

                                       28
<PAGE>   29
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. No such notices, consents, approvals or other communications
shall be valid unless Lender receives a duplicate original thereof at the
following address:

                                   Dennis L. Ruben, Esq.
                                   Executive Vice President, General Counsel
                                   and Secretary
                                   FFCA Funding Corporation
                                   17207 North Perimeter Drive
                                   Scottsdale, Arizona 85255
                                   Telephone: (480) 585-4500
                                   Telecopy:  (480) 585-2226

or to such other address or such other person as Lender may from time to time
specify to Lessor and Lessee in a notice delivered in the manner provided above.

         28. HOLDING OVER. If Lessee remains in possession of the Premises after
the expiration of the term hereof, Lessee, at Lessor's option and within
Lessor's sole discretion, may be deemed a tenant on a month-to-month basis and
shall continue to pay rentals and other sums in the amounts herein provided,
except that the Base Monthly Rental shall be 125% of the Base Monthly Rental in
effect on the day immediately preceding the expiration of the term hereof, and
to comply with all the terms of this Lease; provided that nothing herein nor the
acceptance of rent by Lessor shall be deemed a consent to such holding over.
Lessee shall defend, indemnify, protect and hold the Indemnified Parties
harmless from and against any and all Losses resulting from Lessee's failure to
surrender possession upon the expiration of the Lease Term, including, without
limitation, any claims made by any succeeding lessee.

         29. LANDLORD'S LIEN/SECURITY INTEREST. Lessee agrees that Lessor shall
have a landlord's lien, and additionally hereby separately grants to Lessor a
first and prior security interest, in, on and against Lessee's right, title and
interest in and to all trade fixtures, machinery, appliances, furniture,
equipment and other personal property from time to time situated on or used in
connection with the Premises (the "Personalty"), which lien and security
interest shall secure the payment of all rental and other charges payable by
Lessee to Lessor under the terms hereof and all other obligations of Lessee to
Lessor under this Lease; provided, however, that such lien and security interest
shall be subject and subordinate to any lien or security interest held by Lendor
with respect to such Personalty. Lessee further agrees to execute and deliver to
Lessor from time to time such financing statements and other documents as Lessor
may then deem appropriate or necessary to perfect and maintain said lien and
security interest, and expressly acknowledges and agrees that, cumulative of all
other rights of Lessor hereunder, Lessor shall have all rights and remedies of
Lessor at law or in equity in the event of any Event of Default of Lessee
hereunder, including, to the extent applicable, the Uniform Commercial Code then
in effect in the State in which the Premises is located. If Lessee shall fail
for any reason to execute any such financing statement or document within 10
days after Lessor's request therefor, Lessor shall have the right to execute the
same as attorney-in-fact of Lessee, coupled with an interest, for, and on
behalf, and in the name of Lessee. Lessee covenants to

                                       29
<PAGE>   30
promptly notify Lessor of any changes in Lessee's name and/or organizational
structure which may necessitate the execution and filing of additional financing
statements (provided, however, the foregoing shall not be construed as Lessor's
consent to such changes). Lessor may exercise any or all of the remedies of a
secured party available to it under the UCC with respect to such Personalty, and
it is expressly agreed that if upon an Event of Default Lessor should proceed to
dispose of such property in accordance with the provisions of the UCC, 10 days'
notice by Lessor to Lessee shall be deemed to be reasonable notice under any
provision of the UCC requiring such notice.

         30. REMOVAL OF PERSONALTY. Lessee may move all movable fixtures located
at the Premises at its discretion during the Lease Term so long as there is no
Event of Default. At the expiration of the Lease Term, and if Lessee is not then
in breach hereof, Lessee may remove from the Premises all Personalty belonging
to Lessee. Lessee shall repair any damage caused by such removal and shall leave
the Premises broom clean and in good and working condition and repair inside and
out. Any property of Lessee left on the Premises on the tenth day following the
expiration of the Lease Term shall automatically and immediately become the
property of Lessor.

         31. FINANCIAL STATEMENTS. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Lessee, Lessee
shall deliver to Lessor, Lender and any other mortgagee of Lessor pertaining to
the Premises (i) complete financial statements of Lessee including a balance
sheet, profit and loss statement, statement of cash flows and all other related
schedules for the fiscal period then ended; and (ii) income statements for the
business at the Premises. All such financial statements shall be prepared in
accordance with GAAP, consistently applied from period to period, and shall be
certified to be accurate and complete by Lessee (or the Treasurer or other
appropriate officer of Lessee). Lessee understands that Lessor and Lender will
rely upon such financial statements and Lessee represents that such reliance is
reasonable. In the event that Lessee's property and business at the Premises is
ordinarily consolidated with other business for financial statement purposes,
such financial statements shall be prepared on a consolidated basis showing
separately the sales, profits and losses, assets and liabilities pertaining to
the Premises with the basis for allocation of overhead of other charges being
clearly set forth. The financial statements delivered to Lessor and Lender need
not be audited, but Lessee shall deliver to Lessor and Lender copies of any
audited financial statements of Lessee which may be prepared, as soon as they
are available. Notwithstanding the foregoing and provided Lessee is a publicly
traded corporation, Lessor agrees that Lessee may comply with the reporting
requirements of item (i) above by providing Lessor with copies of (x) reports on
Forms 10-K, 10-Q and 8-K which Lessee shall have filed with the Securities and
Exchange Commission, which reports shall be delivered to Lessor promptly after
the filing of such reports, and (y) all financial statements, reports and proxy
statements mailed to the shareholders of Lessee, which materials shall be
delivered to Lessor promptly after the mailing of such materials to such
shareholders.

         32. FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease.

                                       30
<PAGE>   31
         33. DOCUMENT REVIEW. In the event Lessee makes any reasonable request
upon Lessor requiring Lessor or its attorneys to review and/or prepare (or cause
to be reviewed and/or prepared) any document or documents in connection with or
arising out of or as a result of this Lease, then, except as expressly stated
elsewhere herein, Lessee shall reimburse Lessor or its designee promptly upon
Lessor's demand therefor a reasonable processing and review fee in an amount not
less than $500.00 for each such request.

         34. TIME IS OF THE ESSENCE. Time is of the essence with respect to each
and every provision of this Lease in which time is a factor.

         35. LESSOR'S LIABILITY. Notwithstanding anything to the contrary
provided in this Lease, it is specifically understood and agreed, such agreement
being a primary consideration for the execution of this Lease by Lessor, that
(i) there shall be absolutely no personal liability on the part of Lessor, its
successors or assigns and its officers, directors, employees and agents to
Lessee with respect to any of the terms, covenants and conditions of this Lease,
(ii) Lessee waives all claims, demands and causes of action against Lessor's
officers, directors, employees and agents in the event of any breach by Lessor
of any of the terms, covenants and conditions of this Lease to be performed by
Lessor, and (iii) Lessee shall look solely to the Premises for the satisfaction
of each and every remedy of Lessee in the event of any breach by Lessor of any
of the terms, covenants and conditions of this Lease to be performed by Lessor,
or any other matter in connection with this Lease or the Premises, such
exculpation of liability to be absolute and without any exception whatsoever.

         36. CONSENT OF LESSOR. Unless specified otherwise herein, Lessor's
consent to any request of Lessee may be conditioned or withheld in Lessor's sole
discretion. Lessor shall have no liability for damages resulting from Lessor's
failure to give any consent, approval or instruction reserved to Lessor,
Lessee's sole remedy in any such event being an action for injunctive relief.

         37. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed
waived or amended except by a written instrument unambiguously setting forth the
matter waived or amended and signed by the party against which enforcement of
such waiver or amendment is sought. Waiver of any matter shall not be deemed a
waiver of the same or any other matter on any future occasion. No acceptance by
Lessor of an amount less than the monthly rent and other payments stipulated to
be due under this Lease shall be deemed to be other than a payment on account of
the earliest such rent or other payments then due or in arrears nor shall any
endorsement or statement on any check or letter accompanying any such payment be
deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and
satisfaction.

         38. SUCCESSORS BOUND. Except as otherwise specifically provided herein,
the terms, covenants and conditions contained in this Lease shall bind and inure
to the benefit of the respective heirs, successors, executors, administrators
and assigns of each of the parties hereto.

         39. NO MERGER. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, shall not result in a merger of
Lessor's and Lessee's estates, and shall, at the option of Lessor, either
terminate any or all existing subleases or subtenancies, or operate as an
assignment to Lessor of any or all of such subleases or subtenancies.

                                       31
<PAGE>   32
         40. CAPTIONS. Captions are used throughout this Lease for convenience
of reference only and shall not be considered in any manner in the construction
or interpretation hereof.

         41. SEVERABILITY. The provisions of this Lease shall be deemed
severable. If any part of this Lease shall be held unenforceable by any court of
competent jurisdiction, the remainder shall remain in full force and effect, and
such unenforceable provision shall be reformed by such court so as to give
maximum legal effect to the intention of the parties as expressed therein.

         42. CHARACTERIZATION. A. It is the intent of the parties hereto that
the business relationship created by this Lease and any related documents is
solely that of a long-term commercial lease between landlord and tenant and has
been entered into by both parties in reliance upon the economic and legal
bargains contained herein. None of the agreements contained herein is intended,
nor shall the same be deemed or construed, to create a partnership (either de
jure or de facto) between Lessor and Lessee, to make them joint venturers, to
make Lessee an agent, legal representative, partner, subsidiary or employee of
Lessor, nor to make Lessor in any way responsible for the debts, obligations or
losses of Lessee.

         B. Lessor and Lessee acknowledge and warrant to each other that each
has been represented by independent counsel and has executed this Lease after
being fully advised by said counsel as to its effect and significance. This
Lease shall be interpreted and construed in a fair and impartial manner without
regard to such factors as the party which prepared the instrument, the relative
bargaining powers of the parties or the domicile of any party. Whenever in this
Lease any words of obligation or duty are used, such words or expressions shall
have the same force and effect as though made in the form of a covenant.

         43. EASEMENTS. During the Lease Term Lessor shall have the right to
grant utility easements on, over, under and above the Premises, provided that
Lessor obtains Lessee's prior consent (which consent shall not reasonably be
withheld) that such easements will not materially interfere with Lessee's
long-term use of the Premises.

         44. BANKRUPTCY. A. As a material inducement to Lessor executing this
Lease, Lessee acknowledges and agrees that Lessor is relying upon (i) the
financial condition and specific operating experience of Lessee and Lessee's
obligation to use the Premises specifically as a Permitted Concept, (ii)
Lessee's timely performance of all of its obligations under this Lease
notwithstanding the entry of an order for relief under the Code for Lessee,
(iii) the characterization of this Lease as set forth in Section 3, and (iv) all
Events of Default under this Lease as to the Premises being cured promptly and
this Lease being assumed within 60 days of any order for relief entered under
the Code for Lessee, or this Lease being rejected within such 60 day period and
the Premises surrendered to Lessor.

         Accordingly, in consideration of the mutual covenants contained in this
Lease and for other good and valuable consideration, Lessee hereby agrees that:

                  (i) All obligations that accrue under this Lease (including
         the obligation to pay rent), from and after the date that an Action is
         commenced shall be timely performed exactly as provided in this Lease
         and any failure to so perform shall be harmful and prejudicial to
         Lessor;

                                       32
<PAGE>   33
                  (ii) Any and all obligations under this Lease that become due
         from and after the date that an Action is commenced and that are not
         paid as required by this Lease shall, in the amount of such rents,
         constitute administrative expense claims allowable under the Code with
         priority of payment at least equal to that of any other actual and
         necessary expenses incurred after the commencement of the Action;

                  (iii) Any extension of the time period within which the Lessee
         may assume or reject this Lease without an obligation to cause all
         obligations coming due under this Lease from and after the date that an
         Action is commenced to be performed as and when required under this
         Lease shall be harmful and prejudicial to Lessor;

                  (iv) Any time period designated as the period within which the
         Lessee must cure all defaults and compensate Lessor for all pecuniary
         losses which extends beyond the date of assumption of this Lease shall
         be harmful and prejudicial to Lessor;

                  (v) Any assignment of this Lease must result in all terms and
         conditions of this Lease being assumed by the assignee without
         alteration or amendment, and any assignment which results in an
         amendment or alteration of the terms and conditions of this Lease
         without the express written consent of Lessor shall be harmful and
         prejudicial to Lessor;

                  (vi) Any proposed assignment of this Lease to an assignee: (a)
         that will not use the Premises specifically as a Permitted Concept or
         (b) that does not possess financial condition, operating performance
         and experience characteristics equal to or better than the financial
         condition, operating performance and experience of Lessee as of the
         Effective Date, shall be harmful and prejudicial to Lessor; and

                  (vii) The rejection (or deemed rejection) of this Lease for
         any reason whatsoever shall constitute cause for immediate relief from
         the automatic stay provisions of the Code, and Lessee stipulates that
         such automatic stay shall be lifted immediately and possession of the
         Premises will be delivered to Lessor immediately without the necessity
         of any further action by Lessor.

                  (viii) This Lease shall at all times be treated as consistent
         with the specific characterizations set forth in Section 3 of this
         Lease, and assumption or rejection of this Lease shall be (a) in its
         entirety, (b) for all of the Premises, and (c) in strict accordance
         with the specific terms and conditions of this Lease.

         B. No provision of this Lease shall be deemed a waiver of Lessor's
rights or remedies under the Code or applicable law to oppose any assumption
and/or assignment of this Lease, to require timely performance of Lessee's
obligations under this Lease, or to regain possession of the Premises as a
result of the failure of Lessee to comply with the terms and conditions of this
Lease or the Code.

         C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.

                                       33
<PAGE>   34
         D. For purposes of this Section addressing the rights and obligations
of Lessor and Lessee in the event that an Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.

         45. NO OFFER. No contractual or other rights shall exist between Lessor
and Lessee with respect to the Premises until both have executed and delivered
this Lease, notwithstanding that deposits may have been received by Lessor and
notwithstanding that Lessor may have delivered to Lessee an unexecuted copy of
this Lease. The submission of this Lease to Lessee shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for Lessee to lease or otherwise create any interest on the part of
Lessee in the Premises.

         46. OTHER DOCUMENTS. Each of the parties agrees to sign such other and
further documents as may be necessary or appropriate to carry out the intentions
expressed in this Lease.

         47. ATTORNEYS' FEES. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. In addition, Lessor shall, upon demand, be entitled to all
attorneys' fees and all other costs incurred in the preparation and service of
any notice or demand hereunder, whether or not a legal action is subsequently
commenced. References in this Lease to Lessor's attorneys' fees and/or costs
shall mean both the fees and costs of independent counsel retained by Lessor
with respect to the matter and the fees and costs of Lessor's in-house counsel
incurred in connection with the matter.

         48. ENTIRE AGREEMENT. This Lease and any other instruments or
agreements referred to herein, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there are no other
representations, warranties or agreements except as herein provided. Without
limiting the foregoing, Lessee specifically acknowledges that neither Lessor nor
any agent, officer, employee or representative of Lessor has made any
representation or warranty regarding the projected level of Lessee's gross sales
or the projected profitability of the business to be conducted on the Premises.
Furthermore, Lessee acknowledges that Lessor did not prepare or assist in the
preparation of any of the projected figures used by Lessee in analyzing the
economic viability and feasibility of the business to be conducted by Lessee at
the Premises.

         49. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Lessee
acknowledges that this Lease was substantially negotiated in the State of
Arizona, this Lease was delivered in the State of Arizona, and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Lease, the parties hereto expressly submit to the
jurisdiction of all federal and state courts located in the State of Arizona.
Lessee and Lessor consent that they may be served with any process or paper by
registered mail or by personal service within or without the State of Arizona in
accordance with applicable law. Furthermore, Lessee and Lessor waive and agree
not to assert in any such action, suit or proceeding that they are not
personally subject to the jurisdiction of such courts, that the action, suit or
proceeding is brought in an inconvenient forum

                                       34
<PAGE>   35
or that venue of the action, suit or proceeding is improper. The creation of
this Lease and the rights and remedies of Lessor with respect to the Premises,
as provided herein and by the laws of the State, shall be governed by and
construed in accordance with the internal laws of the State, without regard to
principles of conflicts of law. With respect to other provisions of this Lease,
this Lease shall be governed by the internal laws of the State of Arizona,
without regard to its principles of conflicts of law. Nothing contained in this
Section shall limit or restrict the right of Lessor or Lessee to commence any
proceeding in the federal or state courts located in the state in which the
Premises is located to the extent Lessor or Lessee deems such proceeding
necessary or advisable to exercise remedies available under this Lease.

         50. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original.

         51. MEMORANDUM OF LEASE. Concurrently with the execution of this Lease,
Lessor and Lessee are executing a Memorandum of Lease in recordable form with
respect to each of the Premises, including the names and addresses of Lessor and
Lessee, a description of the applicable Premises, the Lease Term, but omitting
rent and such other terms of this Lease as Lessor may not desire to disclose to
the public. Further, upon Lessor's request, Lessee agrees to execute and
acknowledge a termination of lease and/or quit claim deed in recordable form
with respect to each of the Premises to be held by Lessor until the expiration
or sooner termination of the Lease Term.

         52. NO BROKERAGE. Lessor and Lessee represent and warrant to each other
that they have had no conversation or negotiations with any broker concerning
the leasing of the Premises. Each of Lessor and Lessee agrees to protect,
indemnify, save and keep harmless the other, against and from all liabilities,
claims, losses, costs, damages and expenses, including attorneys' fees, arising
out of, resulting from or in connection with their breach of the foregoing
warranty and representation.

         53. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE
RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF THE PREMISES,
AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY.
THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY
JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM LESSOR AND ANY OF LESSOR'S AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OR
ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LESSEE AGAINST LESSOR OR
ANY OF LESSOR'S AFFILIATES,

                                       35
<PAGE>   36
OFFICERS, DIRECTORS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENT
CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY LESSEE OF ANY RIGHT IT MAY
HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN
NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.

         54. RELIANCE BY ENVIRONMENTAL INSURER. Lessee acknowledges and agrees
that Environmental Insurer may rely on the representations, warranties and
covenants set forth in Section 16 of this Lease, that Environmental Insurer is
an intended third-party beneficiary of such representations, warranties and
covenants and that Environmental Insurer shall have all rights and remedies
available at law or in equity as a result of a breach of such representations,
warranties and covenants, including to the extent applicable, the right of
subrogation.

         55. FIXED CHARGE COVERAGE RATIO. Lessee covenants to Lessor that an
aggregate Fixed Charge Coverage Ratio of at least 1.25:1 shall be maintained
with respect to the Premises, as determined on the last day of each fiscal year
of Lessee. For purposes of this Section, the term "Fixed Charge Coverage Ratio"
shall mean with respect to the twelve month period of time immediately preceding
the date of determination, the ratio calculated for such period of time, each as
determined in accordance with GAAP, of (a) the sum of Net Income (including
proceeds from business interruption insurance payments, if any), Depreciation
and Amortization, Interest Expense and Operating Lease Expense, less a corporate
overhead allocation (which shall equal the sum of 5% of Gross Sales) to (b) the
sum of the Operating Lease Expense (including, without limitation, any Operating
Lease Expense relating to this Lease and the Equipment Payment Amount.

         For purposes of this Section, the following terms shall be defined as
set forth below:

                           "Capital Lease" shall mean any lease of any property
                  (whether real, personal or mixed) by Lessee with respect to
                  one or more of the Premises, which lease would, in conformity
                  with GAAP, be required to be accounted for as a capital lease
                  on the balance sheet of Lessee. The term "Capital Lease" shall
                  not include any operating lease.

                           "Debt" shall mean as directly related to all of the
                  Premises and the period of determination (i) indebtedness for
                  borrowed money, (ii) obligations evidenced by bonds,
                  indentures, notes or similar instruments, (iii) obligations to
                  pay the deferred purchase price of property or services, (iv)
                  obligations under leases which should be, in accordance with
                  GAAP, recorded as Capital Leases, and (v) obligations under
                  direct or indirect guarantees in respect of, and obligations
                  (contingent or otherwise) to purchase or otherwise acquire, or
                  otherwise to assure a creditor against loss in respect of,
                  indebtedness or obligations of others of the kinds referred to
                  in clauses (i) through (iv) above.

                           "Depreciation and Amortization" shall mean with
                  respect to all of the Premises the depreciation and
                  amortization accruing during any period of determination with
                  respect to Lessor as determined in accordance with GAAP.

                                       36
<PAGE>   37
                           "Equipment Payment Amount" shall mean for any period
                  of determination the sum of all amounts payable during such
                  period of determination under all (i) leases for equipment
                  located at one or more of the Premises other than this Lease
                  and (ii) all loans secured by equipment located at one or more
                  of the Premises.

                           "Gross Sales" shall mean the sales or other income
                  arising from all business conducted at all of the Premises by
                  Lessee during the period of determination, less sales tax,
                  credit card commission and complimentary sales, as presented
                  in Lessee's publicly disclosed financial statements, and any
                  amounts received from not-for-profit sales of all non-food
                  items approved for use in connection with promotional
                  campaigns, if any, for all of the Premises.

                           "Interest Expense" shall mean for any period of
                  determination, the sum of all interest accrued or which should
                  be accrued in respect of all Debt of Lessee allocable to one
                  or more of the Premises and all business operations thereon
                  during such period (including interest attributable to Capital
                  Leases), as determined in accordance with GAAP.

                           "Net Income" shall mean with respect to the period of
                  determination, the net income or net loss of Lessee allocable
                  to all of the Premises. In determining the amount of Net
                  Income, (i) adjustments shall be made for nonrecurring gains
                  and losses allocable to the period of determination, (ii)
                  deductions shall be made for, among other things, Depreciation
                  and Amortization, Interest Expense and Operating Lease Expense
                  allocable to the period of determination, and (iii) no
                  deductions shall be made for (x) income taxes or charges
                  equivalent to income taxes allocable to the period of
                  determination, as determined in accordance with GAAP, or (y)
                  corporate overhead expense allocable to the period of
                  determination.

                           "Operating Lease Expense" shall mean the expenses
                  incurred by Lessee under any operating leases with respect to
                  one or more of the Premises and the business operations
                  thereon during the period of determination, as determined in
                  accordance with GAAP.

         56. SUBSTITUTION. A. In the event Lessee ceases operation of a
Permitted Concept as a result of Uneconomic Operations, Lessee shall have the
right to terminate this Lease by substituting a Substitute Premises and lease
for such individual Premises and this Lease, subject to fulfillment of the
following conditions:

                  (i) Lessee shall have given Lessor notice of Lessee's
         intention to substitute the Premises (the "Substitution Notice") and no
         more than 120 days shall have elapsed since Lessor's notice of Lessee's
         intention to cease operation as a result of Uneconomic Operations.

                  (ii) Lessee must provide for the substitution of a Substitute
         Premises, and the proposed Substitute Premises must:

                                       37
<PAGE>   38
                           (1) be a Permitted Concept, in good condition and
                  repair, ordinary wear and tear excepted;

                           (2) have for the twelve-month period preceding the
                  date of the closing of such substitution a Fixed Charge
                  Coverage Ratio (as defined below) of at least 1.25:1;

                           (3) be owned by and vested in Lessee free and clear
                  of all liens and encumbrances, except such matters as are
                  acceptable to Lessor (the "Substitute Premises Permitted
                  Exceptions"); and

                           (4) have for the twelve-month period preceding the
                  date of the closing of such substitution gross sales that are
                  greater than the Lessee's gross sales for the same period at
                  the Premises.

                           (5) have a fair market value equal to or greater than
                  the fair market value of the Premises. The fair market value
                  of the Premises and the fair market value of the Substitute
                  Premises shall be determined in the following manner: Lessor
                  shall, at Lessee's sole expense, retain an independent MAI
                  appraiser to prepare an appraisal of the fair market value of
                  the Premises and the Substitute Premises, including any
                  additions or renovations thereto. In determining the fair
                  market value of the Premises and the Substitute Premises, the
                  appraiser shall utilize the cost, income and sales comparison
                  approaches to value. In utilizing the income approach, the
                  appraiser shall determine the "leased fee" value of the
                  Premises and the Substitute Premises, which shall be arrived
                  at by considering (a) the income that would be produced by
                  this Lease through the end of the fully extended Lease Term,
                  and (b) any other factors relating to such approach which the
                  appraiser shall deem relevant in his sole discretion. The
                  highest amount which results from the calculation of each of
                  the cost approach, the income approach, and the sales
                  comparison approach, all as determined in accordance with the
                  provisions of this Section, shall constitute the fair market
                  value of the Premises and the Substitute Premises for purposes
                  of this subsection.

                  (iii) Lessor shall have inspected and approved the Substitute
         Premises utilizing Lessor customary site inspection and underwriting
         approval criteria. Lessee shall have reimbursed Lessor for all of its
         costs and expenses incurred with respect to such proposed substitution,
         including, without limitation, Lessor's third-party and/or in-house
         site inspectors' costs and expenses with respect to the proposed
         Substitute Premises. Lessee shall be solely responsible for the payment
         of all costs and expenses resulting from such proposed substitution,
         including, without limitation, the cost of title insurance and
         endorsements, survey charges, stamp taxes, mortgage taxes, transfer
         fees, escrow and recording fees, the cost of environmental reports and
         the attorneys' fees and expenses of counsel to Lessee and Lessor.

                  (iv) Lessor shall have received a preliminary title report and
         irrevocable commitment to insure title by means of an owner's ALTA
         extended coverage policy of title insurance (or its equivalent, in the
         event such form is not issued in the jurisdiction

                                       38
<PAGE>   39
         where the proposed Substitute Premises is located) for such proposed
         Substitute Premises issued by Title Company (as defined in the Loan
         Documents) showing good and marketable title in Lessee and committing
         to insure Lessor's fee ownership of the proposed Substitute Premises,
         subject only to the Substitute Premises Permitted Exceptions and
         containing endorsements substantially comparable to those required by
         Lessor in connection with Lessor's initial acquisition of the Premises
         (the "Closing");

                  (v) Lessor shall have received a current ALTA survey of such
         proposed Substitute Premises, the form of which shall be comparable to
         those received by Lessor at the Closing and sufficient to cause the
         standard survey exceptions set forth in the title policy referred to in
         the preceding subsection to be deleted.

                  (vi) Lessor shall have received a satisfactory environmental
         insurance policy or a Phase I environmental report with respect to such
         proposed Substitute Premises, the scope of which shall conform to the
         then customary standards for Lessor purchasing commercial real estate,
         which shall conclude that there is no Environmental Condition affecting
         the proposed Substitute Premises.

                  (vii) Lessee shall deliver, or cause to be delivered, with
         respect to Lessee and the Substitute Premises, opinions of Counsel in
         form and substance comparable to those received at the Closing (but
         also addressing such matters unique to the Substitute Premises as may
         be reasonably required by Lessor).

                  (viii) no default, beyond any applicable notice and cure
         period, shall then exist with respect to any other lease, loan or other
         transaction between Lessor or its affiliates on the one hand and Lessee
         or its affiliates on the other hand.

                  (ix) Lessee shall have executed such documents as are
         comparable to the security documents executed and delivered at Closing,
         as applicable (but with such revisions as may be reasonably required by
         Lessor to address matters unique to the Substitute Premises) or
         amendments to such documents, including, without limitation, a deed,
         lease, memorandum of lease and UCC-1 financing statements (the
         "Substitute Documents"), to provide Lessor with fee ownership of the
         proposed Substitute Premises, subject only to the Substitute Premises
         Permitted Exceptions, and all other rights, remedies and benefits with
         respect to the proposed Substitute Premises which Lessor holds in the
         Premises, all of which documents shall be in form and substance
         reasonably satisfactory to Lessor.

                  (x) the representations and warranties set forth in the
         Substitute Documents and Section 7 of this Lease applicable to the
         proposed Substitute Premises shall be true and correct in all material
         respects as of the date of substitution, and Lessee shall have
         delivered to Lessor an officer's certificate certifying to that effect.

                  (xi) Lessee shall have delivered to Lessor certificates of
         insurance showing that insurance required by the Substitute Documents
         is in full force and effect.

                                       39
<PAGE>   40
         Upon satisfaction of the foregoing conditions with respect to the
substitution of the Premises and this Lease:

                  (a) the proposed Substitute Premises and lease shall be deemed
         substituted for the Premises and this Lease;

                  (b) the Purchase Price for the Substitute Premises shall be
         the same as the Purchase Price for the Premises;

                  (c) in connection with this Lease, Lessor and Lessee shall
         execute Lessor's standard form mutual release and termination of lease;

                  (d) the Substitute Documents shall be dated as of the date of
         the substitution; and

                  (e) Lessor will execute a limited warranty deed for the
         Premises in favor of Lessee; title to the Premises shall be conveyed
         subject to liens for taxes and assessments and easements, covenants and
         restrictions of record which were attached to the Premises as of the
         date hereof, attached during the Lease Term through Lessee's action or
         inaction, as the case may be, have been granted by Lessor in lieu of a
         taking by the power of eminent domain or the like, have been approved
         by Lessee, or which do not materially adversely affect the use of the
         Premises as a Permitted Concept.

         B. For Purposes of this Section, the following terms shall be defined
as set forth below:

                           "Capital Lease" shall mean any lease of any property
                  (whether real, personal or mixed) by Lessee with respect to
                  the Substitute Premises which lease would, in conformity with
                  GAAP, be required to be accounted for as a capital lease on
                  the balance sheet of Lessee. The term "Capital Lease" shall
                  not include any operating lease.

                           "Debt" shall mean as directly related to the
                  Substitute Premises and the period of determination (i)
                  indebtedness for borrowed money, (ii) obligations evidenced by
                  bonds, indentures, notes or similar instruments, (iii)
                  obligations to pay the deferred purchase price of property or
                  services, (iv) obligations under leases which should be, in
                  accordance with GAAP, accounted for as Capital Leases, and (v)
                  obligations under direct or indirect guarantees in respect of,
                  and obligations (contingent or otherwise) to purchase or
                  otherwise acquire, or otherwise to assure a creditor against
                  loss in respect of, indebtedness or obligations of others of
                  the kinds referred to in clauses (i) through (iv) above.

                           "Depreciation and Amortization" shall mean with
                  respect to the Substitute Premises the depreciation and
                  amortization accruing during any period of determination with
                  respect to Debtor as determined in accordance with GAAP.

                           "Equipment Payment Amount" shall mean for any period
                  of determination the sum of all amounts payable during such
                  period of determination under all

                                       40
<PAGE>   41
                  (i) leases for equipment located at the Substitute Premises
                  and (ii) all loans secured by equipment located at the
                  Substitute Premises.

                           "FFCA Payments" shall mean with respect to the period
                  of determination, the sum of the Base Monthly Rental and any
                  and all other rent due and payable under this Lease.

                           "Fixed Charge Coverage Ratio" shall mean with respect
                  to the twelve month period of time immediately preceding the
                  date of determination, the ratio calculated for such period of
                  time, each as determined in accordance with GAAP, of (a) the
                  sum of Net Income (including proceeds from business
                  interruption insurance payments, if any), Depreciation and
                  Amortization, Interest Expense and Operating Lease Expense,
                  less a corporate overhead allocation in an amount equal to 5%
                  of Gross Sales to (b) the sum of the FFCA Payments, Operating
                  Lease Expense and the Equipment Payment Amount.

                           "Gross Sales" shall mean the sales or other income
                  arising from all business conducted at the Substitute Premises
                  by Lessee during the period of determination, less sales tax,
                  credit card commission and complimentary sales, as presented
                  in the Lessee's publicly disclosed financial statements, and
                  any amounts received from not-for-profit sales of all non-food
                  items approved for use in connection with promotional
                  campaigns, if any.

                           "Interest Expense" shall mean for any period of
                  determination, the sum of all interest accrued or which should
                  be accrued in respect of all Debt of Lessee allocable to the
                  Substitute Premises and all business operations thereon during
                  such period (including interest attributable to Capital
                  Leases), as determined in accordance with GAAP.

                           "Net Income" shall mean with respect to the period of
                  determination, the aggregate net income or net loss of Lessee
                  allocable to the Substitute Premises. In determining the
                  amount of Net Income, (i) adjustments shall be made for
                  nonrecurring gains and losses allocable to the period of
                  determination, (ii) deductions shall be made for Depreciation
                  and Amortization, Interest Expense and Operating Lease Expense
                  allocable to the period of determination, and (iii) no
                  deductions shall be made for (x) income taxes or charges
                  equivalent to income taxes allocable to the period of
                  determination, as determined in accordance with GAAP, or (y)
                  corporate overhead expense allocable to the period of
                  determination.

                           "Operating Lease Expense" shall mean the sum of all
                  payments and expenses incurred by Lessee under any operating
                  leases with respect to the Substitute Premises and the
                  business operations thereon during the period of
                  determination, as determined in accordance with GAAP.

         C. Lessee shall also have the right to substitute a Premises in
accordance with this Section in the event Lessor exercises its right to
substitution under the Loan Agreement.

                                       41
<PAGE>   42
         IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as
of the date first above written.

                                          LESSOR:

                                          FDA PROPERTYIES, INC.,
                                          a Delaware corporation

                                          By: /s/ Martin J. O'Dowd
                                              ---------------------------------
                                          Printed Name: Martin J. O'Dowd
                                                        -----------------------
Lessor's Tax Identification Number:       Title: President
                                                 ------------------------------
 36-74379010
----------------------------------

                                          LESSEE:

                                          FAMOUS DAVE'S OF AMERICA, INC.,
                                          a Minnesota corporation

                                          By: /s/ Martin J. O'Dowd
                                              ---------------------------------
                                          Printed Name: Martin J. O'Dowd
                                                        -----------------------
Lessee's Tax Identification Number:       Title: President
                                                 ------------------------------
 41-1782300
-----------------------------------

<PAGE>   43
STATE OF          Minnesota          )
         ---------------------------
                                     ) SS.
COUNTY OF           Hennepin         )
          --------------------------

         The foregoing instrument was acknowledged before me on July 25, 2000
by Martin J. O'Dowd, President of FDA Properties, Inc., a Delaware corporation,
on behalf of the corporation.

                                                 Rita A. Witting
                                               ---------------------------------
                                                 Notary Public

My Commission Expires:

        1-31-05
------------------------------------

STATE OF          Minnesota          )
         ---------------------------
                                     ) SS.
COUNTY OF           Hennepin         )
          --------------------------

         The foregoing instrument was acknowledged before me on July 25, 2000 by
Martin J. O'Dowd, President of Famous Dave's of America, Inc., a Minnesota
corporation, on behalf of the corporation.

                                                 Rita A. Witting
                                               ---------------------------------
                                                 Notary Public

My Commission Expires:

1-31-05
------------------------------------

<PAGE>   44
                                    EXHIBIT A

                                    PREMISES

FFCA NO.                  ADDRESS                            AMOUNT

8001-1612                 1631 West Lake Street             $1,600,000.00
                          Addison, IL

8001-1614                 2750 Pine Lake Road               $1,900,000.00
                          Lincoln, NE<PAGE>   1
                                                                   Exhibit 10.41

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

                       364-DAY REVOLVING CREDIT AGREEMENT

                                   DATED AS OF

                                  MARCH 9, 2001

                                      AMONG

                                NRG ENERGY, INC.

                    THE FINANCIAL INSTITUTIONS PARTY HERETO,

                                       AND

                               ABN AMRO BANK N.V.

                                    AS AGENT

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

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<S>      <C>               <C>                                                                                  <C>

SECTION 1.                 DEFINITIONS; INTERPRETATION............................................................1
         Section 1.1                Definitions...................................................................1
         Section 1.2                Interpretation...............................................................10
SECTION 2.                 THE REVOLVING CREDIT..................................................................10
         Section 2.1                The Loan Commitment..........................................................10
         Section 2.2                [Intentionally Omitted]......................................................10
         Section 2.3                Applicable Interest Rates....................................................10
         Section 2.4                Minimum Borrowing Amounts....................................................12
         Section 2.5                Manner of Borrowing Loans and Designating
                                    Interest Rates Applicable to Loans...........................................12
         Section 2.6                Interest Periods.............................................................14
         Section 2.7                Maturity of Loans............................................................15
         Section 2.8                Prepayments..................................................................15
         Section 2.9                Default Rate.................................................................16
         Section 2.10               The Notes....................................................................16
         Section 2.11               Funding Indemnity............................................................16
         Section 2.12               Commitment Terminations......................................................17
SECTION 3.                 FEES..................................................................................17
         Section 3.1                Fees.........................................................................17
SECTION 4.                 PLACE AND APPLICATION OF PAYMENTS.....................................................18
         Section 4.1                Place and Application of Payments............................................18
SECTION 5.                 REPRESENTATIONS AND WARRANTIES........................................................18
         Section 5.1                Corporate Organization and Authority.........................................18
         Section 5.2                Subsidiaries.................................................................19
         Section 5.3                Corporate Authority and Validity of Obligations..............................19
         Section 5.4                Financial Statements.........................................................19
         Section 5.5                No Litigation; No Labor Controversies........................................19
         Section 5.6                Taxes........................................................................20
         Section 5.7                Approvals....................................................................20
         Section 5.8                Validity of Notes............................................................20
         Section 5.9                ERISA........................................................................20
         Section 5.10               Government Regulation........................................................20
         Section 5.11               Margin Stock; Use of Proceeds................................................21
         Section 5.12               Licenses and Authorizations; Compliance Laws.................................21
         Section 5.13               Ownership of Property Liens..................................................21
         Section 5.14               No Burdensome Restrictions;
                                    Compliance with Agreements...................................................21
         Section 5.15               Full Disclosure..............................................................21
         Section 5.16               Year 2000 Problem............................................................21
SECTION 6.                 CONDITIONS PRECEDENT..................................................................22
         Section 6.1                Initial Credit Event.........................................................22
         Section 6.2                All Credit Events............................................................23
</TABLE>

                                       i

<PAGE>   3
<TABLE>
<S>      <C>               <C>                                                                                  <C>
SECTION 7.                 COVENANTS.............................................................................23
         Section 7.1                Corporate Existence; Subsidiaries............................................23
         Section 7.2                Maintenance..................................................................23
         Section 7.3                Taxes........................................................................24
         Section 7.4                ERISA........................................................................24
         Section 7.5                Insurance....................................................................24
         Section 7.6                Financial Reports and Other Information......................................24
         Section 7.7                Bank Inspection Rights.......................................................26
         Section 7.8                Conduct of Business..........................................................27
         Section 7.9                Liens........................................................................27
         Section 7.10               Use of Proceeds; Regulation U................................................27
         Section 7.11               Mergers, Consolidations and Sales of Assets..................................27
         Section 7.12               Consolidated Net Worth.......................................................28
         Section 7.13               Indebtedness to Consolidated Capitalization..................................28
         Section 7.14               Compliance with Laws.........................................................28
         Section 7.15               PUHCA........................................................................29
SECTION 8.                 EVENTS OF DEFAULT AND REMEDIES........................................................29
         Section 8.1                Events of Default............................................................29
         Section 8.2                Non-Bankruptcy Defaults......................................................31
         Section 8.3                Bankruptcy Defaults..........................................................31
         Section 8.4                [Intentionally Omitted]......................................................31
         Section 8.5                Notice of Default............................................................31
         Section 8.6                Expenses.....................................................................31
SECTION 9.                 CHANGE IN CIRCUMSTANCES...............................................................31
         Section 9.1                Change of Law................................................................31
         Section 9.2                Unavailability of Deposits or Inability to Ascertain,
                                    or Inadequacy of, LIBOR......................................................32
         Section 9.3                Increased Cost and Reduced Return............................................32
         Section 9.4                Lending Offices..............................................................34
         Section 9.5                Discretion of Bank as to Manner of Funding...................................34
SECTION 10.                THE AGENT.............................................................................34
         Section 10.1               Appointment and Authorization of Agent.......................................34
         Section 10.2               Agent and its Affiliates.....................................................35
         Section 10.3               Action by Agent..............................................................35
         Section 10.4               Consultation with Experts....................................................35
         Section 10.5               Liability of Agent; Credit Decision..........................................35
         Section 10.6               Indemnity....................................................................36
         Section 10.7               Resignation of Agent and Successor Agent.....................................36
SECTION 11.                MISCELLANEOUS.........................................................................37
         Section 11.1               Withholding Taxes............................................................37
         Section 11.2               No Waiver of Rights..........................................................38
         Section 11.3               Non-Business Day.............................................................38
         Section 11.4               Documentary Taxes............................................................38
         Section 11.5               Survival of Representations..................................................38
</TABLE>

                                       ii

<PAGE>   4
<TABLE>
<S>      <C>               <C>                                                                                  <C>
         Section 11.6               Survival of Indemnities......................................................39
         Section 11.7               Set-Off......................................................................39
         Section 11.8               Notices......................................................................39
         Section 11.9               Counterparts.................................................................41
         Section 11.10              Successors and Assigns.......................................................41
         Section 11.11              Participants and Note Assignees..............................................41
         Section 11.12              Assignment of Commitments by Banks...........................................42
         Section 11.13              Amendments...................................................................42
         Section 11.14              Headings.....................................................................43
         Section 11.15              Legal Fees, Other Costs and Indemnification..................................43
         Section 11.16              Entire Agreement.............................................................43
         Section 11.17              Construction.................................................................43
         Section 11.18              Governing Law................................................................44
         Section 11.19              Submission to Jurisdiction; Waiver of Jury Trial.............................44

</TABLE>

                                      iii

<PAGE>   5

                       364-DAY REVOLVING CREDIT AGREEMENT

         364-DAY REVOLVING CREDIT AGREEMENT, dated as of March 9, 2001 among NRG
Energy, Inc., a Delaware corporation (the "Borrower"), the financial
institutions from time to time party hereto (each a "Bank," and collectively the
"Banks") and ABN AMRO Bank N.V. in its capacity as agent for the Banks hereunder
(in such capacity, the "Agent").

                                WITNESSETH THAT:

         WHEREAS, the Borrower desires to obtain the several commitments of the
Banks to make available a revolving credit for loans (the "Revolving Credit"),
as described herein; and

         WHEREAS, the Banks are willing to extend such commitments subject to
all of the terms and conditions hereof and on the basis of the representations
and warranties hereinafter set forth;

         NOW, THEREFORE, in consideration of the recitals set forth above and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1.    DEFINITIONS; INTERPRETATION.

Section 1.1   Definitions.  The following terms when used herein have the
following meanings:

         "Adjusted LIBOR" is defined in Section 2.3(b) hereof.

         "Affiliate" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with their correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies of a Person (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event for purposes of this definition: (i) any Person which owns directly or
indirectly 5% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed to control such
corporation or other Person; and (ii) each director and executive officer of the
Borrower or any Subsidiary shall be deemed an Affiliate of the Borrower and each
Subsidiary.

         "Agent" is defined in the first paragraph of this Agreement and
includes any successor Agent pursuant to Section 10.7 hereof.

         "Agreement" means this 364-Day Revolving Credit Agreement, including
all Exhibits and Schedules hereto, as it may be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.

<PAGE>   6

         "Applicable Margin" means, at any time (i) with respect to Base Rate
Loans, the Base Rate Margin and (ii) with respect to Eurocurrency Loans, the
Eurocurrency Margin.

         "Applicable Telerate Page" is defined in Section 2.3(b) hereof.

         "Authorized Representative" means those persons shown on the list of
officers provided by the Borrower pursuant to Section 6.1(e) hereof, or on any
updated such list provided by the Borrower to the Agent, or any further or
different officer of the Borrower so named by any Authorized Representative of
the Borrower in a written notice to the Agent.

         "Bank" is defined in the first paragraph of this Agreement.

         "Base Rate" is defined in Section 2.3(a) hereof.

         "Base Rate Loan" means a Loan bearing interest prior to maturity at a
rate specified in Section 2.3(a) hereof.

         "Base Rate Margin" means the percentage set forth in Schedule 1 hereto
beside the then applicable Rating.

         "Borrower" is defined in the first paragraph of this Agreement.

         "Borrowing" means the total of Loans of a single type advanced,
continued for an additional Interest Period, or converted from a different type
into such type by the Banks on a single date and for a single Interest Period.
Borrowings of Loans are made and maintained ratably from each of the Banks
according to their Percentages. A Borrowing is "advanced" on the day Banks
advance funds comprising such Borrowing to the Borrower, is "continued" on the
date a new Interest Period for the same type of Loan commences for such
Borrowing, and is "converted" when such Borrowing is changed from one type of
Loan to the other, all as requested by the Borrower pursuant to Section 2.5(a).

         "Business Day" means any day other than a Saturday or Sunday on which
Banks are not authorized or required to close in Chicago, Illinois or New York,
New York and, if the applicable Business Day relates to the borrowing or payment
of a Eurocurrency Loan, on which dealings in U.S. Dollars may be carried on by
the Agent in the interbank eurodollar market.

         "Capital Lease" means at any date any lease of Property which, in
accordance with GAAP, would be required to be capitalized on the balance sheet
of the lessee.

         "Capitalized Lease Obligations" means, for any Person, the amount of
such Person's liabilities under Capital Leases determined at any date in
accordance with GAAP.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Commitments" means the Revolving Credit Commitments.

                                       2

<PAGE>   7

         "Compliance Certificate" means a certificate in the form of Exhibit B
hereto.

         "Consolidated Capitalization" means Consolidated Net Worth plus
Indebtedness of the Borrower.

         "Consolidated Current Liabilities" means such liabilities of the
Borrower on a consolidated basis as shall be determined in accordance with GAAP
to constitute current liabilities.

         "Consolidated Net Income" means, for any period, the net income (or net
loss) of the Borrower for such period computed on a consolidated basis in
accordance with GAAP.

         "Consolidated Net Tangible Assets" means, as of the date of
determination thereof, Consolidated Total Assets as of such date less the sum of
(i) Consolidated Current Liabilities and (ii) Intangible Assets.

         "Consolidated Net Worth" means, as of the date of determination
thereof, the amount which would be reflected as stockholders' equity upon a
consolidated balance sheet of the Borrower (determined in accordance with GAAP)
prior to making any adjustment thereto (i) as a result of application of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
or (ii) in connection with the account entitled "currency translation account"
on such balance sheet.

         "Consolidated Total Assets" means, as of the date of determination
thereof, the total amount of all assets of the Borrower determined on a
consolidated basis in accordance with GAAP.

         "Contingent Performance Guarantee" means a Performance Guarantee as to
which (i) the guarantor's obligation cannot be reasonably quantified, and (ii)
neither the Borrower nor any Subsidiary has information which raises a
reasonable possibility that a demand under such Performance Guarantee may be
made prior to, or within 18 months after, the Termination Date. A Contingent
Performance Guarantee which for any reason fails to meet the criteria set forth
in either clause (i) or (ii) of this definition shall immediately cease to be
deemed a Contingent Performance Guarantee for purposes of this Agreement.

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

         "Controlled Group" means all members of a controlled group of
corporations and all trades and businesses (whether or not incorporated) under
common control that, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.

         "Credit Documents" means this Agreement, the Notes and the Fee Letter.

                                       3

<PAGE>   8

         "Credit Event" means the advancing of any Loan or the continuation of
or conversion into a Eurocurrency Loan.

         "Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.

         "Effective Date" means March 9, 2001.

         "Environmental Law" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1802 et seq., the Toxic
Substances Control Act, 15 S.C. Section 2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Section 1252 et seq., the Clean Water Act, 33
U.S.C. Section 1321 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq.,
and any other federal, state, county, municipal, local or other statute, law,
ordinance or regulation which may relate to or deal with human health or the
environment, all as may be from time to time amended.

         "ERISA" is defined in Section 5.9 hereof.

         "Eurocurrency Loan" means a Loan bearing interest prior to maturity at
the rate specified in Section 2.3(b) hereof.

         "Eurocurrency Margin" means the percentage set forth in Schedule 1
hereto beside the then applicable Rating.

         "Eurocurrency Reserve Percentage" is defined in Section 2.3(b) hereof.

         "Event of Default" means any of the events or circumstances specified
in Section 8.1 hereof.

         "Existing Credit Agreement" means that certain 364-Day Revolving Credit
Agreement dated as of March 10, 2000 among NRG Energy, Inc., ABN AMRO Bank N.V.,
as administrative agent, and the banks from time-to-time party thereto, as
amended or otherwise modified from time to time.

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

         "Facility Fee Rate" means the percentage set forth in Schedule 1 hereto
beside the then applicable Rating.

         "Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Base Rate set forth in
Section 2.3(a) hereof.

         "Fee Letter" means that certain letter between the Agent and the
Borrower dated as of the date hereof pertaining to fees to be paid by the
Borrower to the Agent for the Agent's sole account and benefit.

                                       4

<PAGE>   9

         "FinCo" means NRG Finance Company I LLC, a Delaware special purpose
limited liability company which is a Wholly-Owned Subsidiary of the Borrower and
whose sole purpose is to facilitate the financing of a revolving working
capital, acquisition and construction loan facility.

         "FinCo Revolving Loan Facility" means a revolving working capital,
acquisition and construction loan facility (i) under which FinCo is the sole
borrower, (ii) as to which FinCo's obligations are or may be Guaranteed by some
or all of the Borrower's Project Finance Subsidiaries whose projects or turbines
are being financed by FinCo and for which there is no other financing on a
senior basis being provided by any other Person, and (iii) which is unsecured by
any assets of, or stock or other equity interest of or owned by, the Borrower or
its Subsidiaries, other than (x) assets and/or the stock or other equity
interest of FinCo, and (y) assets and/or the stock or other equity interest of
such Project Finance Subsidiaries; provided, however, that any Guaranty of the
Indebtedness of FinCo or any security therefor given by or in respect of a
Project Finance Subsidiary to the extent permitted hereunder may continue in
existence only until the financing received by the Project Finance Subsidiary
from FinCo has been repaid.

         "GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, applied by the Borrower and its
Subsidiaries on a basis consistent with the preparation of the Borrower's
financial statements furnished to the Banks.

         "Guaranty" by any Person means all obligations (other than endorsements
in the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation (including, without limitation,
limited or full recourse obligations in connection with sales of receivables or
any other Property and Performance Guarantees) of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, or (y)
to maintain working capital or other balance sheet condition, or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purpose of all computations made under this Agreement, the
amount of a Guaranty in respect of any obligation shall be deemed to be equal to
the maximum aggregate amount of such obligation or, if the Guaranty is limited
to less than the full amount of such obligation, the maximum aggregate potential
liability under the terms of the Guaranty. Notwithstanding anything in this
definition to the contrary, a Person's support of its subsidiary's obligation to
(a) make equity contributions or (b) pay liquidated damages under an operating
and maintenance agreement should such subsidiary fail to comply with the terms
thereof shall not be considered a "Guaranty" by such Person.

                                       5

<PAGE>   10

         "Hazardous Material" means any substance or material which is hazardous
or toxic, and includes, without limitation, (a) asbestos, polychlorinated
biphenyls, dioxins and petroleum or its by-products or derivatives (including
crude oil or any fraction thereof) and (b) any other material or substance
classified or regulated as "hazardous" or "toxic" pursuant to any Environmental
Law.

         "Indebtedness" means and includes, for any Person, all obligations of
such Person, without duplication, which are required by GAAP to be shown as
liabilities on its balance sheet, and in any event shall include all of the
following whether or not so shown as liabilities: (i) obligations of such Person
for borrowed money, (ii) obligations of such Person representing the deferred
purchase price of property or services, (iii) obligations of such Person
evidenced by notes, acceptances, or other instruments of such Person or arising
out of letters of credit issued for such Person's account, (iv) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (v)
Capitalized Lease Obligations of such Person and (vi) obligations for which such
Person is obligated pursuant to a Guaranty, provided that Contingent Performance
Guarantees of the Borrower shall not be deemed "Indebtedness" for purposes of
this Agreement. All calculations of the Indebtedness of any Person (and the
components thereof) shall be performed on a consolidated basis, provided, that
Indebtedness shall not include obligations which are required by GAAP to be
shown as liabilities on such Person's balance sheet, but which are non-recourse
to such Person.

         "Interest Period" is defined in Section 2.6 hereof.

         "Intangible Assets" means, as of the date of determination thereof, all
assets of the Borrower properly classified as intangible assets determined on a
consolidated basis in accordance with GAAP.

         "Investment Grade Rating" means, with respect to any Person, that its
(i) Moody's Rating is at least Baa3 and (ii) S&P Rating is at least BBB-. If
either clause (i) or (ii) is not satisfied, such Person shall not be deemed to
have an "Investment Grade Rating".

         "Lending Office" is defined in Section 9.4 hereof.

         "LIBOR" is defined in Section 2.3(b) hereof.

         "LIBOR Index Rate" is defined in Section 2.3(b) hereof.

         "Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, including, but not
limited to, the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale, security agreement or trust receipt, or a lease,
consignment or bailment for security purposes. The term "Lien" shall also
include reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purposes of this

                                       6

<PAGE>   11

definition, a Person shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, Capital Lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes, and such retention of
title shall constitute a "Lien."

         "Loan" is defined in Section 2.1(a) hereof and, as so defined, includes
a Base Rate Loan or Eurocurrency Loan, each of which is a "type" of Loan
hereunder.

         "Material Adverse Effect" means any material adverse change in, or any
adverse development which materially affects or could reasonably be expected to
affect, the business, financial position or results of operations of the
Borrower and its Subsidiaries, taken as a whole, or the ability of the Borrower
to perform its obligations under the Credit Documents.

         "Material Subsidiary" means a Subsidiary of the Borrower whose total
assets represent at least 5% of the total assets of the Borrower and its
Subsidiaries determined based upon the most recent financial statements
delivered pursuant to Section 7.6 (as determined in accordance with GAAP).

         "Minimum Consolidated Net Worth" means an amount, as of any
determination thereof, equal to the sum of $1,000,000,000 plus 25% of
Consolidated Net Income for the period from and including January 1, 2001 to
such determination date but which amount shall in no event be less than
$1,000,000,000.

         "Moody's Rating" means the rating assigned by Moody's Investors
Service, Inc. and any successor thereto that is a nationally recognized rating
agency to the outstanding senior unsecured non-credit enhanced long-term debt
obligations of a Person (or if neither Moody's Investors Service, Inc. nor any
such successor shall be in the business of rating long-term indebtedness, a
nationally recognized rating agency in the U.S. as mutually agreed between the
Required Banks and Holdings). Any reference in this Agreement to any specific
rating is a reference to such rating as currently defined by Moody's Investors
Service, Inc. (or such a successor) and shall be deemed to refer to the
equivalent rating if such rating system changes.

         "Non-Conforming Period" is defined in Section 7.13 hereof.

         "Note" is defined in Section 2.10(a) hereof.

         "Obligations" means all fees payable hereunder, all obligations of the
Borrower to pay principal or interest on Loans and all other payment obligations
of the Borrower arising under or in relation to any Credit Document.

         "Percentage" means, for each Bank, the percentage of the Revolving
Credit Commitments represented by such Bank's Revolving Credit Commitment or, if
the Revolving Credit Commitments have been terminated, the percentage held by
such Bank of the aggregate principal amount of all outstanding Obligations.

                                       7

<PAGE>   12

         "Performance Guarantee" means a guarantee issued by the Borrower or a
Subsidiary that the Borrower or such Subsidiary will cause some action (other
than the payment of money) to be performed, whether by performing the action
itself or paying others to perform such action.

         "Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or any agency or political subdivision thereof.

         "Plan" means at any time an employee pension benefit plan covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code that is either (i) maintained by a member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.

         "PBGC" is defined in Section 5.9 hereof.

         "Project Finance Subsidiary" means any special purpose Subsidiary of
the Borrower formed solely to facilitate the financing of the assets of such
Subsidiary, and as to which the recourse of any creditors of such Subsidiary is
limited solely to such assets and the stock or other equity interest of such
Subsidiary.

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

         "Rating" means the rating given to senior unsecured non-credit enhanced
debt obligations of the Borrower by Moody's Investors Service, Inc. and Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any
successors thereto.

         "Reference Banks" means ABN AMRO Bank N.V., and one other
representative of the Banks. In the event that any of such Banks ceases to be a
"Bank" hereunder or fails to provide timely quotations of interest rates to the
Agent as and when required by this Agreement, then such Bank shall be replaced
by a new reference bank jointly designated by the Agent and the Borrower.

         "Replaceable Bank" is defined in Section 11.13(iii).

         "Replacement Bank" is defined in Section 11.13(iii).

         "Required Banks" means, as of the date of determination thereof, Banks
holding at least 66 2/3% of the Percentages.

         "Revolving Credit Commitment" is defined in Section 2.1 hereof.

         "SEC" means the Securities and Exchange Commission.

                                       8

<PAGE>   13

         "Security" has the same meaning as in Section 2(l) of the Securities
Act of 1933, as amended.

         "S&P Rating" means the rating assigned by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc. and any successor thereto
that is a nationally recognized rating agency to the outstanding senior
unsecured non-credit enhanced long-term debt obligations of a Person (or, if
neither such division nor any successor shall be in the business of rating
long-term indebtedness, a nationally recognized rating agency in the U.S. as
mutually agreed between the Required Banks and Holdings). Any reference in this
Agreement to any specific rating is a reference to such rating as currently
defined by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. (or such a successor) and shall be deemed to refer to the
equivalent rating if such rating system changes.

         "Subsidiary" means, as to the Borrower, any active, domestic
corporation or other entity of which one hundred percent (100%) of the
outstanding stock or comparable equity interests having ordinary voting power
for the election of the Board of Directors of such corporation or similar
governing body in the case of a non corporation (irrespective of whether or not,
at the time, stock or other equity interest of any other class or classes of
such corporation or other entity shall have or might have voting power by reason
of the happening of any contingency) is at the time directly owned by the
Borrower.

         "Telerate Service" means the Dow Jones Telerate Service.

         "Termination Date" means March 8, 2002.

         "Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable accrued benefits under such Plan exceeds (ii) the fair market
value of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the Controlled Group to
the PBGC or the Plan under Title IV of ERISA.

         "Utilization" means the percentage obtained by dividing the aggregate
outstanding principal amount of Loans on any date (after giving effect to any
Borrowings and repayments occurring on such date) by the Commitments in effect
on such date (after giving effect to any reductions thereof on such date).

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

         "Voting Stock" of any Person means capital stock of any class or
classes or other equity interests (however designated) having ordinary voting
power for the election of directors or similar governing body of such Person.

         "Welfare Plan" means a "welfare plan," as defined in Section 3(1) of
ERISA.

                                       9

<PAGE>   14

         "Wholly-Owned" when used in connection with any Subsidiary of the
Borrower means a Subsidiary of which all of the issued and outstanding shares of
stock or other equity interests (other than directors' qualifying shares as
required by law) shall be owned by the Borrower and/or one or more of its
Wholly-Owned Subsidiaries.

Section 1.2 Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to Chicago,
Illinois time unless otherwise specifically provided. Where the character or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the specific provisions of this Agreement.

SECTION 2.    THE REVOLVING CREDIT.

Section 2.1 The Loan Commitment. General Terms. Subject to the terms and
conditions hereof, each Bank severally and not jointly agrees to make a loan or
loans (individually a "Loan" and collectively "Loans") to the Borrower from time
to time on a revolving basis in U.S. Dollars up to the amount of its revolving
credit commitment set forth on the applicable signature page hereof (such
amount, as reduced pursuant to Section 2.12 or changed as a result of one or
more assignments under Section 11.12 or 11.13(iii), its "Revolving Credit
Commitment" and, cumulatively for all the Banks, the "Revolving Credit
Commitments") before the Termination Date. The aggregate amount of Loans at any
time outstanding shall not exceed the Revolving Credit Commitments in effect at
such time. Each Borrowing of Loans shall be made ratably from the Banks in
proportion to their respective Percentages. As provided in Section 2.5(a)
hereof, the Borrower may elect that each Borrowing of Loans be either Base Rate
Loans or Eurocurrency Loans. Loans may be repaid and the principal amount
thereof reborrowed before the Termination Date, subject to all the terms and
conditions hereof. The initial amount of Revolving Credit Commitments under this
Agreement equals $500,000,000.

         Section 2.2   [Intentionally Omitted].

         Section 2.3   Applicable Interest Rates.

              (a) Base Rate Loans. Each Base Rate Loan made or maintained by a
         Bank shall bear interest during each Interest Period it is outstanding
         computed on the basis of a year of 365 or 366 days, as applicable, and
         actual days elapsed on the unpaid principal amount thereof from the
         date such Loan is advanced, continued or created by conversion from a
         Eurocurrency Loan until maturity (whether by acceleration or otherwise)
         at a rate per annum equal to the sum of the Applicable Margin plus the
         Base Rate from time to time in effect, payable on the last day of its
         Interest Period and at maturity (whether by acceleration or otherwise).

              "Base Rate" means for any day the greater of:

                                       10

<PAGE>   15

                   (i) the rate of interest announced by the Agent at its
              offices in Chicago, Illinois, from time to time as its prime rate,
              or equivalent, for U.S. Dollar loans as in effect on such day,
              with any change in the Base Rate resulting from a change in said
              prime rate to be effective as of the date of the relevant change
              in said prime rate; and

                   (ii) the sum of (x) the rate determined by the Agent to be
              the prevailing rate per annum (rounded upwards, if necessary, to
              the nearest one hundred-thousandth of a percentage point) at
              approximately 10:00 a.m. (New York time) (or as soon thereafter as
              is practicable) on such day (or, if such day is not a Business
              Day, on the immediately preceding Business Day) for the purchase
              at face value of overnight Federal funds, as published by the
              Federal Reserve bank of New York, in an amount comparable to the
              principal amount owed to the Agent for which such rate is being
              determined, plus (y) 1/2 of 1% (0.50%).

              (b) Eurocurrency Loans. Each Eurocurrency Loan made or maintained
         by a Bank shall bear interest during each Interest Period it is
         outstanding (computed on the basis of a year of 360 days and actual
         days elapsed) on the unpaid principal amount thereof from the date such
         Loan is advanced, continued, or created by conversion from a Base Rate
         Loan until maturity (whether by acceleration or otherwise) at a rate
         per annum equal to the sum of the Applicable Margin plus the Adjusted
         LIBOR applicable for such Interest Period, payable on the last day of
         the Interest Period and at maturity (whether by acceleration or
         otherwise), and, if the applicable Interest Period is longer than three
         months, on each day occurring every three months after the commencement
         of such Interest Period. All payments of principal and interest on a
         Loan (whether a Base Rate Loan or Eurocurrency Loan) shall be made in
         U.S. Dollars.

              "Adjusted LIBOR" means, for any Borrowing of Eurocurrency Loans, a
         rate per annum determined in accordance with the following formula:

              Adjusted LIBOR =                   LIBOR
                                ------------------------------------
                                1 - Eurocurrency Reserve Percentage

              "LIBOR" means, for an Interest Period, (a) the LIBOR Index Rate
         for such Interest Period as from time to time quoted by the Telerate
         Service, if such rate is available, and (b) if the LIBOR Index Rate is
         not quoted by the Telerate Service, the arithmetic average of the rates
         of interest per annum (rounded upwards, if necessary, to the nearest
         one-sixteenth of one percent) at which deposits in U.S. Dollars in
         immediately available funds are offered to each Reference Bank at 11:00
         a.m. (London, England time) two (2) Business Days before the beginning
         of such Interest Period by major banks in the interbank eurocurrency
         market for delivery on the first day of and for a period equal to such
         Interest Period in an amount equal or comparable to the principal
         amount of the Eurocurrency Loan scheduled to be made by the Agent as
         part of such Borrowing.

                                       11

<PAGE>   16

              "LIBOR Index Rate" means, for any Interest Period, the rate per
         annum (rounded upwards, if necessary, to the next higher one-sixteenth
         of one percent) for deposits in U.S. Dollars for delivery on the first
         day of and for a period equal to such Interest Period in an amount
         equal or comparable to the principal amount of the Loan scheduled to be
         made by the Agent as part of such Borrowing, which appears on the
         Applicable Telerate Page, as of 11:00 a.m. (London, England time) on
         the day two (2) Business Days before the commencement of such Interest
         Period.

              "Applicable Telerate Page" means the display page designated as
         "Page 3750" on the Telerate Service (or such other page as may replace
         such pages, as appropriate, on that service or such other service as
         may be nominated by the British Bankers' Association as the information
         vendor for the purpose of displaying British Bankers' Association
         Interest Settlement Rates for deposits in U.S. Dollars).

              "Eurocurrency Reserve Percentage" means the daily average for the
         applicable Interest Period of the maximum rate, expressed as a decimal,
         at which reserves (including, without limitation, any supplemental,
         marginal and emergency reserves) are imposed during such Interest
         Period by the Board of Governors of the Federal Reserve System (or any
         successor) on "eurocurrency liabilities," as defined in such Board's
         Regulation D (or in respect of any other category of liabilities that
         includes deposits by reference to which the interest rate is determined
         or any category of extensions of credit or other assets that include
         loans by non-United States offices of any Bank to United States
         residents), subject to any amendments of such reserve requirement by
         such Board or its successor, taking into account any transitional
         adjustments thereto. For purposes of this definition, the Eurocurrency
         Loans shall be deemed to be "eurocurrency liabilities" as defined in
         Regulation D without benefit or credit for any prorations, exemptions
         or offsets under Regulation D.

              (c) Rate Determinations. The Agent shall determine each interest
         rate applicable to Obligations, and a determination thereof by the
         Agent shall be conclusive and binding except in the case of manifest
         error.

         Section 2.4 Minimum Borrowing Amounts. Each Borrowing of Base Rate
Loans and Eurocurrency Loans denominated in U.S. Dollars shall be in an amount
not less than $1,000,000 and in integral multiples of $1,000,000.

         Section 2.5 Manner of Borrowing Loans and Designating Interest Rates
Applicable to Loans.

              (a) Notice to the Agent. The Borrower shall give written notice to
         the Agent by no later than 10:00 a.m. (Chicago time) (i) at least three
         (3) Business Days before the date on which the Borrower requests the
         Banks to advance a Borrowing of Eurocurrency Loans and (ii) on the date
         the Borrower requests the Banks to advance a Borrowing of Base Rate
         Loans. The Loans included in each Borrowing shall bear interest
         initially at the type of rate specified in such notice of a new
         Borrowing. Thereafter, the Borrower may

                                       12

<PAGE>   17

         from time to time elect to change or continue the type of interest rate
         borne by each Borrowing or, subject to Section 2.4's minimum amount
         requirement for each outstanding Borrowing, a portion thereof, as
         follows: (i) if such Borrowing is of Eurocurrency Loans, on the last
         day of the Interest Period applicable thereto, the Borrower may
         continue part or all of such Borrowing as Eurocurrency Loans for an
         Interest Period or Interest Periods specified by the Borrower or
         convert part or all of such Borrowing into Base Rate Loans, (ii) if
         such Borrowing is of Base Rate Loans, on any Business Day, the Borrower
         may convert all or part of such Borrowing into Eurocurrency Loans for
         an Interest Period or Interest Periods specified by the Borrower. The
         Borrower shall give all such notices requesting the advance,
         continuation, or conversion of a Borrowing to the Agent by telephone or
         telecopy (which notice shall be irrevocable once given and, if by
         telephone, shall be promptly confirmed in writing). Notices of the
         continuation of a Borrowing of Eurocurrency Loans for an additional
         Interest Period or of the conversion of part or all of a Borrowing of
         Eurocurrency Loans into Base Rate Loans or of Base Rate Loans into
         Eurocurrency Loans must be given by no later than 10:00 a.m. (Chicago
         time) at least three (3) Business Days before the date of the requested
         continuation or conversion. All such notices concerning the advance,
         continuation, or conversion of a Borrowing shall specify the date of
         the requested advance, continuation or conversion of a Borrowing (which
         shall be a Business Day), the amount of the requested Borrowing to be
         advanced, continued, or converted, the type of Loans to comprise such
         new, continued or converted Borrowing and, if such Borrowing is to be
         comprised of Eurocurrency Loans, the Interest Period applicable
         thereto. The Borrower agrees that the Agent may rely on any such
         telephonic or telecopy notice given by any person it in good faith
         believes is an Authorized Representative without the necessity of
         independent investigation, and in the event any such notice by
         telephone conflicts with any written confirmation, such telephonic
         notice shall govern if the Agent has acted in reliance thereon. There
         may be no more than five different Interest Periods in effect at any
         one time.

              (b) Notice to the Banks. The Agent shall give prompt telephonic or
         telecopy notice to each Bank of any notice from the Borrower received
         pursuant to Section 2.5(a) above. The Agent shall give notice to the
         Borrower and each Bank by like means of the interest rate applicable to
         each Borrowing of Eurocurrency Loans and the amount thereof.

              (c) Borrower's Failure to Notify. Any outstanding Borrowing of
         Base Rate Loans shall, subject to Section 6.2 hereof, automatically be
         continued for an additional Interest Period on the last day of its then
         current Interest Period unless the Borrower has notified the Agent
         within the period required by Section 2.5(a) that it intends to convert
         such Borrowing into a Borrowing of Eurocurrency Loans or notifies the
         Agent within the period required by Section 2.8(a) that it intends to
         prepay such Borrowing. If the Borrower fails to give notice pursuant to
         Section 2.5(a) above of the continuation or conversion of any
         outstanding principal amount of a Borrowing of Eurocurrency Loans
         before the last day of its then current Interest Period within the
         period required by Section 2.5(a) and has not notified the Agent within
         the period required by Section 2.8(a) that it

                                       13

<PAGE>   18
         intends to prepay such Borrowing, such Borrowing shall automatically be
         converted into a Borrowing of Base Rate Loans, subject to Section 6.2
         hereof.

              (d) Disbursement of Loans. Not later than 11:00 a.m. (Chicago
         time) on the date of any requested advance of a new Borrowing of
         Eurocurrency Loans, and not later than 12:00 noon (Chicago time) on the
         date of any requested advance of a new Borrowing of Base Rate Loans,
         subject to Section 6 hereof, each Bank shall make available its Loan
         comprising part of such Borrowing in funds immediately available at the
         principal office of the Agent in Chicago, Illinois. The Agent shall
         make available to the Borrower Loans at the Agent's principal office in
         Chicago, Illinois or such other office as the Agent has previously
         agreed to, in writing, with the Borrower.

              (e) Agent Reliance on Bank Funding. Unless the Agent shall have
         been notified by a Bank before the date on which such Bank is scheduled
         to make payment to the Agent of the proceeds of a Loan (which notice
         shall be effective upon receipt) that such Bank does not intend to make
         such payment, the Agent may assume that such Bank has made such payment
         when due and the Agent may in reliance upon such assumption (but shall
         not be required to) make available to the Borrower the proceeds of the
         Loan to be made by such Bank and, if any Bank has not in fact made such
         payment to the Agent, such Bank shall, on demand, pay to the Agent the
         amount made available to the Borrower attributable to such Bank
         together with interest thereon in respect of each day during the period
         commencing on the date such amount was made available to the Borrower
         and ending on (but excluding) the date such Bank pays such amount to
         the Agent at a rate per annum equal to the Federal Funds Rate. If such
         amount is not received from such Bank by the Agent immediately upon
         demand, the Borrower will, on demand, repay to the Agent the proceeds
         of the Loan attributable to such Bank with interest thereon at a rate
         per annum equal to the interest rate applicable to the relevant Loan.

         Section 2.6 Interest Periods. As provided in Section 2.5(a) hereof, at
the time of each request to advance, continue, or create by conversion a
Borrowing of Eurocurrency Loans, the Borrower shall select an Interest Period
applicable to such Loans from among the available options. The term "Interest
Period" means the period commencing on the date a Borrowing of Loans is
advanced, continued, or created by conversion and ending: (a) in the case of
Base Rate Loans, on the last Business Day of the calendar quarter in which such
Borrowing is advanced, continued, or created by conversion (or on the last day
of the following calendar quarter if such Loan is advanced, continued or created
by conversion on the last Business Day of a calendar quarter), and (b) in the
case of Eurocurrency Loans, 1, 2, 3, or 6 months thereafter; provided, however,
that:

              (a) any Interest Period for a Borrowing of Base Rate Loans that
         otherwise would end after the Termination Date shall end on the
         Termination Date;

              (b) for any Borrowing of Eurocurrency Loans, the Borrower may not
         select an Interest Period that extends beyond the Termination Date;

                                       14

<PAGE>   19

              (c) whenever the last day of any Interest Period would otherwise
         be a day that is not a Business Day, the last day of such Interest
         Period shall be extended to the next succeeding Business Day, provided
         that, if such extension would cause the last day of an Interest Period
         for a Borrowing of Eurocurrency Loans to occur in the following
         calendar month, the last day of such Interest Period shall be the
         immediately preceding Business Day; and

              (d) for purposes of determining an Interest Period for a Borrowing
         of Eurocurrency Loans, a month means a period starting on one day in a
         calendar month and ending on the numerically corresponding day in the
         next calendar month; provided, however, that if there is no numerically
         corresponding day in the month in which such an Interest Period is to
         end or if such an Interest Period begins on the last Business Day of a
         calendar month, then such Interest Period shall end on the last
         Business Day of the calendar month in which such Interest Period is to
         end.

         Section 2.7 Maturity of Loans. Unless an earlier maturity is provided
for hereunder (whether by acceleration or otherwise), each Loan shall mature and
become due and payable by the Borrower on the Termination Date.

         Section 2.8 Prepayments.

              (a) The Borrower may prepay without premium or penalty and in
         whole or in part (but, if in part, then: (i) if such Borrowing is of
         Base Rate Loans, in an amount not less than $1,000,000, (ii) if such
         Borrowing is of Eurocurrency Loans in an amount not less than
         $1,000,000, and (iii) in an amount such that the minimum amount
         required for a Borrowing pursuant to Section 2.4 hereof remains
         outstanding) any Borrowing of Eurocurrency Loans upon three Business
         Days prior notice to the Agent or, in the case of a Borrowing of Base
         Rate Loans, notice delivered to the Agent no later than 10:00 a.m.
         (Chicago time) on the date of prepayment, such prepayment to be made by
         the payment of the principal amount to be prepaid and accrued interest
         thereon to the date fixed for prepayment. In the case of Eurocurrency
         Loans, such prepayment may only be made on the last day of the Interest
         Period then applicable to such Loans. The Agent will promptly advise
         each Bank of any such prepayment notice it receives from the Borrower.
         Any amount paid or prepaid before the Termination Date may, subject to
         the terms and conditions of this Agreement, be borrowed, repaid and
         borrowed again.

              (b) If the aggregate principal amount of outstanding Loans shall
         at any time for any reason exceed the Revolving Credit Commitments then
         in effect, the Borrower shall, immediately and without notice or
         demand, pay the amount of such excess to the Agent for the ratable
         benefit of the Banks as a prepayment of the Loans. Immediately upon
         determining the need to make any such prepayment the Borrower shall
         notify the Agent of such required prepayment.

              (c) Each such prepayment shall be accompanied by a payment of all
         accrued and unpaid interest on the Loans prepaid and shall be subject
         to Section 2.11.

                                       15

<PAGE>   20

         Section 2.9 Default Rate. If any payment of any Obligation is not made
when due (whether by acceleration or otherwise), such Obligation shall bear
interest, computed on the basis of a year of 360 days and actual days elapsed
(except for Base Rate Loans bearing interest based on the rate described in
clause (i) of the definition of Base Rate, in which case such Loan shall bear
interest computed on the basis of a year of 365 or 366 days, as applicable, and
the actual number of days elapsed) from the date such payment was due until paid
in full, payable on demand, at a rate per annum equal to:

              (a) for any Obligation other than a Eurocurrency Loan, the sum of
         two percent (2%) plus the Base Rate Margin plus the Base Rate from time
         to time in effect; and

              (b) for any Eurocurrency Loan, the sum of two percent (2%) plus
         the rate of interest in effect thereon at the time of such default
         until the end of the Interest Period applicable thereto and,
         thereafter, at a rate per annum equal to the sum of two percent (2%)
         plus the Base Rate Margin plus the Base Rate from time to time in
         effect.

         Section 2.10 The Notes.

              (a) The Loans made to the Borrower by a Bank shall be evidenced by
         a single promissory note of the Borrower issued to such Bank in the
         form of Exhibit A hereto. Each such promissory note is hereinafter
         referred to as a "Note" and collectively such promissory notes are
         referred to as the "Notes."

              (b) Each Bank shall record on its books and records or on a
         schedule to its Note the amount of each Loan advanced, continued, or
         converted by it, all payments of principal and interest and the
         principal balance from time to time outstanding thereon, the type of
         such Loan, and, for any Eurocurrency Loan, the Interest Period and the
         interest rate applicable thereto. The record thereof, whether shown on
         such books and records of a Bank or on a schedule to any Note, shall be
         prima facie evidence as to all such matters; provided, however, that
         the failure of any Bank to record any of the foregoing or any error in
         any such record shall not limit or otherwise affect the obligation of
         the Borrower to repay all Loans made to it hereunder together with
         accrued interest thereon. At the request of any Bank and upon such Bank
         tendering to the Borrower the Note to be replaced, the Borrower shall
         furnish a new Note to such Bank to replace any outstanding Note, and at
         such time the first notation appearing on a schedule on the reverse
         side of, or attached to, such Note shall set forth the aggregate unpaid
         principal amount of all Loans, if any, then outstanding thereon.

         Section 2.11 Funding Indemnity. If any Bank shall incur any loss, cost
or expense (including, without limitation, any loss of profit, and any loss,
cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any
Eurocurrency Loan or the relending or reinvesting of such deposits or amounts
paid or prepaid to such Bank) as a result of:

                                       16

<PAGE>   21

              (a) any payment (whether by acceleration or otherwise), prepayment
         or conversion of a Eurocurrency Loan on a date other than the last day
         of its Interest Period,

              (b) any failure (because of a failure to meet the conditions of
         Section 6 or otherwise) by the Borrower to borrow or continue a
         Eurocurrency Loan, or to convert a Base Rate Loan into a Eurocurrency
         Loan, on the date specified in a notice given pursuant to Section
         2.5(a) or established pursuant to Section 2.5(c) hereof,

              (c) any failure by the Borrower to make any payment of principal
         on any Eurocurrency Loan (x) when due (whether by acceleration or
         otherwise), or (y) on the date specified in a notice of prepayment, or

              (d) any acceleration of the maturity of a Eurocurrency Loan as a
         result of the occurrence of any Event of Default hereunder,

then, upon the demand of such Bank, the Borrower shall pay to such Bank
such amount as will reimburse such Bank for such loss, cost or expense. If any
Bank makes such a claim for compensation, it shall provide to the Borrower, with
a copy to the Agent, a certificate executed by an officer of such Bank setting
forth the amount of such loss, cost or expense in reasonable detail (including
an explanation of the basis for and the computation of such loss, cost or
expense) and the amounts shown on such certificate if reasonably calculated
shall be conclusive absent manifest error.

         Section 2.12 Commitment Terminations. The Borrower shall have the right
at any time and from time to time, upon five (5) Business Days prior written
notice to the Agent, to terminate the Revolving Credit Commitments without
premium or penalty, in whole or in part, any partial termination to be (i) in an
amount not less than $5,000,000, and (ii) allocated ratably among the Banks in
proportion to their respective Percentages, provided that the Revolving Credit
Commitments may not be reduced to an amount less than the amount of all Loans
then outstanding. The Agent shall give prompt notice to each Bank of any such
termination of Commitments. Any termination of Revolving Credit Commitments
pursuant to this Section 2.12 may not be reinstated.

SECTION 3.    FEES.

         Section 3.1 Fees.

              (a) Certain Fees. The Borrower shall pay, or cause to be paid, to
         the Agent certain fees set forth in the Fee Letter at the time
         specified in the Fee Letter for payment of such amounts.

              (b) Facility Fee. For the period from the Effective Date to and
         including the Termination Date, the Borrower shall pay to the Agent for
         the ratable account of the Banks in accordance with their Percentages a
         facility fee accruing at a rate per annum equal to the Facility Fee
         Rate on the average daily amount of the Commitments (whether

                                       17

<PAGE>   22

         used or unused), or if the Commitments have expired or terminated, on
         the principal amount of Loans. Such facility fee is payable in arrears
         on the last Business Day of each calendar quarter and on the
         Termination Date, unless the Revolving Credit Commitments are
         terminated in whole on an earlier date, in which event the fee for the
         period to but not including the date of such termination shall be paid
         in whole on the date of such termination.

              (c) Closing Fees. On the Effective Date the Borrower shall pay to
         the Agent for the account of each Bank a closing fee of 0.05% on the
         amount of such Bank's Revolving Credit Commitment in effect on the
         Effective Date.

              (d) Fee Calculations. All fees payable under this Agreement shall
         be payable in U.S. Dollars and shall be computed on the basis of a year
         of 360 days, for the actual number of days elapsed. All determinations
         of the amount of fees owing hereunder (and the components thereof)
         shall be made by the Agent and shall be conclusive absent manifest
         error.

SECTION 4.    PLACE AND APPLICATION OF PAYMENTS.

         Section 4.1 Place and Application of Payments. All payments of
principal of and interest on the Loans, and of all other amounts payable by the
Borrower under this Agreement, shall be made by the Borrower to the Agent by no
later than 12:00 Noon (Chicago time) on the due date thereof at the principal
office of the Agent in Chicago, Illinois (or such other location in the United
States as the Agent may designate to the Borrower). Any payments received after
such time shall be deemed to have been received by the Agent on the next
Business Day. All such payments shall be made free and clear of, and without
deduction for, any set-off, counterclaim, levy, withholding or any other
deduction of any kind in U.S. Dollars, in immediately available funds at the
place of payment. The Agent will promptly thereafter cause to be distributed
like funds relating to the payment of principal or interest on Loans or
applicable fees ratably to the Banks and like funds relating to the payment of
any other amount payable to any Person to such Person, in each case to be
applied in accordance with the terms of this Agreement.

SECTION 5.    REPRESENTATIONS AND WARRANTIES.

         The Borrower hereby represents and warrants to each Bank as to itself
and, where the following representations and warranties apply to Subsidiaries,
as to each of its Subsidiaries, as follows:

         Section 5.1 Corporate Organization and Authority. The Borrower and each
of its Subsidiaries is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, except where such failure to
be in good standing would not, individually or in the aggregate, have a Material
Adverse Effect. Each is duly qualified to transact business in each jurisdiction
in which such qualification is required, whether by reason of ownership or
leasing of property or the conduct of business or otherwise, except where
failure

                                       18

<PAGE>   23

to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect. Each has the power and authority required to own, lease
and operate its properties and to conduct its business as currently conducted,
except where failure to have such power and authority would not, individually or
in the aggregate, have a Material Adverse Effect.

         Section 5.2 Subsidiaries. Schedule 5.2 (as updated quarterly pursuant
to Section 7.6(b) hereof or otherwise from time to time in writing by the
Borrower) hereto identifies each Subsidiary and the jurisdiction of its
incorporation. All of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and outstanding and fully paid and nonassessable
except as set forth on Schedule 5.2 hereto. All such shares owned by the
Borrower are owned beneficially, and of record, and, except in the case of (i)
Liens granted in connection with the FinCo Revolving Loan Facility, and (ii) any
Project Finance Subsidiary, free of any Lien.

         Section 5.3 Corporate Authority and Validity of Obligations. The
Borrower has full right and authority to enter into this Agreement and the other
Credit Documents to which it is a party, to make the borrowings herein provided
for, to issue its Notes in evidence thereof, and to perform all of its
obligations under the Credit Documents to which it is a party. Each Credit
Document to which it is a party has been duly authorized, executed and delivered
by the Borrower and constitutes valid and binding obligations of the Borrower
enforceable in accordance with its terms. No Credit Document, nor the
performance or observance by the Borrower of any of the matters or things
therein provided for, contravenes any provision of law or any charter or by-law
provision of the Borrower or any material Contractual Obligation of or affecting
the Borrower or any of its Properties or results in or requires the creation or
imposition of any Lien on any of the Properties or revenues of the Borrower.

         Section 5.4 Financial Statements. All financial statements heretofore
delivered to the Banks showing historical performance of the Borrower for each
of the Borrower's fiscal years ending on or before December 31, 1999, and for
the Borrower's quarter ended September 30, 2000 have been prepared in accordance
with generally accepted accounting principles applied on a basis consistent,
except as otherwise noted therein, with that of the previous fiscal year. Each
of such financial statements fairly presents on a consolidated basis the
financial condition of the Borrower as of the dates thereof and the results of
operations for the periods covered thereby. The Borrower and its Subsidiaries
have no material contingent liabilities other than those disclosed in such
financial statements referred to in this Section 5.4 or in comments or footnotes
thereto, or in any report supplementary thereto, heretofore furnished to the
Banks. Since December 31, 1999, there has been no material adverse change in the
business, operations, Property or financial or other condition, or business
prospects, of the Borrower or any of its Subsidiaries.

         Section 5.5 No Litigation; No Labor Controversies.

              (a) Except as set forth on Schedule 5.5 (as updated quarterly
         pursuant to Section 7.6(b) hereof or otherwise from time to time in
         writing by the Borrower), there is no litigation or governmental
         proceeding pending, or to the knowledge of the Borrower,

                                       19

<PAGE>   24

         threatened, against the Borrower or any Subsidiary which, if adversely
         determined, could (individually or in the aggregate) have a Material
         Adverse Effect.

              (b) Except as set forth on Schedule 5.5 (as updated quarterly
         pursuant to Section 7.6(b) hereof or otherwise from time to time in
         writing by the Borrower), there are no labor controversies pending or,
         to the best knowledge of the Borrower, threatened against the Borrower
         or any Subsidiary which could have a Material Adverse Effect.

         Section 5.6 Taxes. The Borrower and its Subsidiaries have filed all
United States federal tax returns, and all other tax returns, required to be
filed and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary, except such taxes, if
any, as are being contested in good faith and for which adequate reserves have
been provided. No notices of tax liens have been filed and no claims are being
asserted concerning any such taxes, which liens or claims are material to the
financial condition of the Borrower or any of its Subsidiaries (individually or
in the aggregate). The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries for any taxes or other governmental charges are
adequate.

         Section 5.7 Approvals. Except as contemplated by Section 7.14, no
authorization, consent, license, exemption, filing or registration with any
court or governmental department, agency or instrumentality, nor any approval or
consent of the stockholders of the Borrower or any Subsidiary or from any other
Person, is necessary to the valid execution, delivery or performance by the
Borrower or any Subsidiary of any Credit Document to which it is a party.

         Section 5.8 Validity of Notes. When executed, authenticated and
delivered pursuant to the provisions of this Agreement against payment of the
consideration therefor, the Notes will be duly issued and will constitute legal,
valid and binding obligations of the Borrower, enforceable in accordance with
their terms, except for the effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting the rights of
creditors generally, and will rank pari passu with all other outstanding
unsecured indebtedness of the Borrower.

         Section 5.9 ERISA. With respect to each Plan, the Borrower and each
other member of the Controlled Group has fulfilled its obligations under the
minimum funding standards of and is in compliance in all material respects with
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
with the Code to the extent applicable to it and has not incurred any liability
to the Pension Benefit Guaranty Corporation ("PBGC") or a Plan under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA. The Borrower does not have any contingent liabilities for any
post-retirement benefits under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.

         Section 5.10 Government Regulation. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

                                       20

<PAGE>   25

         Section 5.11 Margin Stock; Use of Proceeds. Neither the Borrower nor
any Subsidiary is engaged principally, or as one of its primary activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock ("margin stock" to have the same meaning herein as in Regulation U
of the Board of Governors of the Federal Reserve System). The proceeds of the
Loans are to be used solely for the purposes set forth in and permitted by
Section 7.10. The Borrower will not use the proceeds of any Loan in a manner
that violates any provision of Regulation U or X of the Board of Governors of
the Federal Reserve System.

         Section 5.12 Licenses and Authorizations; Compliance Laws. The Borrower
and each of its Subsidiaries has all necessary licenses, permits and
governmental authorizations to own and operate its Properties and to carry on
its business as currently conducted and contemplated. The Borrower and each of
its Subsidiaries is in compliance with all applicable laws, regulations,
ordinances and orders of any governmental or judicial authorities except for any
such law, regulation, ordinance or order which, the failure to comply therewith,
could not reasonably be expected to have a Material Adverse Effect.

         Section 5.13 Ownership of Property Liens. The Borrower and each
Subsidiary has good title to or valid leasehold interests in all its Property.
None of the Borrower's Property is subject to any Lien, except as permitted in
Section 7.9.

         Section 5.14 No Burdensome Restrictions; Compliance with Agreements.
Neither the Borrower nor any Subsidiary is (a) party or subject to any law,
regulation, rule or order, or any Contractual Obligation that (individually or
in the aggregate) could have a Material Adverse Effect or (b) in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in, nor has any event occurred (and is continuing) that
constitutes or would (whether or not with the giving of notice and/or with the
passage of time and/or the fulfillment of any other requirement) constitute, to
the knowledge of the Borrower, a default or any breach or failure to perform by
the Borrower under any indenture, mortgage, loan agreement, lease or other
agreement or instrument to which it is a party, which default could have a
Material Adverse Effect.

         Section 5.15 Full Disclosure. All information heretofore furnished by
the Borrower to the Agent or any Bank for purposes of or in connection with the
Credit Documents or any transaction contemplated thereby is, and all such
information hereafter furnished by the Borrower to the Agent or any Bank will
be, true and accurate in all material respects and not misleading on the date as
of which such information is stated or certified.

         Section 5.16 Year 2000 Problem. On the basis of a comprehensive review
and assessment of the Borrower's and its Subsidiaries' systems and equipment and
inquiry made of the Borrower's and its Subsidiaries' material suppliers, vendors
and customers, and based on its operations since January 1, 2000, the Borrower
has no reason to believe that the Year 2000 Problem, including costs of
remediation, has resulted or will result in a Material Adverse Effect. As used
herein, "Year 2000 Problem" means any significant risk that computer hardware,
software or equipment containing embedded microchips essential to the businesses
or operations of the Borrower and its Subsidiaries will not, in the case of
dates or time periods occurring after

                                       21

<PAGE>   26

         December 31, 1999, function at least as effectively as in the case of
         dates or time periods occurring prior to January 1, 2000.

SECTION 6.    CONDITIONS PRECEDENT.

         The obligation of each Bank to advance, continue, or convert any Loan
shall be subject to the following conditions precedent:

         Section 6.1 Initial Credit Event. Before or concurrently with the
initial Credit Event:

              (a) The Agent shall have received for each Bank (i) the favorable
         written opinion of counsel to the Borrower in form and substance
         satisfactory to the Agent and its counsel, and (ii) the closing fee
         referred to in Section 3.1(c) hereof;

              (b) The Agent shall have received for each Bank copies of (i) the
         Articles of Incorporation, together with all amendments, and a
         certificate of good standing, for the Borrower, both certified as of a
         date not earlier than 20 days prior to the date hereof by the
         appropriate governmental officer of the Borrower's jurisdiction of
         incorporation and (ii) the Borrower's bylaws (or comparable constituent
         documents) and any amendments thereto, certified in each instance by
         its Secretary or an Assistant Secretary;

              (c) The Agent shall have received for each Bank copies of
         resolutions of the Borrower's Board of Directors authorizing the
         execution and delivery of the Credit Documents and the consummation of
         the transactions contemplated thereby together with specimen signatures
         of the persons authorized to execute such documents on the Borrower's
         behalf, all certified in each instance by its Secretary or Assistant
         Secretary;

              (d) The Agent shall have received for each Bank such Bank's duly
         executed Note of the Borrower dated the date hereof and otherwise in
         compliance with the provisions of Section 2.10(a) hereof;

              (e) The Agent shall have received for each Bank a list of the
         Borrower's Authorized Representatives and such other documents as any
         Bank may reasonably request;

              (f) All legal matters incident to the execution and delivery of
         the Credit Documents shall be satisfactory to the Banks;

              (g) The Existing Credit Agreement shall have terminated and the
         Borrower shall have no further obligations thereunder (except
         obligations which by their terms survive the termination of the
         Existing Credit Agreement).

              (h) The Agent shall have received a certificate by the chief
         financial officer, treasurer, vice president of finance or corporate
         controller of the Borrower, stating that on the date of such initial
         Credit Event no Default or Event of Default has occurred and is
         continuing.

                                       22

<PAGE>   27

         Section 6.2 All Credit Events. As of the time of each Credit Event
hereunder (including the initial Credit Event):

              (a) The Agent shall have received the notice required by Section
         2.5 hereof;

              (b) Each of the representations and warranties set forth in
         Section 5 hereof shall be and remain true and correct in all material
         respects as of said time, taking into account any amendments to such
         Section (including, without limitation, any amendments to the Schedules
         referenced therein) made after the date of this Agreement in accordance
         with its provisions, except that if any such representation or warranty
         relates solely to an earlier date it need only remain true as of such
         date, provided that solely for purposes of this Section 6.2(b) the
         representations relating to the Borrower's Subsidiaries set forth in
         Section 5.2 hereof shall be deemed representations relating only to the
         Borrower's Material Subsidiaries;

              (c) The Borrower shall be in full compliance with all of the terms
         and conditions hereof, and no Default or Event of Default shall have
         occurred and be continuing or would occur as a result of such Credit
         Event;

              (d) No event of default by the Borrower has been declared and is
         continuing under any existing debt agreements; and

              (e) Such Credit Event shall not violate any order, judgment or
         decree of any court or other authority or any provision of law or
         regulation applicable to any Bank (including, without limitation,
         Regulation U of the Board of Governors of the Federal Reserve System).

         Each request for a Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such Credit Event as
to the facts specified in paragraphs (b) and (c) of this Section 6.2, provided,
that solely in the case of a Credit Event which is a continuation of a previous
Borrowing, the Borrower shall not be deemed to have made any representation or
warranty with regard to the matters set forth in Section 5.5(a) and (b) hereof.

SECTION 7.    COVENANTS.

         The Borrower covenants and agrees that, so long as any Loan is
outstanding hereunder, or any Commitment is available to or in use by the
Borrower hereunder, except to the extent compliance in any case is waived in
writing by the Required Banks:

         Section 7.1 Corporate Existence; Subsidiaries. The Borrower shall, and
shall cause each of its Subsidiaries to, preserve and maintain its corporate
existence, subject to the provisions of Section 7.11 hereof.

         Section 7.2 Maintenance. The Borrower will maintain, preserve and keep
its plants, Properties and equipment necessary to the proper conduct of its
business in reasonably good repair, working order and condition and will from
time to time make all reasonably necessary

                                       23

<PAGE>   28
repairs, renewals, replacements, additions and betterments thereto so that at
all times such plants, Properties and equipment shall be reasonably preserved
and maintained, and the Borrower will cause each of its Subsidiaries to do so in
respect of Property owned or used by it; provided, however, that nothing in this
Section 7.2 shall prevent the Borrower or a Subsidiary from discontinuing the
operation or maintenance of any such Properties if such discontinuance is not
disadvantageous to the Banks or the holders of the Notes, and is, in the
judgment of the Borrower, desirable in the conduct of its business or the
business of its Subsidiary.

         Section 7.3 Taxes. The Borrower will duly pay and discharge, and will
cause each of its Subsidiaries duly to pay and discharge, all taxes, rates,
assessments, fees and governmental charges upon or against it or against its
Properties, in each case before the same becomes delinquent and before penalties
accrue thereon, unless and to the extent that the same is being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP have
been provided therefor on the books of the Borrower.

         Section 7.4 ERISA. The Borrower will promptly pay and discharge all
obligations and liabilities arising under ERISA of a character which if unpaid
or unperformed might result in the imposition of a Lien against any of its
properties or assets and will promptly notify the Agent of (i) the occurrence of
any reportable event (as defined in ERISA) affecting a Plan, other than any such
event of which the PBGC has waived notice by regulation, (ii) receipt of any
notice from PBGC of its intention to seek termination of any Plan or appointment
of a trustee therefor, (iii) its intention to terminate or withdraw from any
Plan, and (iv) the occurrence of any event affecting any Plan which could result
in the incurrence by the Borrower of any material liability, fine or penalty, or
any material increase in the contingent liability of the Borrower under any
post-retirement Welfare Plan benefit. The Agent will promptly distribute to each
Bank any notice it receives from the Borrower pursuant to this Section 7.4.

         Section 7.5 Insurance. The Borrower will insure, and keep insured, and
will cause each of its Subsidiaries to insure, and keep insured, with good and
responsible insurance companies, all insurable Property owned by it of a
character usually insured by companies similarly situated and operating like
Property. To the extent usually insured (subject to self-insured retentions) by
companies similarly situated and conducting similar businesses, the Borrower
will also insure, and cause each of its Subsidiaries to insure, employers' and
public and product liability risks with good and responsible insurance
companies. The Borrower will upon request of the Agent furnish to the Agent a
summary setting forth the nature and extent of the insurance maintained pursuant
to this Section 7.5.

         Section 7.6 Financial Reports and Other Information.

              (a) The Borrower will maintain a system of accounting in
         accordance with GAAP and will furnish to the Banks and their respective
         duly authorized representatives such information respecting the
         business and financial condition of the Borrower and its subsidiaries
         as any Bank may reasonably request; and without any request, the
         Borrower will furnish each of the following to each Bank:

                                       24
<PAGE>   29

                   (i) within 120 days after the end of each fiscal year of the
              Borrower, (A) a copy of the Borrower's audited financial
              statements for such fiscal year, including the consolidated
              balance sheet of the Borrower for such year and the related
              statement of income and statement of cash flow, as certified by
              independent public accountants of recognized national standing
              selected by the Borrower in accordance with GAAP with such
              accountants unqualified opinion to the effect that the financial
              statements have been prepared in accordance with GAAP and present
              fairly in all material respects in accordance with GAAP the
              consolidated financial position of the Borrower and its
              subsidiaries as of the close of such fiscal year and the results
              of their operations and cash flows for the fiscal year then ended
              and that an examination of such accounts in connection with such
              financial statements has been made in accordance with generally
              accepted auditing standards and accordingly, such examination
              included such tests of the accounting records and such other
              auditing procedures as were considered necessary in the
              circumstances; (B) a copy of the Borrower's unaudited
              consolidating financials for such fiscal year, including a
              consolidating unaudited balance sheet of the Borrower, and the
              related statement of income and shall use its best efforts to
              provide a statement of cash flow in a format acceptable to the
              Agent; all of the foregoing prepared by the Borrower in reasonable
              detail in accordance with GAAP and certified by the Borrower's
              chief financial officer, treasurer, vice president of finance or
              corporate controller as fairly presenting the financial condition
              as at the dates thereof and the results of operations for the
              periods covered thereby;

                   (ii) within 60 days after the end of each of the first three
              quarterly fiscal periods of the Borrower, a condensed consolidated
              unaudited balance sheet of the Borrower, and the related statement
              of income and statement of cash flow, as of the close of such
              period, all of the foregoing prepared by the Borrower in
              reasonable detail in accordance with GAAP and certified by the
              Borrower's chief financial officer, treasurer, vice president of
              finance or corporate controller as fairly presenting the financial
              condition as at the dates thereof and the results of operations
              for the periods covered thereby (subject to year end adjustments):

                   (iii) within the period provided in subsection (i) above, the
              written statement of the accountants who certified the audit
              report thereby required that in the course of their audit they
              have obtained no knowledge of any Default or Event of Default, or,
              if such accountants have obtained knowledge of any such Default or
              Event of Default, they shall disclose in such statement the nature
              and period of the existence thereof;

                   (iv) promptly after the sending or filing thereof, copies of
              all proxy statements, financial statements and reports the
              Borrower sends to its shareholders, and copies of all other
              regular, periodic and special reports and all registration
              statements the Borrower files with the SEC or any successor
              thereto, or with any national securities exchanges.

                                       25
<PAGE>   30

              (b) Each financial statement furnished to the Banks pursuant to
         subsection (i) or (ii) of Section 7.6(a) shall be accompanied by (A) a
         written certificate signed by the Borrower's chief financial officer,
         vice president of finance, corporate controller or treasurer (i) to the
         effect that no Default or Event of Default has occurred during the
         period covered by such statements or, if any such Default or Event of
         Default has occurred during such period, setting forth a description of
         such Default or Event of Default and specifying the action, if any,
         taken by the Borrower to remedy the same, (ii) to the effect that the
         representations and warranties contained in Section 5 hereof are true
         and correct in all material respects as though made on the date of such
         certificate (other than those made solely as of an earlier date, which
         need only remain true as of such date), taking into account any
         amendments to such Section (including, without limitation, any
         amendments to the Schedules referenced therein) made after the date of
         this Agreement in accordance with its provisions and except as
         otherwise described therein, (iii) notifying the Banks (x) of any
         litigation or governmental proceeding of the type described in Section
         5.5 hereof or (y) of any change in the information set forth on the
         Schedules hereto and (B) a Compliance Certificate in the form of
         Exhibit B hereto showing the Borrower's compliance with the covenants
         set forth in Sections 7.9, 7.11, 7.12 and 7.13 hereof.

              (c) The Borrower will (i) promptly (and in any event within three
         Business Days after an officer of the Borrower has knowledge thereof)
         give notice to the Agent and each Bank (x) of the occurrence of any
         Default or Event of Default or (y) of any payment default or payment
         event of default aggregating $50,000,000 or more under any Contractual
         Obligation of the Borrower and (ii) promptly (and in any event within
         ten Business Days after an officer of the Borrower has knowledge
         thereof) give notice to the Agent and each Bank of any material adverse
         change in the business, operations, Property or financial or other
         condition of the Borrower and its Subsidiaries (individually or in the
         aggregate).

         Section 7.7 Bank Inspection Rights. Upon reasonable notice from any
Bank, the Borrower will, at the Borrower's expense (such expenses to be
reasonably incurred), permit such Bank (and such Persons as any Bank may
designate) during normal business hours to visit and inspect, under the
Borrower's guidance, any of the properties of the Borrower or any of its
Subsidiaries, to examine all of their books of account, records, reports and
other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and with their independent public accountants (and by this provision
the Borrower authorizes such accountants to discuss with the Banks (and such
Persons as any Bank may designate subject to confidentiality agreements
reasonably acceptable to the Borrower) the finances and affairs of the Borrower
and its Subsidiaries) all at such reasonable times and as often as may be
reasonably requested; provided, however, that except upon the occurrence and
during the continuation of any Default or Event of Default, not more than one
such set of visits and inspections may be conducted each calendar quarter.

                                       26
<PAGE>   31

         Section 7.8 Conduct of Business. The Borrower will not engage in any
line of business other than business associated with or related to energy
generation, transmission, marketing and distribution or other infrastructure
lines of business.

         Section 7.9 Liens. The Borrower shall cause the Obligations to at all
times rank at least pari passu with all other senior unsecured obligations of
the Borrower. The Borrower will not create, incur, permit to exist or to be
incurred any Lien of any kind on any Property owned by the Borrower; provided,
however, that this Section 7.9 shall not apply to nor operate to prevent:

              (a) Liens upon any Property acquired by the Borrower to secure any
         Indebtedness (which for purposes of this Section 7.9(a) shall include
         non-recourse obligations) of the Borrower incurred to finance or
         refinance the purchase price of such Property (including Property which
         was initially purchased with equity), provided that any such Lien shall
         apply only to the Property that was so acquired and the aggregate
         principal amount of Indebtedness secured by such Liens shall not exceed
         the cost or value of the acquired Property;

              (b) Other Liens not to exceed 10% of Consolidated Net Tangible
         Assets;

              (c) Liens on the stock or other equity interests (i) granted in
         connection with the FinCo Revolving Loan Facility and (ii) of Project
         Finance Subsidiaries; and

              (d) Any extension, renewal or replacement (or successive
         extensions, renewals or replacements) in whole or in part of any Lien
         referred to in the foregoing paragraphs (a) through (c), inclusive.

         Section 7.10 Use of Proceeds; Regulation U. The proceeds of each
Borrowing will be used by the Borrower to repay indebtedness outstanding under
the Existing Credit Agreement, and for working capital and general corporate
purposes. The Borrower will not use any part of the proceeds of any of the
Borrowings directly or indirectly to purchase or carry any margin stock (as
defined in Section 5.11 hereof) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.

         Section 7.11 Mergers, Consolidations and Sales of Assets.

              (a) The Borrower will not consolidate with or merge into any other
         Person or sell, convey, transfer or lease its properties and assets
         substantially as an entirety to any Person, and the Borrower shall not
         permit any Person to consolidate with or merge into the Borrower,
         unless: (i) immediately prior to and immediately following such
         consolidation, merger, sale or lease, and after giving effect thereto,
         no Default or Event of Default shall have occurred and be continuing;
         and (ii) the Borrower is the surviving or continuing corporation, or
         the surviving or continuing corporation that acquires by sale,
         conveyance, transfer or lease (a) has a Rating equal to or better than
         the Rating of the Borrower in effect prior to such consolidation or
         merger and (y) is incorporated in the

                                       27
<PAGE>   32

         United States and expressly assumes the payment and performance of all
         Obligations of the Borrower under the Credit Documents pursuant to
         documentation in form and substance satisfactory to the Required Banks.

              (b) Except for the sale of the properties and assets of the
         Borrower substantially as an entirety pursuant to subsection (a) above,
         and other than assets required to be sold to conform with governmental
         regulations, the Borrower shall not sell or otherwise dispose of any
         assets (other than short-term, readily marketable investments purchased
         for cash management purposes with funds not representing the proceeds
         of other asset sales) if on a pro forma basis, the aggregate net book
         value of all such sales during the most recent 12-month period would
         exceed ten percent (10%) of Consolidated Net Tangible Assets computed
         as of the end of the most recent fiscal quarter preceding such sale;
         provided, however, that any such sales -------- ------- shall be
         disregarded for purposes of this ten percent (10%) limitation if the
         proceeds are invested in assets in similar or related lines of business
         of the Borrower and, provided further, that the Borrower may sell or
         otherwise dispose of assets in excess of such ten percent (10%) if the
         proceeds from such sales or dispositions, which are not reinvested as
         provided above, are retained by the Borrower as cash or cash
         equivalents at all times until invested in assets in similar or related
         lines of business of the Borrower.

         Section 7.12 Consolidated Net Worth. The Borrower will at all times
cause its Consolidated Net Worth to be equal to or greater than the Minimum
Consolidated Net Worth.

         Section 7.13 Indebtedness to Consolidated Capitalization. The Borrower
will at the end of each of its fiscal quarters maintain a ratio of its
Indebtedness to Consolidated Capitalization of not more than 0.68 to 1.00,
provided that for not more than two consecutive months in any six month period
(any such two month period being referred to herein as a "Non-Conforming
Period"), the ratio of the Borrower's Indebtedness to Consolidated
Capitalization may increase to not more than 0.72 to 1.00 so long as the
Borrower delivers to the Agent within 30 days after the end of any such
Non-Conforming Period written affirmation from Moody's Investors Service, Inc.
and Standard and Poor's Ratings Service, Inc. that the respective Ratings which
were in effect prior to such Non-Conforming Period remains in effect and that
the Borrower has not been placed in any "credit-watch with negative
implications" or similar type of category. For purposes of this covenant, only
fifty percent (50%) of any Indebtedness of the Borrower constituting Performance
Guarantees of obligations of the Borrower's Affiliates shall be deemed
Indebtedness, provided that if any demand has been made on such guarantee, the
full amount of such guarantee shall be included in calculating Indebtedness.

         Section 7.14 Compliance with Laws. Without limiting any of the other
covenants of the Borrower in this Section 7, the Borrower will conduct its
business, and otherwise be, in compliance with all applicable laws, regulations,
ordinances, writs, judgments, injunctions, decrees, awards and orders of any
governmental or judicial authorities; provided, however, that the Borrower shall
not be required to comply with any such law, rule, regulation, ordinance, writ,
judgments, injunction, decree, award or order if the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect.

                                       28
<PAGE>   33

         Section 7.15 PUHCA. The Borrower has obtained, and will maintain in
full force and effect, all necessary approvals, if any, under the Public Utility
Holding Company Act of 1935, as amended, in connection with the Borrower's
performance under the Credit Documents.

SECTION 8.    EVENTS OF DEFAULT AND REMEDIES.

         Section 8.1 Events of Default. Any one or more of the following shall
constitute an Event of Default:

              (a) The Borrower shall (i) fail to make when due any payment of
         principal on the Notes, or (ii) fail to make when due, and continuance
         of such failure for three or more Business Days, payment of interest on
         the Notes or any fee or other amount required to be made to the Agent
         pursuant to the Credit Documents;

              (b) Any representation or warranty made or deemed to have been
         made by or on behalf of the Borrower in the Credit Documents or on
         behalf of the Borrower in any certificate, statement, report or other
         writing furnished by or on behalf of the Borrower to the Agent pursuant
         to the Credit Documents or any other instrument, document or agreement
         shall prove to have been false or misleading in any material respect on
         the date as of which the facts set forth are stated or certified or
         deemed to have been stated or certified;

              (c) The Borrower shall fail to comply with Section 7 hereof and
         such failure to comply shall continue for 30 calendar days after the
         earlier to occur of (i) notice thereof to the Borrower by the Agent and
         (ii) first actual knowledge thereof by an officer of the Borrower;

              (d) The Borrower shall fail to comply with any agreement,
         covenant, condition, provision or term contained in the Credit
         Documents (and such failure shall not constitute an Event of Default
         under any of the other provisions of this Section 8) and such failure
         to comply shall continue for 30 calendar days after the earlier to
         occur of (i) notice thereof to the Borrower by the Agent and (ii) first
         actual knowledge thereof by an officer of the Borrower;

              (e) The Borrower shall become insolvent or shall generally not 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 of the
         Borrower 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 Borrower or for a
         substantial part of the property thereof and shall not be discharged
         within 90 days;

              (f) Any bankruptcy, reorganization, debt arrangement or other
         proceedings under any bankruptcy or insolvency law shall be instituted
         by or against the Borrower, and, if instituted against the Borrower,
         shall have

                                       29
<PAGE>   34

         been consented to or acquiesced in by the Borrower, or shall remain
         undismissed for 90 days, or an order for relief shall have been entered
         against the Borrower, or the Borrower shall take any corporate action
         to approve institution of, or acquiescence in, such a proceeding;

              (g) Any dissolution or liquidation proceeding shall be instituted
         by or against the Borrower and, if instituted against the Borrower,
         shall be consented to or acquiesced in by the Borrower or shall remain
         for 90 days undismissed, or the Borrower shall take any corporate
         action to approve institution of, or acquiescence in, such a
         proceeding;

              (h) A judgment or judgments, decrees or orders of any court,
         tribunal, arbitrator, administrative or other governmental body or
         entity for the payment of money in excess of the sum of $50,000,000 in
         the aggregate shall be rendered against the Borrower (excluding the
         amount thereof covered by insurance) or any of the Borrower's
         properties and such judgment, decree or order shall remain unvacated
         and undischarged and unstayed for 90 consecutive days, except while
         being contested in good faith by appropriate proceedings;

              (i) The institution by the Borrower of steps to terminate any Plan
         if in order to effectuate such termination, the Borrower would be
         required to make a contribution to such Plan, or would incur a
         liability or obligation to such Plan, in excess of $50,000,000, or the
         institution by the PBGC of steps to terminate any Plan;

              (j) Either (A) a default shall occur under that certain Credit
         Agreement dated as of November 30, 1999 among NRG Energy, Inc., the
         banks party thereto and Australia and New Zealand Banking Group
         Limited, as Administrative Agent, as such agreement may from time to
         time be restated, amended or otherwise modified or any substitute or
         replacement credit agreement with respect thereto (the "LC Agreement"),
         and as a result of such default is (x) the termination of the
         commitments under the LC Agreement, (y) the Borrower is required to
         provide cash collateral pursuant to the LC Agreement, or (z) the bank
         and/or the agent under the LC Agreement exercise any right or remedy
         thereunder, or (B) (i) a default in payment of any principal of or any
         interest aggregating $50,000,000 or more on any bond, debenture, note
         or other evidence of indebtedness of the Borrower or under any
         indenture or other instrument under which any such evidence of
         indebtedness has been issued or (ii) a default shall occur under any
         bond, debenture, note or other evidence of indebtedness of the Borrower
         or under any indenture or other instrument under which any such
         evidence of indebtedness has been issued and such default shall
         continue for a period of time sufficient to permit the holder or
         beneficiary of such indebtedness or a trustee therefor to cause the
         acceleration of the maturity of any such indebtedness of principal of
         or any interest aggregating $50,000,000 or more or any mandatory
         unscheduled prepayment, purchase or funding thereof; or

              (k) if at any time both (i) Xcel Energy Inc., a Minnesota
         corporation, or its successors, ceases to own a majority of the
         outstanding Voting Stock of the Borrower and (ii) the Borrower does not
         have an Investment Grade Rating.

                                       30
<PAGE>   35

         Section 8.2 Non-Bankruptcy Defaults. When any Event of Default other
than those described in subsections (e), (f) or (g) of Section 8.1 hereof has
occurred and is continuing, the Agent shall, by written notice to the Borrower:
(a) if so directed by the Required Banks, terminate the remaining Commitments
and all other obligations of the Banks hereunder on the date stated in such
notice (which may be the date thereof); and (b) if so directed by the Required
Banks, declare the principal of and the accrued interest on all outstanding
Notes to be forthwith due and payable and thereupon all outstanding Notes,
including both principal and interest thereon, shall be and become immediately
due and payable together with all other amounts payable under the Credit
Documents without further demand, presentment, protest or notice of any kind.
The Agent, after giving notice to the Borrower pursuant to Section 8.1(c),
8.1(d) or this Section 8.2, shall also promptly send a copy of such notice to
the other Banks, but the failure to do so shall not impair or annul the effect
of such notice.

         Section 8.3 Bankruptcy Defaults. When any Event of Default described in
subsections (e), (f) or (g) of Section 8.1 hereof has occurred and is
continuing, then all outstanding Notes shall immediately and automatically
become due and payable together with all other amounts payable under the Credit
Documents without presentment, demand, protest or notice of any kind and the
obligation of the Banks to extend further credit pursuant to any of the terms
hereof shall immediately and automatically terminate.

         Section 8.4 [Intentionally Omitted]

         Section 8.5 Notice of Default. The Agent shall give notice to the
Borrower under Section 8.1(c) or 8.1(d) hereof promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.

         Section 8.6 Expenses. The Borrower agrees to pay to the Agent and each
Bank, and any other holder of any Note outstanding hereunder, all reasonable
costs and expenses incurred or paid by the Agent or such Bank or any such
holder, including attorneys' fees and court costs, in connection with any
Default or Event of Default by the Borrower hereunder or in connection with the
enforcement of any of the Credit Documents.

SECTION 9.    CHANGE IN CIRCUMSTANCES.

         Section 9.1 Change of Law. Notwithstanding any other provisions of this
Agreement or any Note if at any time after the date hereof any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for any Bank to make or continue to maintain Eurocurrency Loans or to perform
its obligations as contemplated hereby, such Bank shall promptly give notice
thereof to the Borrower and such Bank's obligations to make or maintain
Eurocurrency Loans under this Agreement shall terminate until it is no longer
unlawful for such Bank to make or maintain Eurocurrency Loans. The Borrower
shall prepay on demand the outstanding principal amount of any such affected
Eurocurrency Loans, together with all interest accrued thereon at a rate per
annum equal to the interest rate applicable to such Loan; provided, however,
subject to all of the terms and conditions of this Agreement, the Borrower may
then elect to borrow the principal amount of the affected Eurocurrency Loans
from such Bank by

                                       31
<PAGE>   36

         means of Base Rate Loans from such Bank, which Base Rate Loans shall
         not be made ratably by the Banks but only from such affected Bank.

         Section 9.2 Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Loans:

              (a) the Agent determines that deposits in U.S. Dollars (in the
         applicable amounts) are not being offered to it in the federal funds or
         eurocurrency interbank market, as applicable, for such Interest Period,
         or that by reason of circumstances affecting the federal funds or
         interbank eurocurrency market, as applicable, adequate and reasonable
         means do not exist for ascertaining the applicable Federal Funds Rate
         or LIBOR; or

              (b) Banks having 25% or more of the aggregate amount of the
         Revolving Credit Commitments reasonably determine and so advise the
         Agent that the Federal Funds Rate or LIBOR, as applicable, as
         reasonably determined by the Agent will not adequately and fairly
         reflect the cost to such Banks or Bank of funding their or its Loans or
         Loan for such Interest Period;

then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks or
of the relevant Bank to make Base Rate Loans bearing interest at the Federal
Funds Rate or Eurocurrency Loans in the currency so affected, as applicable,
shall be suspended.

         Section 9.3 Increased Cost and Reduced Return.

              (a) If, on or after the date hereof, the adoption of any
         applicable law, rule or regulation, or any change therein, or any
         change in the interpretation or administration thereof by any
         governmental authority, central bank or comparable agency charged with
         the interpretation or administration thereof, or compliance by any Bank
         (or its Lending Office) with any request or directive (whether or not
         having the force of law but, if not having the force of law, compliance
         with which is customary in the relevant jurisdiction) of any such
         authority, central bank or comparable agency:

                   (i) shall subject any Bank (or its Lending Office) to any
              tax, duty or other charge with respect to its Eurocurrency Loans,
              its Notes, or its obligation to make Eurocurrency Loans, or shall
              change the basis of taxation of payments to any Bank (or its
              Lending Office) of the principal of or interest on its
              Eurocurrency Loans, or any other amounts due under this Agreement
              in respect of its Eurocurrency Loans or its obligation to make
              Eurocurrency Loans (except for changes in the rate of tax on the
              overall net income or profits of such Bank or its Lending Office
              imposed by the jurisdiction in which such Bank or its lending
              office is incorporated in which such Bank's principal executive
              office or Lending Office is located); or

                                       32
<PAGE>   37

                   (ii) shall impose, modify or deem applicable any reserve,
              special deposit or similar requirement (including, without
              limitation, any such requirement imposed by the Board of Governors
              of the Federal Reserve System, but excluding with respect to any
              Eurocurrency Loans any such requirement included in an applicable
              Eurocurrency Reserve Percentage) against assets of, deposits with
              or for the account of, or credit extended by, any Bank (or its
              Lending Office) or shall impose on any Bank (or its Lending
              Office) or on the interbank market any other condition affecting
              its Eurocurrency Loans, its Notes, or its obligation to make
              Eurocurrency Loans;

and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurocurrency Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within fifteen (15) days after
demand by such Bank (with a copy to the Agent), the Borrower shall be obligated
to pay to such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction. In the event any law, rule,
regulation or interpretation described above is revoked, declared invalid or
inapplicable or is otherwise rescinded, and as a result thereof a Bank is
determined to be entitled to a refund from the applicable authority for any
amount or amounts which were paid or reimbursed by Borrower to such Bank
hereunder, such Bank shall, so long as no Event of Default has occurred and is
then continuing, refund such amount or amounts to Borrower without interest.

              (b) If, after the date hereof, any Bank or the Agent shall have
         determined that the adoption of any applicable law, rule or regulation
         regarding capital adequacy, or any change therein (including, without
         limitation, any revision in the Final Risk-Based Capital Guidelines of
         the Board of Governors of the Federal Reserve System (12 CFR Part 208,
         Appendix A; 12 CFR Part 225, Appendix A) or of the Office of the
         Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any
         other applicable capital rules heretofore adopted and issued by any
         governmental authority), or any change in the interpretation or
         administration thereof by any governmental authority, central bank or
         comparable agency charged with the interpretation or administration
         thereof, or compliance by any Bank (or its Lending Office) with any
         request or directive regarding capital adequacy (whether or not having
         the force of law but, if not having the force of law, compliance with
         which is customary in the applicable jurisdiction) of any such
         authority, central bank or comparable agency, has or would have the
         effect of reducing the rate of return on such Bank's capital, or on the
         capital of any corporation controlling such Bank, as a consequence of
         its obligations hereunder to a level below that which such Bank could
         have achieved but for such adoption, change or compliance (taking into
         consideration such Bank's policies with respect to capital adequacy) by
         an amount deemed by such Bank to be material, then from time to time,
         within fifteen (15) days after demand by such Bank (with a copy to the
         Agent), the Borrower shall pay to such Bank such additional amount or
         amounts as will compensate such Bank for such reduction.

                                       33
<PAGE>   38

              (c) Each Bank that determines to seek compensation under this
         Section 9.3 shall notify the Borrower and the Agent of the
         circumstances that entitle the Bank to such compensation pursuant to
         this Section 9.3 and will designate a different Lending Office if such
         designation will avoid the need for, or reduce the amount of, such
         compensation and will not, in the sole judgment of such Bank, be
         otherwise disadvantageous to such Bank. A certificate of any Bank
         claiming compensation under this Section 9.3 and setting forth the
         additional amount or amounts to be paid to it hereunder shall be
         conclusive in the absence of manifest error. In determining such
         amount, such Bank may use any reasonable averaging and attribution
         methods.

              (d) If any Bank (other than ABN AMRO Bank N.V.) has demanded
         compensation or given notice of its intention to demand compensation
         under this Section 9.3 or the Borrower is required to pay any
         additional amount to any Bank under Section 9.3, the Borrower shall
         have the right, with the assistance of the Agent, to seek a substitute
         Bank or Banks reasonably satisfactory to the Agent (which may be one or
         more of the Banks) to replace such Bank under this Agreement and on the
         date of replacement, the Borrower shall pay all accrued interest and
         fees to the Bank being replaced. The Bank to be so replaced shall
         cooperate with the Borrower and substitute Bank to accomplish such
         substitution, provided that all of such Bank's Loan Commitment is
         replaced.

         Section 9.4 Lending Offices. Each Bank may, at its option, elect to
make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof or in the assignment agreement which any
assignee bank executes pursuant to Section 11.12 hereof (each a "Lending
Office") for each type of Loan available hereunder or at such other of its
branches, offices or affiliates as it may from time to time elect and designate
in a written notice to the Borrower and the Agent.

         Section 9.5 Discretion of Bank as to Manner of Funding. Notwithstanding
any other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Bank had actually funded and
maintained each Eurocurrency Loan through the purchase of deposits of U.S.
Dollars in the eurocurrency interbank market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to LIBOR for such
Interest Period.

SECTION 10.   THE AGENT.

         Section 10.1 Appointment and Authorization of Agent. Each Bank hereby
appoints ABN AMRO Bank N.V. as the Agent under the Credit Documents and hereby
authorizes the agent to take such action as Agent on its behalf and to exercise
such powers under the Credit Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this

                                       34
<PAGE>   39
Agreement and the Credit Documents. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this
Agreement or any other Credit Document a fiduciary relationship in respect of
any Bank, the holder of any Note or any other Person; and nothing in this
Agreement or any other Credit Document, expressed or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations in respect of
this Agreement or any other Credit Document except as expressly set forth herein
or therein.

         Section 10.2 Agent and its Affiliates. The Agent shall have the same
rights and powers under this Agreement and the other Credit Documents as any
other Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and the Agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or
any Affiliate of the Borrower as if it were not the Agent under the Credit
Documents. The term "Bank" as used herein and in all other Credit Documents,
unless the context otherwise clearly requires, includes the Agent in its
individual capacity as a Bank. References in Section 2 hereof to the Agent's
Loans, or to the amount owing to the Agent for which an interest rate is being
determined, refer to the Agent in its individual capacity as a Bank.

         Section 10.3 Action by Agent. If the Agent receives from the Borrower a
written notice of an Event of Default pursuant to Section 7.6(c)(i) hereof, the
Agent shall promptly give each of the Banks written notice thereof. The
obligations of the Agent under the Credit Documents are only those expressly set
forth therein. Without limiting the generality of the foregoing, the Agent shall
not be required to take any action hereunder with respect to any Default or
Event of Default, except as expressly provided in Sections 8.2 and 8.5. In no
event, however, shall the Agent be required to take any action in violation of
applicable law or of any provision of any Credit Document, and the Agent shall
in all cases be fully justified in failing or refusing to act hereunder or under
any other Credit Document unless it shall be first indemnified to its reasonable
satisfaction by the Banks against any and all costs, expense, and liability
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Bank or the Borrower. In all
cases in which this Agreement and the other Credit Documents do not require the
Agent to take certain actions, the Agent shall be fully justified in using its
discretion in failing to take or in taking any action hereunder and thereunder.

         Section 10.4 Consultation with Experts. The Agent may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.

         Section 10.5 Liability of Agent; Credit Decision. Neither the Agent nor
any of its directors, officers, agents, or employees shall be liable for any
action taken or not taken by it in connection with the Credit Documents (i) with
the consent or at the request of the Required Banks or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any other Credit Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of the Borrower or any other party contained

                                       35
<PAGE>   40
herein or in any other Credit Document; (iii) the satisfaction of any condition
specified in Section 6 hereof, except receipt of items required to be delivered
to the Agent; or (iv) the validity, effectiveness, genuineness, enforceability,
perfection, value, worth or collectability hereof or of any other Credit
Document or of any other documents or writing furnished in connection with any
Credit Document; and the Agent makes no representation of any kind or character
with respect to any such matter mentioned in this sentence. The Agent may
execute any of its duties under any of the Credit Documents by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Banks, the Borrower, or any other Person for the default or misconduct of any
such agents or attorneys-in-fact selected with reasonable care. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, other document or statement (whether written or oral) believed by
it to be genuine or to be sent by the proper party or parties. In particular and
without limiting any of the foregoing, the Agent shall have no responsibility
for confirming the accuracy of any Compliance Certificate or other document or
instrument received by it under the Credit Documents. The Agent may treat the
payee of any Note as the holder thereof until written notice of transfer shall
have been filed with the Agent signed by such payee in form satisfactory to the
Agent. Each Bank acknowledges that it has independently and without reliance on
the Agent or any other Bank, and based upon such information, investigations and
inquiries as it deems appropriate, made its own credit analysis and decision to
extend credit to the Borrower in the manner set forth in the Credit Documents.
It shall be the responsibility of each Bank to keep itself informed as to the
creditworthiness of the Borrower and any other relevant Person, and the Agent
shall have no liability to any Bank with respect thereto.

         Section 10.6 Indemnity. The Banks shall ratably, in accordance with
their respective Percentages, indemnify and hold the Agent, and its directors,
officers, employees, agents and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it under any
Credit Document or in connection with the transactions contemplated thereby,
regardless of when asserted or arising, except to the extent they are promptly
reimbursed for the same by the Borrower and except to the extent that any event
giving rise to a claim was caused by the gross negligence or willful misconduct
of the party seeking to be indemnified. The obligations of the Banks under this
Section 10.6 shall survive termination of this Agreement.

         Section 10.7 Resignation of Agent and Successor Agent. The Agent may
resign at any time by giving written notice thereof to the Banks and the
Borrower. Upon any such resignation of the Agent, the Required Banks shall have
the right to appoint a successor Agent with the consent of the Borrower,
provided, that at any time an Event of Default has occurred and is continuing,
no such consent shall be required. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Banks, with the
consent of the Borrower, appoint a successor Agent, which shall be any Bank
hereunder or any commercial bank organized under the laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $200,000,000. Upon the acceptance of its appointment as the Agent
hereunder, such successor Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring or removed Agent under the Credit
Documents, and the retiring Agent shall be discharged from

                                       36
<PAGE>   41

its duties and obligations thereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 10 and all protective
provisions of the other Credit Documents shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.

SECTION 11.   MISCELLANEOUS.

         Section 11.1 Withholding Taxes.

              (a) Payments Free of Withholding. Subject to Section 11.1(b)
         hereof, each payment by the Borrower under this Agreement or the other
         Credit Documents shall be made without withholding for or on account of
         any present or future taxes (other than overall net income taxes on the
         recipient). If any such withholding is so required, the Borrower shall
         make the withholding, pay the amount withheld to the appropriate
         governmental authority before penalties attach thereto or interest
         accrues thereon and forthwith pay such additional amount as may be
         necessary to ensure that the net amount actually received by each Bank
         and the Agent free and clear of such taxes (including such taxes on
         such additional amount) is equal to the amount which that Bank or the
         Agent (as the case may be) would have received had such withholding not
         been made. If the Agent or any Bank pays any amount in respect of any
         such taxes, penalties or interest the Borrower shall reimburse the
         Agent or that Bank for that payment on demand in the currency in which
         such payment was made. If the Borrower pays any such taxes, penalties
         or interest, it shall deliver official tax receipts evidencing that
         payment or certified copies thereof to the Bank or Agent on whose
         account such withholding was made (with a copy to the Agent if not the
         recipient of the original) on or before the thirtieth day after
         payment. If any Bank or the Agent determines it has received or been
         granted a credit against or relief or remission for, or repayment of,
         any taxes paid or payable by it because of any taxes, penalties or
         interest paid by the Borrower and evidenced by such a tax receipt, such
         Bank or Agent shall, to the extent it can do so without prejudice to
         the retention of the amount of such credit, relief, remission or
         repayment, pay to the Borrower such amount as such Bank or Agent
         determines is attributable to such deduction or withholding and which
         will leave such Bank or Agent (after such payment) in no better or
         worse position than it would have been in if the Borrower had not been
         required to make such deduction or withholding. Nothing in this
         Agreement shall interfere with the right of each Bank and the Agent to
         arrange its tax affairs in whatever manner it thinks fit nor oblige any
         Bank or the Agent to disclose any information relating to its tax
         affairs or any computations in connection with such taxes.

              (b) U.S. Withholding Tax Exemptions. Each Bank that is not a
         United States person (as such term is defined in Section 7701(a)(30) of
         the Code) shall submit to the Borrower and the Agent on or before the
         earlier of the date the initial Borrowing is made hereunder and thirty
         (30) days after the date hereof, two duly completed and signed copies
         of either Form W8BEN (relating to such Bank and entitling it to a
         complete exemption from withholding under the Code on all amounts to be
         received by such Bank, including fees, pursuant to the

                                       37
<PAGE>   42

         Credit Documents and the Loans) or Form W8ECI (relating to all amounts
         to be received by such Bank, including fees, pursuant to the Credit
         Documents and the Loans) of the United States Internal Revenue Service.
         Thereafter and from time to time, each Bank shall submit to the
         Borrower and the Agent such additional duly completed and signed copies
         of one or the other of such Forms (or such successor forms as shall be
         adopted from time to time by the relevant United States taxing
         authorities) as may be (i) requested by the Borrower in a written
         notice, directly or through the Agent, to such Bank and (ii) required
         under then-current United States law or regulations to avoid or reduce
         United States withholding taxes on payments in respect of all amounts
         to be received by such Bank, including fees, pursuant to the Credit
         Documents or the Loans.

              (c) Inability of Bank to Submit Forms. If any Bank determines, as
         a result of any change in applicable law, regulation or treaty, or in
         any official application or interpretation thereof, that it is unable
         to submit to the Borrower or Agent any form or certificate that such
         Bank is obligated to submit pursuant to subsection (b) of this Section
         11.1 or that such Bank is required to withdraw or cancel any such form
         or certificate previously submitted or any such form or certificate
         otherwise becomes ineffective or inaccurate, such Bank shall promptly
         notify the Borrower and Agent of such fact and the Bank shall to that
         extent not be obligated to provide any such form or certificate and
         will be entitled to withdraw or cancel any affected form or
         certificate, as applicable.

         Section 11.2 No Waiver of Rights. No delay or failure on the part of
the Agent or any Bank or on the part of the holder or holders of any Note in the
exercise of any power or right under any Credit Document shall operate as a
waiver thereof, nor as an acquiescence in any default, nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
power or right, and the rights and remedies hereunder of the Agent, the Banks
and the holder or holders of any Notes are cumulative to, and not exclusive of,
any rights or remedies which any of them would otherwise have.

         Section 11.3 Non-Business Day. If any payment of principal or interest
on any Loan or of any other Obligation shall fall due on a day which is not a
Business Day, interest or fees (as applicable) at the rate, if any, such Loan or
other Obligation bears for the period prior to maturity shall continue to accrue
on such Obligation from the stated due date thereof to and including the next
succeeding Business Day, on which the same shall be payable.

         Section 11.4 Documentary Taxes. The Borrower agrees that it will pay
any documentary, stamp or similar taxes payable in respect to any Credit
Document, including interest and penalties, in the event any such taxes are
assessed, irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.

         Section 11.5 Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as any credit is in use or available hereunder.

                                       38
<PAGE>   43

         Section 11.6 Survival of Indemnities. All indemnities and all other
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans, including, but not
limited to, Section 2.11, Section 9.3 and Section 11.15 hereof, shall survive
the termination of this Agreement and the other Credit Documents and the payment
of the Loans and all other Obligations.

         Section 11.7 Set-Off.

              (a) In addition to any rights now or hereafter granted under
         applicable law and not by way of limitation of any such rights, upon
         the occurrence of any Event of Default, each Bank, each Affiliate of a
         Bank, and each subsequent holder of any Note is hereby authorized by
         the Borrower at any time or from time to time, without notice to the
         Borrower or to any other Person, any such notice being hereby expressly
         waived, to set off and to appropriate and to apply any and all deposits
         (general or special, including, but not limited to, Indebtedness
         evidenced by certificates of deposit, whether matured or unmatured, and
         in whatever currency denominated) and any other Indebtedness at any
         time held or owing by that Bank, its Affiliate or that subsequent
         holder to or for the credit or the account of the Borrower, whether or
         not matured, against and on account of the obligations and liabilities
         of the Borrower to that Bank, its Affiliate or that subsequent holder
         under the Credit Documents, including, but not limited to, all claims
         of any nature or description arising out of or connected with the
         Credit Documents, irrespective of whether or not (a) that Bank, its
         Affiliate or that subsequent holder shall have made any demand
         hereunder or (b) the principal of or the interest on the Loans or Notes
         and other amounts due hereunder shall have become due and payable
         pursuant to Section 8 and although said obligations and liabilities, or
         any of them, may be contingent or unmatured.

              (b) Each Bank agrees with each other Bank a party hereto that if
         such Bank shall receive and retain any payment, whether by set-off or
         application of deposit balances or otherwise, on any of the Loans in
         excess of its ratable share of payments on all such obligations then
         outstanding to the Banks, then such Bank shall purchase for cash at
         face value, but without recourse, ratably from each of the other Banks
         such amount of the Loans, or participations therein, held by each such
         other Bank (or interest therein) as shall be necessary to cause such
         Bank to share such excess payment ratably with all the other Banks;
         provided, however, that if any such purchase is made by any Bank, and
         if such excess payment or part thereof is thereafter recovered from
         such purchasing Bank, the related purchases from the other Banks shall
         be rescinded ratably and the purchase price restored as to the portion
         of such excess payment so recovered, but without interest unless the
         purchasing Bank is required to pay interest thereon, in which case each
         Bank returning funds to such purchasing Bank shall pay its pro rata
         share of such interest.

         Section 11.8 Notices. Except as otherwise specified herein, all notices
under the Credit Documents shall be in writing (including telecopy or other
electronic communication) and shall be given to a party hereunder at its address
or telecopier number set forth below or such other address or telecopier number
as such party may hereafter specify by notice to the Agent and the Borrower,
given by courier, by United States certified or registered mail, or by other

                                       39
<PAGE>   44

telecommunication device capable of creating a written record of such notice and
its receipt. Notices under the Credit Documents to the Banks shall be addressed
to their respective addresses, telecopier or telephone numbers set forth on the
signature pages hereof or in the assignment agreement which any assignee bank
executes pursuant to Section 11.12 hereof, and to the Borrower and to the Agent
to:

         If to the Borrower:

         NRG Energy, Inc.
         1221 Nicollet Mall
         Suite 700
         Minneapolis, MN 55403-2445
         Attention: Treasurer
         Facsimile: (612) 373-5341
         Telephone: (612) 373-5306

         If to the Agent:

         ABN AMRO Bank
         Agency Services
         1325 Avenue of the Americas
         9th Floor
         New York, New York 10019
         Attention: Linda Boardman
         Facsimile: (212) 314-1712
         Telephone: (212) 314-1724

         With copies to:

         ABN AMRO Bank N.V.
         135 South LaSalle Street
         Suite 710
         Chicago, Illinois 60603
         Attention: David B. Bryant
         Facsimile: (312) 904-1466
         Telephone: (312) 904-2799

         ABN AMRO Bank N.V.
         208 South LaSalle Street
         Suite 1500
         Chicago, Illinois 60604-1003
         Attention: Ken Keck
         Facsimile: (312) 992-5111
         Telephone: (312) 992-5134

                                       40
<PAGE>   45

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 11.8 or on the signature pages hereof and a
confirmation of receipt of such telecopy has been received by the sender, (ii)
if given by courier, when delivered, (iii) if given by mail, three business days
after such communication is deposited in the mail, registered with return
receipt requested, addressed as aforesaid or (iv) if given by any other means,
when delivered at the addresses specified in this Section 11.8; provided that
any notice given pursuant to Section 2 hereof shall be effective only upon
receipt.

         Section 11.9 Counterparts. This Agreement may be executed in any number
of counterpart signature pages, and by the different parties on different
counterparts, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.

         Section 11.10 Successors and Assigns. This Agreement shall be binding
upon the Borrower and its successors and assigns, and shall inure to the benefit
of each of the Banks and the benefit of their respective successors and assigns,
including any subsequent holder of any Note. The Borrower may not assign any of
its rights or obligations under any Credit Document without the written consent
of all of the Banks.

         Section 11.11 Participants and Note Assignees. Each Bank shall have the
right at its own cost to grant participations (to be evidenced by one or more
agreements or certificates of participation) in the Loans made and/or Revolving
Credit Commitments held by such Bank at any time and from time to time, and to
assign its rights under such Loans or the Note evidencing such Loans to a
federal reserve bank; provided that (i) no such participation or assignment
shall relieve any Bank of any of its obligations under this Agreement, (ii) no
such assignee or participant shall have any rights under this Agreement except
as provided in this Section 11.11, and (iii) the Agent shall have no obligation
or responsibility to such participant or assignee, except that nothing herein is
intended to affect the rights of an assignee of a Note to enforce the Note
assigned. Any party to which such a participation or assignment has been granted
shall have the benefits of Section 2.11 and Section 9.3, but shall not be
entitled to receive any greater payment under either such Section than the Bank
granting such participation would have been entitled to receive in connection
with the rights transferred. Any agreement pursuant to which any Bank may grant
such a participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement that would (A) increase any Revolving
Credit Commitment of such Bank if such increase would also increase the
participant's obligations, (B) forgive any amount of or postpone the date for
payment of any principal of or interest on any Loan or of any fee payable
hereunder in which such participant has an interest or (C) reduce the stated
rate at which interest or fees in which such participant has an interest accrue
hereunder.

                                       41
<PAGE>   46

         Section 11.12 Assignment of Commitments by Banks. Each Bank shall have
the right at any time, with the written consent (except in the case of an
assignment to (i) an Affiliate of such Bank, or (ii) another Bank) of the
Borrower and Agent (which consent shall not be unreasonably withheld), to assign
all or any part of its Revolving Credit Commitment (including the same
percentage of its Note and outstanding Loans) to one or more other Persons;
provided that such assignment is in an amount of at least $10,000,000 or the
entire Revolving Credit Commitment of such Bank, and if such assignment is not
for such Bank's entire Revolving Credit Commitment then such Bank's Revolving
Credit Commitment after giving effect to such assignment shall not be less than
$10,000,000; and provided further that neither the consent of the Borrower nor
of the Agent shall be required for any Bank to assign all or part of its
Revolving Credit Commitment to any Affiliate of the assigning Bank. Each such
assignment shall set forth the assignee's address for notices to be given under
Section 11.8 hereof hereunder and its designated Lending Office pursuant to
Section 9.4 hereof. Upon any such assignment, delivery to the Agent of an
executed copy of such assignment agreement and the forms referred to in Section
11.1 hereof, if applicable, and, except in the case of an assignment to an
Affiliate of the assigning Bank, the payment of a $3,500 recordation fee to the
Agent, the assignee shall become a Bank hereunder, all Loans and the Revolving
Credit Commitment it thereby holds shall be governed by all the terms and
conditions hereof and the Bank granting such assignment shall have its Revolving
Credit Commitment, and its obligations and rights in connection therewith,
reduced by the amount of such assignment; provided, however, in the event a Bank
assigns all of its Revolving Credit Commitment to an Affiliate or at the request
of the Borrower, pursuant to Section 11.13(iii), no recordation fee shall be
required hereunder. Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Loans owing to it and the Note 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.

         Section 11.13 Amendments. Any provision of the Credit Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by (a) the Borrower, (b) the Required Banks, and (c) if the rights or
duties of the Agent are affected thereby, the Agent; provided that:

                   (i) no amendment or waiver pursuant to this Section 11.13
              shall (A) increase any Commitment of any Bank without the consent
              of such Bank or (B) reduce the stated rate at which interest or
              fees accrue or reduce the amount of or postpone any fixed date for
              payment of any principal of or interest on any Loan or of any fee
              payable hereunder without the consent of each Bank; and

                   (ii) no amendment or waiver pursuant to this Section 11.13
              shall, unless signed by each Bank, change this Section 11.13, or
              the definition of Required Banks, or affect the number of Banks
              required to take any action under the Credit Documents.

         If the Borrower requests an amendment to this Agreement which requires
the approval of all of the Banks and one of the Banks (a "Replaceable Bank")
does not approve it, the Borrower

                                       42
<PAGE>   47

may propose that another bank which is reasonably acceptable to the Agent (a
"Replacement Bank") be substituted for and replace the Replaceable Bank for
purposes of this Agreement. If a Replacement Bank is so substituted for the
Replaceable Bank, the Replaceable Bank shall enter into an assignment agreement
with the Replacement Bank, the Borrower and the Agent to assign and transfer to
the Replacement Bank, the Replaceable Bank's Commitment hereunder, which shall
provide, among other things, for the payment of all Obligations owing to the
Replaceable Bank; provided, however, if a Replacement Bank cannot be found, then
the Borrower may elect to take out the Replaceable Bank and reduce the facility
accordingly by making a prepayment in the amount of such Replaceable Bank's
outstanding Loans plus all accrued and unpaid interest thereon and all fees and
all other Obligations due and owing to the Replaceable Bank on the date of
replacement. Notwithstanding anything to the contrary contained herein, in no
event shall the Agent be a Replaceable Bank.

         Section 11.14 Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.

         Section 11.15 Legal Fees, Other Costs and Indemnification. The Borrower
agrees to pay all reasonable costs and expenses of the Agent in connection with
the preparation and negotiation of the Credit Documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent, in
connection with the preparation and execution of the Credit Documents and any
amendment, waiver or consent related hereto, whether or not the transactions
contemplated herein are consummated. The Borrower further agrees to indemnify
each Bank, the Agent, and their respective Affiliates, directors, agents,
officers and employees, against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor, whether or not the indemnified Person is
a party thereto) which any of them may incur or reasonably pay arising out of or
relating to any Credit Document or any of the transactions contemplated thereby
or the direct or indirect application or proposed application of the proceeds of
any Loan other than those which arise from the gross negligence or willful
misconduct of the party claiming indemnification. The Borrower, upon demand by
the Agent or a Bank at any time, shall reimburse the Agent or Bank for any
reasonable legal or other expenses incurred in connection with investigating or
defending against any of the foregoing except if the same is directly due to the
gross negligence or willful misconduct of the party to be indemnified.

         Section 11.16 Entire Agreement. The Credit Documents constitute the
entire understanding of the parties thereto with respect to the subject matter
thereof and any prior or contemporaneous agreements, whether written or oral,
with respect thereto are superseded thereby.

         Section 11.17 Construction. The parties hereto acknowledge and agree
that neither this Agreement nor the other Credit Documents shall be construed
more favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation of this Agreement and the other Credit Documents.

                                       43
<PAGE>   48

         Section 11.18 Governing Law. This Agreement and the other Credit
Documents, and the rights and duties of the parties hereto, shall be construed
and determined in accordance with the internal laws of the State of New York.

         Section 11.19 Submission to Jurisdiction; Waiver of Jury Trial. EACH OF
THE BORROWER, EACH BANK AND THE AGENT HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
EACH OF THE BORROWER, EACH BANK AND THE AGENT IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE BORROWER, EACH BANK AND THE AGENT HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.

                            [SIGNATURE PAGE FOLLOWS]

                                       44
<PAGE>   49

         In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their duly authorized
officers as of the day and year first above written.

                                         NRG ENERGY, INC.

                                         By:  ______________________
                                         Name: Brian B. Bird
                                         Title: Vice President & Treasurer

                                       45
<PAGE>   50

Commitment: $20,000,000.00               ABN AMRO BANK N.V., in its individual
                                         capacity as a Bank and as Agent

                                         By: ___________________________
                                         Name:    David B. Bryant
                                         Title:   Senior Vice President

                                         By: ___________________________
                                         Name:    Saad B. Qais
                                         Title:   Assistant Vice President

Address for notices:
ABN AMRO Bank N.V.
135 South LaSalle Street
Suite 710
Chicago, Illinois 60603
Attention: David B. Bryant
Facsimile: (312) 904-1466
Telephone: (312) 904-2799

With copy to:
CREDIT ADMINISTRATION
ABN AMRO Bank N.V.
208 South LaSalle Street
Suite 1500
Chicago, Illinois 60604
Attention: Ken Keck
Facsimile: (312) 992-5111
Telephone: (312) 992-5134

Lending Offices:

Base Rate Loans:

208 South LaSalle Street
Suite 1500
Chicago, Illinois 60604
Attention: Loan Administration

Eurocurrency Loans:
Same as for Base Rate Loans

<PAGE>   51

                                    EXHIBIT A

                                      NOTE
                                                                   March 9, 2001

         For Value Received, the undersigned, NRG Energy, Inc., a Delaware
corporation (the "Borrower"), promises to pay to the order of
_______________________________(the "Bank") on the Termination Date of the
hereinafter defined Credit Agreement, at the principal office of ABN AMRO Bank
N.V., Chicago Branch, in Chicago, Illinois, in U.S. Dollars, the aggregate
unpaid principal amount of all Loans made by the Bank to the Borrower pursuant
to the Credit Agreement, together with interest on the principal amount of each
Loan from time to time outstanding hereunder at the rates, and payable in the
manner and on the dates, specified in the Credit Agreement.

         The Bank shall record on its books or records or on a schedule attached
to this Note, which is a part hereof, each Loan made by it pursuant to the
Credit Agreement, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Base Rate Loan or a Eurocurrency Loan, the interest rate and Interest Period
applicable thereto, provided that prior to the transfer of this Note all such
amounts shall be recorded on a schedule attached to this Note. The record
thereof, whether shown on such books or records or on a schedule to this Note,
shall be prima facie evidence of the same, provided, however, that the failure
of the Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of the Borrower to repay all Loans
made to it pursuant to the Credit Agreement together with accrued interest
thereon.

         This Note is one of the Notes referred to in the 364-Day Revolving
Credit Agreement dated as of March 9, 2001, among the Borrower, ABN AMRO Bank
N.V., as Agent, and the Banks party thereto (the "Credit Agreement"), and this
Note and the holder hereof are entitled to all the benefits provided for thereby
or referred to therein, to which Credit Agreement reference is hereby made for a
statement thereof. All defined terms used in this Note, except terms otherwise
defined herein, shall have the same meaning as in the Credit Agreement. This
Note shall be governed by and construed in accordance with the internal laws of
the State of New York.

         Prepayments may be made hereon and this Note may be declared due prior
to the expressed maturity hereof, all in the events, on the terms and in the
manner as provided for in the Credit Agreement.

         The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.

                                         NRG ENERGY, INC.

                                         By:  ______________________
                                         Name: Brian B. Bird
                                         Title: Vice President & Treasurer

                                      A-1

<PAGE>   52
                                    EXHIBIT B

                             COMPLIANCE CERTIFICATE

         This Compliance Certificate is furnished to ABN AMRO Bank N.V., as
Agent pursuant to the 364-Day Revolving Credit Agreement (the "Credit
Agreement") dated as of March 9, 2001, by and among NRG Energy, Inc., the
financial institutions from time to time party thereto and ABN AMRO Bank N.V.,
as Agent. Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.

         The undersigned hereby certifies that:

         1.   I am the duly elected or appointed __________ of NRG Energy, Inc.;

         2.   I have reviewed the terms of the Credit Agreement and I have made,
              or have caused to be made under my supervision, a detailed review
              of the transactions and conditions of NRG Energy, Inc. and its
              Subsidiaries during the accounting period covered by the attached
              financial statements;

         3.   The examinations described in paragraph 2 did not disclose, and I
              have no knowledge of, the existence of any condition or event
              which constitutes a Default or an Event of Default during or at
              the end of the accounting period covered by the attached financial
              statements or as of the date of this Compliance Certificate,
              except as set forth below; and

         4.   Schedule B-1 attached hereto sets forth financial data and
              computations evidencing compliance with certain covenants of the
              Credit Agreement, all of which data and computations are true,
              complete and correct. All computations are made in accordance with
              the terms of the Credit Agreement.

         Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

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

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

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

         The foregoing certifications, together with the computations set forth
in Schedule 1 hereto and the financial statements delivered with this Compliance
Certificate in support hereof

are made and delivered this ___________day of ____________, ______.

                                            -------------------------------
                                       B-1

<PAGE>   53

                             COMPLIANCE CERTIFICATE

                                  SCHEDULE B-1

                  COMPLIANCE CALCULATIONS FOR CREDIT AGREEMENT

                      CALCULATION AS OF __________, 20_____

A.       Liens (Section 7.9)

         1.   Total Liens $_______

              (Line A1 not to exceed 10% of Consolidated Net Tangible Assets)

B.       Sale of Assets (Section 7.11)

         1.   Net book value of assets sold

              during this fiscal year $_______

              (Line B1 not to exceed 10% of Consolidated Net Tangible Assets)

C.       Consolidated Net Worth (Section 7.12)

         1.   Consolidated stockholders equity $_______

         2.   Effect of currency translation account on consolidated
              stockholders equity $_______

         3.   Effect of application FASB's Statement of Financial Accounting
              Standards No. 133, Accounting for Derivative Instruments and
              Hedging Activities on consolidated stockholders equity $_______

         4.   Consolidated Net Worth

              (Line C1 adjusted by Lines C2 and C3) $_______

D.       Consolidated Capitalization

         1.   Consolidated Net Worth (Line C4) $_______

         2.   Indebtedness of the Borrower (excluding performance guarantees
              under which demand has not been made) $_______

         3.   50% of Indebtedness of Borrower consisting of performance
              guarantees under which demand has not been made $_______________

                                      B-2

<PAGE>   54

         4.   Adjusted Indebtedness of Borrower (line D2-D3) $_______________

         5.   Consolidated Capitalization

              (Sum of line D1 and D4) $_______

E.       Indebtedness to Consolidated Capitalization

         1.   Adjusted Indebtedness of the Borrower (line D4)
              $__________________

         2.   Consolidated Capitalization (line D5) $_________________

         3.   Ratio of Adjusted Indebtedness of Consolidated Capitalization __
              to __

              (Line E1 to E2) (ratio not to exceed 0.68 to 1.00 unless a
              Non-Conforming Period, in which case ratio can not exceed 0.72 to
              1.00)

                                      B-3

<PAGE>   55
                                   SCHEDULE 1
                                  PRICING GRID
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------

 Level     If the Borrower's     The         If the          If the          If the        If the         If the         If the
              Moody's/S&P       Annual     Utilization    Utilization is    Utilization   Utilization   Utilization    Utilization
               Rating Is:      Facility    is equal to     greater than     is greater     is equal      is greater     is greater
                                Fee is:   or less than    33% but less      than 66%,    to or less    than 33% but    than 66%,
                                            33%, the      than or equal        the        than 33%,    less than or     the Base
                                          Eurocurrency     to 66%, the     Eurocurrency    the Base    equal to 66%,   Rate Margin
                                           Margin is:     Eurocurrency      Margin is:       Rate      the Base Rate       is:
                                                           Margin is:                     Margin is:     Margin is:
-----------------------------------------------------------------------------------------------------------------------------------
<S>         <C>                <C>       <C>             <C>              <C>            <C>          <C>            <C>

I          Greater than or     0.10%     0.400%          0.475%           0.525%         0.000%       0.075%          0.125%
           equal to A3/A-
-----------------------------------------------------------------------------------------------------------------------------------

II         Below Level I,      0.125%    0.500%          0.575%           0.625%         0.000%       0.075%          0.125%
           but greater than
           or equal to
           Baa1/BBB+
-----------------------------------------------------------------------------------------------------------------------------------

III        Below Level II,     0.150%    0.600%          0.725%           0.850%         0.000%       0.125%          0.250%
           but greater than
           or equal to
           Baa2/BBB
-----------------------------------------------------------------------------------------------------------------------------------

IV         Below Level III,    0.175%    0.825%          0.950%           1.075%         0.000%       0.125%          0.250%
           but greater than
           or equal to
           Baa3/BBB-
-----------------------------------------------------------------------------------------------------------------------------------

V          Below Level IV      0.375%    1.375%          1.500%           1.625%         0.000%       0.125%          0.250%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

provided, that (A) the Facility Fee shall be increased by 0.075% over the
Facility Fee set forth in the above grid during any Non-Conforming Period and
(B) the Eurocurrency Margins and the Base Rate Margins shall be increased by
0.175% over the Eurocurrency Margins and the Base Rate Margins set forth in the
above grid during any Non-Conforming Period.

         Any change in the Borrower's Moody's Rating or S&P Rating (and in any
fees or interest payable hereunder based on such Ratings) shall be effective as
of the date on which Moody's or S&P, as the case may be, announces the
applicable change in such Rating. Any change in the Utilization shall be
effective as of the date of such change. In the event of a split Rating (i.e.
the Moody's Rating and the S&P Rating fall into different Levels in the above
grid), the lower Rating shall prevail. In the event neither a Moody's Rating nor
a S&P Rating is in effect, Level V pricing shall prevail unless otherwise agreed
by the Required Banks.

<PAGE>   56

                                  SCHEDULE 5.2

                                  SUBSIDIARIES

-------------------------------------------------------------------------------
                    SUBSIDIARY NAME                     STATE OF INCORPORATION/
                                                              FORMATION
-------------------------------------------------------------------------------
1.          NRG Connecticut Ancillary Assets LLC              Delaware
-------------------------------------------------------------------------------
2.          Cobee Holdings Inc.                               Delaware
-------------------------------------------------------------------------------
3.          Elk River Resource Recovery, Inc.                 Minnesota
-------------------------------------------------------------------------------
4.          Graystone Corporation                             Minnesota
-------------------------------------------------------------------------------
5.          Meriden Gas Turbines LLC                          Delaware
-------------------------------------------------------------------------------
6.          MidAtlantic Generation Holding LLC                Delaware
-------------------------------------------------------------------------------
7.          NEO Corporation                                   Minnesota
-------------------------------------------------------------------------------
8.          NRG Connecticut Power Assets LLC                  Delaware
-------------------------------------------------------------------------------
9.          Northeast Generation Holding LLC                  Delaware
-------------------------------------------------------------------------------
10.         NRG Affiliate Services Inc.                       Delaware
-------------------------------------------------------------------------------
11.         NRG Asia-Pacific, Ltd.                            Delaware
-------------------------------------------------------------------------------
12.         NRG Cadillac Inc.                                 Delaware
-------------------------------------------------------------------------------
13.         NRG Central U.S. LLC                              Delaware
-------------------------------------------------------------------------------
14.         NRG ComLease LLC                                  Delaware
-------------------------------------------------------------------------------
15.         NRG Connecticut Affiliate Services Inc.           Delaware
-------------------------------------------------------------------------------
16.         NRG del Coronado Inc.                             Delaware
-------------------------------------------------------------------------------
17.         NRG Eastern LLC                                   Delaware
-------------------------------------------------------------------------------
18.         NRG El Segundo Inc.                               Delaware
-------------------------------------------------------------------------------
19.         NRG Energy Center, Inc.                           Minnesota
-------------------------------------------------------------------------------
20.         NRG Energy Jackson Valley I, Inc.                California
-------------------------------------------------------------------------------
21.         NRG Energy Jackson Valley II, Inc.               California
-------------------------------------------------------------------------------
22.         NRG Granite Acquisition LLC                       Delaware
-------------------------------------------------------------------------------
23.         NRG International Services Company                Delaware
-------------------------------------------------------------------------------
24.         NRG International Development Inc.                Delaware
-------------------------------------------------------------------------------
25.         NRG International, Inc.                           Delaware
-------------------------------------------------------------------------------
26.         NRG Kaufman LLC                                   Delaware
-------------------------------------------------------------------------------
27.         NRG Lakefield Inc.                                Delaware
-------------------------------------------------------------------------------
28.         NRG Latin America Inc.                            Delaware
-------------------------------------------------------------------------------

<PAGE>   57

29.         NRG Louisiana LLC                                 Delaware
-------------------------------------------------------------------------------
30.         NRG Mextrans Inc.                                 Delaware
-------------------------------------------------------------------------------
31.         NRG MidAtlantic LLC                               Delaware
-------------------------------------------------------------------------------
32.         NRG Mesquite LLC                                  Delaware
-------------------------------------------------------------------------------
33.         NRG Northeast Affiliate Services Inc.             Delaware
-------------------------------------------------------------------------------
34.         NRG Operating Services, Inc.                      Delaware
-------------------------------------------------------------------------------
35.         NRG PacGen Inc.                                   Delaware
-------------------------------------------------------------------------------
36.         NRG Power Marketing Inc.                          Delaware
-------------------------------------------------------------------------------
37.         NRG Processing Solutions LLC                      Delaware
-------------------------------------------------------------------------------
38.         NRG San Diego Inc.                                Delaware
-------------------------------------------------------------------------------
39.         NRG San Francisco Thermal Inc.                    Delaware
-------------------------------------------------------------------------------
40.         NRG Services Corporation                          Delaware
-------------------------------------------------------------------------------
41.         NRG Sunnyside Operations GP Inc.                  Delaware
-------------------------------------------------------------------------------
42.         NRG Sunnyside Operations LP Inc.                  Delaware
-------------------------------------------------------------------------------
43.         NRG Thermal Corporation                           Delaware
-------------------------------------------------------------------------------
44.         NRG Valmy Power LLC                               Delaware
-------------------------------------------------------------------------------
45.         NRG Valmy Power Holdings LLC
-------------------------------------------------------------------------------
46.         NRG West Coast Inc.                               Delaware
-------------------------------------------------------------------------------
47.         NRG Western Affiliate Services Inc.               Delaware
-------------------------------------------------------------------------------
48.         O Brien Cogeneration, Inc. II                     Delaware
-------------------------------------------------------------------------------
49.         Okeechobee Power I, Inc.                          Delaware
-------------------------------------------------------------------------------
50.         Okeechobee Power II, Inc.                         Delaware
-------------------------------------------------------------------------------
51.         Okeechobee Power III, Inc.                        Delaware
-------------------------------------------------------------------------------
52.         Power Operations, Inc.                            Delaware
-------------------------------------------------------------------------------
53.         San Joaquin Valley Energy I, Inc.                California
-------------------------------------------------------------------------------
54.         San Joaquin Valley Energy IV, Inc.               California
-------------------------------------------------------------------------------
55.         Scoria Incorporated                               Minnesota
-------------------------------------------------------------------------------
56.         South Central Generation Holding LLC              Delaware
-------------------------------------------------------------------------------

<PAGE>   58

                                  SCHEDULE 5.5

LITIGATION/GOVERNMENTAL PROCEEDINGS SUMMARY

Fortistar (Oswego)

In July 1999, Fortistar Capital, Inc. ("Fortistar") commenced an action against
NRG Energy, Inc. (the "Company") in Hennepin County (Minnesota) District Court,
seeking damages in excess of $100 million and an order restraining the Company
from consummating the acquisition of Niagara Mohawk Power Corporation's Oswego
generating station. Fortistar's motion for a temporary restraining order was
denied. A temporary injunction hearing was held on September 27, 1999. The
acquisition was consummated in October 1999. On January 14, 2000, the court
denied Fortistar's request for a temporary injunction. In April and December
2000, the Company filed summary judgment motions to dispose of the litigation
respecting both liability and damages, and a hearing on these motions was held
on January 26, 2001. No ruling has been issued to date. A trial date has been
scheduled for early April 2001. The Company has asserted numerous counterclaims
against Fortistar and will continue to vigorously defend the suit.

New York Environmental Investigation

In May 2000, the New York Department of Environmental Conservation issued a
Notice of Violation to the Company and the prior owner of the Company's Huntley
and Dunkirk facilities in New York, relating to physical changes made at those
facilities prior to our assumption of ownership. The Notice of Violation alleges
that these changes represent major modifications undertaken without the proper
permits having been obtained. Although the Company has a right to
indemnification by the previous owner for fines, penalties, assessments and
related losses resulting from the previous owner's failure to comply with
environmental laws and regulations, if these facilities did not comply with the
applicable permit requirements, the Company could be required, among other
things, to install specified pollution control technology to further reduce
pollutant emissions from the Huntley and Dunkirk facilities, and the Company
could become subject to fines and penalties associated with the current and
prior operation of the facilities. The Company is currently in settlement
discussions with the Department of Environmental Conservation and the State
Attorney General's Office.

Station Power Litigation

Niagara Mohawk Power Corporation, the former owner of the Company's Huntley,
Dunkirk and Oswego Harbor generating stations, has asserted that it can require
these facilities to obtain power for these stations under a retail tariff,
rather than allowing the plants to treat station power as net/negative
generation at wholesale prices.

On September 21, 2000, the Company filed an action before the Federal Energy
Regulatory Commission ("FERC"), seeking its declaration that these facilities
are entitled to station power at wholesale prices. On September 28, 2000,
Niagara Mohawk instituted separate actions against

<PAGE>   59

Huntley Power LLC, Dunkirk Power LLC and Oswego Harbor Power LLC in the State
Supreme Court of New York, seeking approximately $8 million plus late payment
fees accrued, less payments received, which produces a current balance in
dispute of approximately $7 million. The Company has pending in the New York
State Supreme Court a motion to stay these state court actions pending a ruling
by the FERC on the Company's claims, and Niagara Mohawk has pending a partial
summary judgment motion, in which it is claiming that the Company has already
been heard on these arguments before the New York Public Service Commission and
is therefore collaterally estopped to again assert that FERC has exclusive
jurisdiction over these disputes.

EEOC Claims

Approximately thirty-four former employees of Cajun Electric Power Cooperative
are claiming that race discrimination and/or sex discrimination caused the
termination of their employment at the Cajun facilities following the Company's
acquisition of these facilities. The Equal Employment Opportunity Commission has
issued "Dismissal and Notice of Rights" (right to sue) letters to several of the
claimants and the Company expects that the EEOC will issue such letters to all
of the claimants. These letters afford the claimants the opportunity to assert
in either federal or state court both federal and state claims. The federal
claims have a cumulative cap on punitive and compensatory damages of $300,000
per claim, and there are no caps on state claims. Prevailing parties in such
claims are entitled to attorneys' fees. The Company denies that race
discrimination or sex discrimination prompted any of the employee dismissals.

Fortistar Methane LLC v. NEO Corporation

In May 2000, Fortistar Methane LLC sued NEO Corporation in New York Federal
District Court, requesting an injunction barring NEO from claimed interference
with the management activities of Minnesota Methane LLC's Executive Financial
Officer, Scott Contino of Fortistar; declaring NEO to be in default of the
Operating Agreement between the parties; requiring NEO to turn over all books
and records; and awarding damages. Minnesota Methane is 50% owned by the
Company's subsidiary NEO Corporation, and 50% owned by Fortistar Methane LLC. In
August 2000, the case was transferred to the Minnesota Federal District Court.
On January 5, 2001, the judge ruled from the bench, granting NEO's motions to
dismiss the claims of Fortistar. This ruling was confirmed by the court's
written order of January 19, 2000. On January 8, 2001, NEO Corporation, on its
own behalf and on behalf of Minnesota Methane, brought suit against Fortistar in
Hennepin County District Court in Minnesota, claiming breach of contract, breach
of covenant of good faith and fair dealing, fraud, defamation, and business
disparagement. Fortistar's reponse to this complaint is due at the end of
January 2001.

<PAGE>   60

California Actions

The Company has been named as a defendant in certain private plaintiff class
actions filed in the Superior Court of the State of California for the County of
San Diego in San Diego, California on November 27, 2000 (Pamela R. Gordon v.
Reliant Energy, Inc., et al.) and November 29, 2000 (Ruth Hendricks v. Dynegy
Power Marketing Inc., et al.), and in the Superior Court of the State of
California, City and County of San Francisco (Pier 23 Restaurant v. PG&E Energy
Trading, et al., filed January 24, 2001). The Company has also been named in
another suit filed on January 16, 2001 in the Superior Court of the State of
California for the County of San Diego, brought by three California water
districts, as consumers of electricity (Sweetwater Authority v. Dynegy Inc., et
al.), and in a suit filed on January 18, 2001 in Superior Court of the State of
California, County of San Francisco, brought by the San Francisco City Attorney
on behalf of the People of the State of California (The People of the State of
California v. Dynegy Power Marketing, Inc., et al.). Although the complaints
contain a number of allegations, the basic claim is that, by underbidding
forward contracts and exporting electricity to surrounding markets, the
defendants, acting in collusion, were able to drive up wholesale prices on the
Real Time and Replacement Reserve markets, through the Western Systems
Coordinating Council and otherwise. The complaints allege that the conduct
violated California antitrust and/or unfair competition laws. The Company does
not believe that it has engaged in any illegal activities, and intends to
vigorously defend these lawsuits.

LABOR DISPUTE SUMMARY

None.

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