CREDIT AGREEMENT

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EXHIBIT 4.3

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$1,310,000,000

CREDIT AGREEMENT

Dated as of March 7, 2005

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Among

CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC,

as Borrower,

THE BANKS PARTIES HERETO,

DEUTSCHE BANK SECURITIES INC.,

as Syndication Agent,

ABN AMRO BANK N.V.,

JPMORGAN CHASE BANK, N.A.

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents

and

CITIBANK, N.A.,

as Administrative Agent

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DEUTSCHE BANK SECURITIES INC. and

WACHOVIA CAPITAL MARKETS, LLC,

as Joint Lead Arrangers and Bookrunners

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TABLE OF CONTENTS

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PAGE

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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS................................ 1

SECTION 1.1. Certain Defined Terms..................................... 1

SECTION 1.2. Other Definitional Provisions............................. 22

ARTICLE II AMOUNTS AND TERMS OF THE LOANS................................. 22

SECTION 2.1. The Commitments........................................... 22

SECTION 2.2. Procedure for Revolving Loan Borrowing.................... 23

SECTION 2.3. Minimum Tranches.......................................... 24

SECTION 2.4. Conversion of Revolving Loans to Term Loans............... 24

ARTICLE III PROVISIONS RELATING TO ALL LOANS.............................. 25

SECTION 3.1. Evidence of Loans......................................... 25

SECTION 3.2. Fees...................................................... 25

SECTION 3.3. Interest.................................................. 25

SECTION 3.4. Reserve Requirements...................................... 26

SECTION 3.5. Interest Rate Determination and Protection................ 27

SECTION 3.6. Voluntary Interest Conversion or Continuation of Loans.... 28

SECTION 3.7. Funding Losses Relating to LIBOR Rate Loans............... 28

SECTION 3.8. Change in Legality........................................ 29

ARTICLE IV INCREASED COSTS, TAXES, PAYMENTS AND PREPAYMENTS............... 30

SECTION 4.1. Increased Costs; Capital Adequacy......................... 30

SECTION 4.2. Pro Rata Treatment and Payments and Computations.......... 31

SECTION 4.3. Taxes..................................................... 32

SECTION 4.4. Sharing of Payments, Etc.................................. 34

SECTION 4.5. Optional Termination or Reduction of the Commitments...... 34

SECTION 4.6. Voluntary Prepayments..................................... 35

SECTION 4.7. Mandatory Prepayments and Commitment Reductions........... 35

SECTION 4.8. Mitigation of Losses and Costs............................ 36

SECTION 4.9. Determination and Notice of Additional Costs and

Other Amounts............................................. 36

ARTICLE V CONDITIONS OF LENDING........................................... 36

SECTION 5.1. Conditions Precedent to Loans............................. 36

SECTION 5.2. Conditions Precedent to Each Borrowing.................... 38

ARTICLE VI REPRESENTATIONS AND WARRANTIES................................. 39

SECTION 6.1. Representations and Warranties of the Borrower............ 39

ARTICLE VII AFFIRMATIVE AND NEGATIVE COVENANTS............................ 43

SECTION 7.1. Affirmative Covenants..................................... 43

SECTION 7.2. Negative Covenants........................................ 46

SECTION 7.3. Borrower's Accounting Reorganization...................... 49

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ARTICLE VIII EVENTS OF DEFAULT............................................ 50

SECTION 8.1. Events of Default......................................... 50

SECTION 8.2. Cancellation/Acceleration................................. 53

ARTICLE IX THE ADMINISTRATIVE AGENT....................................... 53

SECTION 9.1. Appointment............................................... 53

SECTION 9.2. Delegation of Duties...................................... 54

SECTION 9.3. Exculpatory Provisions.................................... 54

SECTION 9.4. Reliance by Administrative Agent.......................... 54

SECTION 9.5. Notice of Default......................................... 54

SECTION 9.6. Non-Reliance on Administrative Agent and Other Banks...... 55

SECTION 9.7. Indemnification........................................... 55

SECTION 9.8. Agent in Its Individual Capacity.......................... 56

SECTION 9.9. Successor Administrative Agent............................ 56

ARTICLE X MISCELLANEOUS................................................... 56

SECTION 10.1. Amendments and Waivers................................... 56

SECTION 10.2. Notices.................................................. 57

SECTION 10.3. No Waiver; Cumulative Remedies........................... 58

SECTION 10.4. Survival of Representations and Warranties............... 58

SECTION 10.5. Payment of Expenses and Taxes; Indemnity................. 58

SECTION 10.6. Effectiveness, Successors and Assigns, Participations;

Assignments.............................................. 59

SECTION 10.7. Setoff................................................... 63

SECTION 10.8. Counterparts............................................. 63

SECTION 10.9. Severability............................................. 63

SECTION 10.10. Integration............................................. 63

SECTION 10.11. GOVERNING LAW........................................... 63

SECTION 10.12. Submission to Jurisdiction; Waivers..................... 64

SECTION 10.13. Acknowledgments......................................... 64

SECTION 10.14. Limitation on Agreements................................ 65

SECTION 10.15. Removal of Bank......................................... 65

SECTION 10.16. Officer's Certificates.................................. 66

SECTION 10.17. USA Patriot Act......................................... 66

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Schedules

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Schedule 1.1(A) - Schedule of Commitments and Addresses

Schedule 6.1(p) - Ownership of Capital Stock of Subsidiaries; Significant

Subsidiaries

Exhibits

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Exhibit A - Notice of Borrowing

Exhibit B - Notice of Interest Conversion/Continuation

Exhibit C - Assignment and Acceptance

Exhibit D - Note

Exhibit E - Pledge Agreement

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This Credit Agreement (this "Agreement"), dated as of March 7, 2005,

among CenterPoint Energy Houston Electric, LLC, a Texas limited liability

company (the "Borrower"), the banks and other financial institutions from time

to time parties hereto (individually, a "Bank" and, collectively, the "Banks"),

Deutsche Bank Securities Inc., as syndication agent (in such capacity, the

"Syndication Agent"), ABN Amro Bank N.V., JPMorgan Chase Bank, N.A. and Wachovia

Bank, National Association, as co-documentation agents (in such capacities, the

"Documentation Agents") and Citibank, N.A., as administrative agent (in such

capacity, together with any successors thereto in such capacity, the

"Administrative Agent").

The parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1. Certain Defined Terms. As used in this Agreement, the

following terms shall have the following meanings:

"ABR" means for any day, a rate per annum (rounded upwards, if

necessary, to the next 1/64 of 1%) equal to the greater of (a) the Prime

Rate in effect on such day and (b) the Federal Funds Effective Rate in

effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" means

the rate of per annum publicly announced from time to time by Citibank,

N.A. as its prime rate in effect at its principal office in New York City

(the Prime Rate not being intended to be the lowest rate of interest

charged by Citibank, N.A. in connection with extensions of credit to

debtors). Any change in the ABR due to a change in the Prime Rate or the

Federal Funds Effective Rate shall be effective as of the opening of

business on the effective day of such change in the Prime Rate or the

Federal Funds Effective Rate, respectively.

"ABR Loan" means a Loan that bears interest at the ABR as provided in

Section 3.3(a).

"Adjusted Interest Expense" means, for any period, (a) total interest

expense (including that attributable to Capital Lease obligations and

capitalized interest) determined in accordance with GAAP of the Borrower

and its Consolidated Subsidiaries for such period with respect to all

outstanding Indebtedness of the Borrower and its Consolidated Subsidiaries

(including all commissions, discounts and other fees and charges owed with

respect to letters of credit and bankers' acceptance financings and net

costs under Swap Agreements in respect of interest rates to the extent such

net costs are allocable to such period in accordance with GAAP) less (b)

the sum of the following for such period (i) total interest income

determined in accordance with GAAP and (ii) but only to the extent included

in the amount calculated pursuant to clause (a) above, (x) interest expense

on Hybrid Preferred Securities, (y) interest expense in respect of the

securitization programs of the Borrower and its Consolidated Subsidiaries

in respect of Securitization Securities and (z) amortization of settlement

payments previously made on forward-starting Swap Agreements and of any

upfront fees and other costs associated with financings for the Borrower

and its Consolidated Subsidiaries.

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"Administrative Agent" has the meaning specified in the introduction

to this Agreement.

"Affiliate" means any Person that, directly or indirectly, Controls or

is Controlled by or is under common Control with another Person.

"Agents" means the collective reference to the Syndication Agent, the

Documentation Agents and the Administrative Agent.

"Agreement" has the meaning specified in the introduction to this

Agreement.

"Applicable Margin" means the rate per annum set forth below opposite

the Designated Rating from time to time in effect during the period for

which payment is due:

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DESIGNATED RATING LIBOR RATE MARGIN ABR MARGIN

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BBB+ or Baa1 or higher 0.625% 0.000%

BBB or Baa2 0.750% 0.000%

BBB- or Baa3 0.875% 0.000%

BB+ or Ba1 1.000% 0.000%

BB or Ba2 or lower 1.250% 0.250%

</TABLE>

In each row in the table set forth above, the first indicated rating

corresponds to that assigned by S&P and the second indicated rating

corresponds to that assigned by Moody's; the determination of which row of

such table is applicable at any time is set forth in the definition of

"Designated Rating".

"Assignment and Acceptance" has the meaning specified in Section

10.6(c).

"Available Commitment" means, as to any Bank at any time, an amount

equal to the excess, if any, of (a) such Bank's Commitment then in effect

over (b) such Bank's Outstanding Loans then outstanding.

"Bank" and "Banks" have the meanings specified in the introduction to

this Agreement.

"Bank Affiliate" means, (a) with respect to any Bank, (i) an Affiliate

of such Bank that is a bank or (ii) any entity (whether a corporation,

partnership, trust or otherwise) that is engaged in making, purchasing,

holding or otherwise investing in bank loans and similar extensions of

credit in the ordinary course of its business and is administered or

managed by a Bank or an Affiliate of such Bank and (b) with respect to any

Bank that is a fund which invests in bank loans and similar extensions of

credit, any other fund that invests in bank loans and similar extensions of

credit and is managed by

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such Bank, an Affiliate of such Bank or the same investment advisor as such

Bank or by an Affiliate of such investment advisor.

"Board" means the Board of Governors of the Federal Reserve System of

the United States (or any successor thereto).

"Borrowed Money" of any Person means any Indebtedness of such Person

for or in respect of money borrowed or raised by whatever means (including

acceptances, deposits, lease obligations under Capital Leases, Mandatory

Payment Preferred Stock and synthetic leases); provided, however, that

Borrowed Money shall not include (a) any guarantees that may be incurred by

endorsement of negotiable instruments for deposit or collection in the

ordinary course of business or similar transactions, (b) any obligations or

guarantees of performance of obligations under a franchise, performance

bonds, franchise bonds, obligations to reimburse drawings under letters of

credit issued in accordance with the terms of any safe harbor lease or

franchise or in lieu of performance or franchise bonds or other obligations

incurred in the ordinary course of business that do not represent money

borrowed or raised, in each case to the extent that such reimbursement

obligations are payable in full within ten (10) Business Days after the

date upon which such obligation arises, (c) trade payables, (d) any

obligations of such Person under Swap Agreements, (e) customer advance

payments and deposits arising in the ordinary course of business or (f)

operating leases.

"Borrower" has the meaning specified in the introduction to this

Agreement.

"Borrowing" means a borrowing consisting of Revolving Loans under

Section 2.1 of the same Type, and having, in the case of LIBOR Rate Loans,

the same Interest Period, made on the same day by the Banks.

"Borrowing Date" means any Business Day specified by the Borrower as a

date on which the Borrower requests the Banks to make Revolving Loans

hereunder.

"Business Day" means a day other than a Saturday, Sunday or other day

on which commercial banks in New York City are authorized or required by

law to close; provided that when used in connection with a LIBOR Rate Loan,

the term "Business Day" shall also exclude any day on which commercial

banks are not open for dealings in Dollar deposits in the London interbank

market.

"Capital Lease" means a lease that, in accordance with GAAP, would be

recorded as a capital lease on the balance sheet of the lessee.

"Capital Stock" means any and all shares, interests, participations or

other equivalents (however designated) of capital stock of a corporation,

and any and all equivalent ownership interests in a Person (other than a

corporation), including without limitation, partnership interests in

partnerships and member interests in limited liability companies, and any

and all warrants or options to purchase any of the foregoing or securities

convertible into any of the foregoing.

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"Cash Equivalents" means (a) marketable direct obligations issued by,

or unconditionally guaranteed by, the United States government or issued by

any agency thereof and backed by the full faith and credit of the United

States, in each case maturing within one year from the date of acquisition;

(b) certificates of deposit, time deposits, eurodollar time deposits or

overnight bank deposits having maturities of 270 days or less from the date

of acquisition issued by any Bank or by any commercial bank organized under

the laws of the United States or any state thereof having combined capital

and surplus of not less than $500,000,000; (c) commercial paper of an

issuer rated at least A-1 by S&P or P-1 by Moody's, or carrying an

equivalent rating by a nationally recognized rating agency, if both of the

two named rating agencies cease publishing ratings of commercial paper

issuers generally, and maturing within 270 days from the date of

acquisition; (d) repurchase obligations of any Bank or of any commercial

bank satisfying the requirements of clause (b) of this definition, having a

term of not more than 30 days, with respect to securities issued or fully

guaranteed or insured by the United States government; (e) securities with

maturities of one year or less from the date of acquisition issued or fully

guaranteed by any state, commonwealth or territory of the United States, by

any political subdivision or taxing authority of any such state,

commonwealth or territory or by any foreign government, the securities of

which state, commonwealth, territory, political subdivision, taxing

authority or foreign government (as the case may be) are rated at least A

by S&P or A by Moody's; (f) securities with maturities of 270 days or less

from the date of acquisition backed by standby letters of credit issued by

any Bank or any commercial bank satisfying the requirements of clause (b)

of this definition; (g) money market mutual or similar funds that invest

exclusively in assets satisfying the requirements of clauses (a) through

(f) of this definition; or (h) money market funds that (i) comply with the

criteria set forth in SEC Rule 2a-7 under the Investment Company Act of

1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody's and (iii)

have portfolio assets of at least $5,000,000,000.

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

utility holding company, and the indirect parent of the Borrower.

"Change in Control" means (i) with respect to CenterPoint, the

acquisition by any Person or "group" (within the meaning of Rule 13d-5 of

the Exchange Act) of beneficial ownership (determined in accordance with

Rule 13d-3 of the Exchange Act) of Capital Stock of CenterPoint, the result

of which is that such Person or group beneficially owns 50% or more of the

aggregate voting power of all then issued and outstanding Capital Stock of

CenterPoint or (ii) CenterPoint shall cease to own and control

beneficially, directly or indirectly, 100% of the outstanding common

Capital Stock of the Borrower free and clear of all Liens. For purposes of

the foregoing, the phrase "voting power" means, with respect to an issuer,

the power under ordinary circumstances to vote for the election of members

of the board of directors or other governing body of such issuer.

"Closing Date" means the date, on or before March 31, 2005, all the

conditions set forth in Section 6.1 are satisfied (or waived) in accordance

with the terms hereof.

"Code" means the Internal Revenue Code of 1986, as amended from time

to time, and any successor statute.

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"Collateral" means all property of the Borrower and its Subsidiaries,

now owned or hereafter acquired, upon which a Lien is purported to be

created by the Pledge Agreement.

"Commitment" means, as to any Bank, the obligation of such Bank, if

any, to make Revolving Loans in an aggregate principal amount not to exceed

the amount set forth under the heading "Commitment" opposite such Bank's

name on Schedule 1.1(A) or in the Assignment and Acceptance pursuant to

which such Bank became a party hereto, as the same may be changed from time

to time pursuant to the terms hereof; and "Commitments" shall be the

collective reference to the Commitments of all of the Banks. The original

amount of the Total Commitments is $1,310,000,000.

"Commitment Fee" means, as to any Bank, the fee equal to the rate per

annum set forth below opposite the Designated Rating from time to time in

effect during the period for which payment is due on the Available

Commitment of such Bank:

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DESIGNATED RATING COMMITMENT FEE

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BBB+ or Baa1 or higher 0.100%

BBB or Baa2 0.125%

BBB- or Baa3 0.150%

BB+ or Ba1 0.175%

BB or Ba2 or lower 0.225%

</TABLE>

In each row in the table set forth above, the first indicated rating

corresponds to that assigned by S&P and the second indicated rating

corresponds to that assigned by Moody's; the determination of which row of

such table is applicable at any time is set forth in the definition of

"Designated Rating".

"Commonly Controlled Entity" means an entity, whether or not

incorporated, that is under common control with the Borrower within the

meaning of Section 4001 of ERISA or is part of a group that includes the

Borrower and that is treated as a single employer under Section 414 of the

Code.

"Confidential Information Memorandum" means the Confidential

Information Memorandum, dated January, 2005.

"Consolidated Capitalization" means, as of any date of determination,

the sum of (a) Consolidated Shareholders' Equity, (b) Consolidated

Indebtedness for Borrowed Money and, without duplication, (c) Mandatory

Payment Preferred Stock; provided that for the purpose of calculating

compliance with Section 7.2(a), Consolidated Capitalization shall be

determined excluding any adjustment, non-cash charge to net income or other

non-cash charges or writeoffs resulting thereto from application of SFAS

No. 142.

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"Consolidated EBITDA" means, for any twelve-month period ending on the

date of determination, Consolidated Net Income for such period plus,

without duplication and to the extent reflected as a charge in the

statement of such Consolidated Net Income for such period, the sum of (a)

income tax expense, (b) interest expense, distributions on Hybrid Preferred

Securities (to the extent not included in interest expense and to the

extent deducted to arrive at Consolidated Net Income), amortization or

writeoff of debt discount and debt issuance costs and commissions,

discounts and other fees and charges associated with Indebtedness

(including the Loans) of the Borrower and its Consolidated Subsidiaries and

amortization of settlement payments previously made on forward-starting

Swap Agreements, (c) depreciation and amortization expense, (d)

amortization of intangibles (including, but not limited to, goodwill) and

organization costs, (e) any extraordinary, unusual or non-recurring

expenses or losses (including, whether or not otherwise includable as a

separate item in the statement of such Consolidated Net Income for such

period, losses on sales of assets outside of the ordinary course of

business), and (f) any other non-cash charges, and minus, to the extent

included as income in the statement of such Consolidated Net Income for

such period, the sum of (a) interest income, (b) any extraordinary, unusual

or non-recurring income or gains (including, whether or not otherwise

includable as a separate item in the statement of such Consolidated Net

Income for such period, gains on the sales of assets outside of the

ordinary course of business), (c) any other non-cash income, (d) Transition

Charges Principal and Interest, (e) Pre-Tax Excess Mitigation Credit and

(f) the aggregate pre-tax principal amount of CTC Recoveries, all as

determined on a consolidated basis. For purposes of this definition, any

results of operations classified as "discontinued operations" in accordance

with GAAP will be included in the manner set forth above.

"Consolidated Indebtedness" means, as of any date of determination,

the sum of

(i) the total Indebtedness for Borrowed Money of the Borrower and

its Consolidated Subsidiaries as shown on the consolidated balance

sheet of the Borrower and its Consolidated Subsidiaries, determined

without duplication of any Guarantee of Indebtedness of the Borrower

by any of its Consolidated Subsidiaries or of any Guarantee of

Indebtedness of any such Consolidated Subsidiary by the Borrower or

any other Consolidated Subsidiary of the Borrower, plus

(ii) any Mandatory Payment Preferred Stock, less

(iii) the amount of Indebtedness described in clause (i)

attributable to amounts then outstanding under receivables facilities

or arrangements to the extent that such amounts would not have been

shown as Indebtedness on a balance sheet prepared in accordance with

GAAP prior to January 1, 1997, less

(iv) the greater of (x) until the date that is six months after

the receipt thereof, cash and Cash Equivalents of the Borrower and its

Consolidated Subsidiaries on such date of determination constituting

Net Cash Proceeds of the True-Up Securitization and (y) until the date

of the final scheduled maturity of the Facility, the lesser of (A) the

aggregate amount of cash and Cash Equivalents of

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the Borrower and its Consolidated Subsidiaries on such date of

determination constituting Net Cash Proceeds of the True-Up

Securitization and (B) the aggregate principal amount outstanding on

such date under the Facility.

"Consolidated Net Income" means, for any period, the consolidated net

income (or loss) of the Borrower and its Consolidated Subsidiaries,

determined on a consolidated basis in accordance with GAAP; provided that

there shall be excluded (a) the income (or deficit) of any Person accrued

prior to the date it becomes a Consolidated Subsidiary of the Borrower or

is merged into or consolidated with the Borrower or any of its Consolidated

Subsidiaries and (b) the income (or deficit) of any Person (other than a

Consolidated Subsidiary of the Borrower) in which the Borrower or any of

its Consolidated Subsidiaries has an ownership interest, except to the

extent that any such income is actually received by the Borrower or such

Consolidated Subsidiary in the form of dividends or similar distributions.

"Consolidated Shareholders' Equity" means, as of any date of

determination, the total assets of the Borrower and its Significant

Subsidiaries, less all liabilities of the Borrower and its Significant

Subsidiaries. As used in this definition, "liabilities" means all

obligations that, in accordance with GAAP consistently applied, would be

classified on a balance sheet as liabilities (including without limitation

(to the extent so classified), (a) Indebtedness; (b) deferred liabilities;

and (c) Indebtedness of the Borrower or any of its Significant Subsidiaries

that is expressly subordinated in right and priority of payment to other

liabilities of the Borrower or such Significant Subsidiary, but in any case

excluding as at such date of determination any Junior Subordinated Debt

owned by any Hybrid Preferred Securities Subsidiary).

"Consolidated Subsidiary" means, with respect to a specified Person at

any date, any Subsidiary or any other Person (other than with respect to

the Borrower, any Securitization Subsidiary or any Unrestricted

Subsidiary), the accounts of which under GAAP would be consolidated with

those of such specified Person in its consolidated financial statements as

of such date.

"Contractual Obligation" means, as to any Person, any provision of any

security issued by such Person or of any written agreement, instrument or

other written undertaking to which such Person is a party or by which it or

any of its property is bound.

"Controlled" means, with respect to any Person, the ability of another

Person (whether directly or indirectly and whether by the ownership of

voting securities, contract or otherwise) to appoint and/or remove the

majority of the members of the board of directors or other governing body

of that Person (and "Control" shall be similarly construed).

"CTC Recoveries" means the competition transition charges to be paid

to the Borrower by retail electric providers in respect of stranded costs

and certain power market price and fuel cost recovery true-ups.

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"Default" means any event that, with the lapse of time or giving of

notice, or both, or any other condition, would constitute an Event of

Default.

"Default Rate" means with respect to any overdue amount owed

hereunder, a rate per annum equal to (a) in the case of overdue principal

with respect to any Loan, the sum of the interest rate in effect at such

time with respect to such Loan under Section 3.3, plus 2%; provided that in

the case of overdue principal with respect to any LIBOR Rate Loan, after

the end of the Interest Period with respect to such Loan, the Default Rate

shall equal the rate set forth in clause (b) below, and (b) in the case of

overdue interest with respect to any Loan, Commitment Fees or other amounts

payable hereunder, the sum of the interest rate per annum in effect at such

time with respect to ABR Loans, plus 2%.

"Designated Rating" means (a) the higher of the Ratings and (b) if the

difference in the Rating issued by S&P and Moody's is greater than one

level, the Rating that is one level higher than the lower of such Ratings

shall apply. Any change in the calculation of the Applicable Margin with

respect to the Borrower that is caused by a change in the Designated Rating

will become effective on the date of the change in the Designated Rating.

If the rating system of any Rating Agency shall change, or if either S&P or

Moody's shall cease to be in the business of rating corporate debt

obligations, the Borrower and the Administrative Agent shall negotiate in

good faith if necessary to amend this definition and the definitions of

"Rating" and "Rating Agencies" to reflect such changed rating system or the

unavailability of Ratings from such Rating Agencies and, pending the

effectiveness of any such amendment, the Designated Rating shall be

determined by reference to the Rating most recently in effect prior to such

change or cessation.

"Disposition" means with respect to any Property (excluding cash and

Cash Equivalents), any sale, lease, sale and leaseback, assignment,

conveyance, transfer or other disposition thereof outside the ordinary

course of business. The terms "Dispose" and "Disposed of" shall have

correlative meanings.

"Documentation Agents" has the meaning specified in the introduction

to this Agreement.

"Dollars" and the symbol "$" mean the lawful currency of the United

States.

"Early Funding ABR Loan" has the meaning specified in Section 2.2(a).

"ERISA" means the Employee Retirement Income Security Act of 1974, as

amended from time to time.

"Event of Default" has the meaning specified in Section 8.1.

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

"Excluded Indebtedness" means the incurrence or issuance by the

Borrower and its Subsidiaries of the following:

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(a) Indebtedness for Borrowed Money in respect of any

refinancing, refundings, renewals or extensions (on or prior to the

maturity thereof) of (without any increase in the principal amount

thereof plus any expenses (including any redemption premium or

penalty) or any shortening of the final maturity thereof to a date

earlier than the earlier of (i) the maturity date thereof then in

effect and (ii) May 16, 2008) Indebtedness for Borrowed Money

outstanding on the date hereof;

(b) Intercompany Indebtedness for Borrowed Money;

(c) Indebtedness for Borrowed Money permitted hereunder to the

extent constituting (i) the issuance by the Borrower or any of its

Subsidiaries of commercial paper, (ii) any backup credit or liquidity

facilities in respect of any such commercial paper issuance, (iii)

other short-term instruments in lieu of the issuance of commercial

paper, (iv) letters of credit issued for the account of the Borrower

or any of its Subsidiaries in respect of any of the foregoing and (v)

drawings on letters of credit, bonds or similar obligations permitted

under this Agreement if the proceeds are applied to the underlying

obligation secured or supported thereby;

(d) Indebtedness for Borrowed Money of the Borrower pursuant to

the Loan Documents;

(e) Indebtedness for Borrowed Money in respect of performance,

surety and similar bonds and completion guarantees provided by the

Borrower or any of its Subsidiaries in the ordinary course of

business;

(f) Indebtedness for Borrowed Money in respect of Capital Leases

entered into by the Borrower or any of its Subsidiaries in the

ordinary course of business;

(g) Indebtedness for Borrowed Money in respect of Swap Agreements

entered into in the ordinary course of business and not entered into

for speculative purposes; and

(h) Indebtedness for Borrowed Money incurred by the Borrower and

any of its Restricted Subsidiaries after the date hereof at any time

outstanding in the aggregate principal amount not to exceed

$200,000,000.

"Existing CenterPoint Credit Agreement" means the $2,350,000,000

Credit Agreement, dated as of October 7, 2003, among CenterPoint, the

Administrative Agent and other financial institutions parties thereto, as

heretofore amended, modified or supplemented.

"Existing CenterPoint Credit Facility" means the credit facility

provided under the Existing CenterPoint Credit Agreement.

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<PAGE>

"Existing Credit Agreement" means the $1,310,000,000 Credit Agreement,

dated as of November 12, 2002, among CenterPoint Electric, as borrower,

Credit Suisse First Boston, as administrative agent, and the other

financial institutions parties thereto, as amended, modified or

supplemented from time to time.

"Facility" means the Commitments and the extensions of credit made

thereunder, including the Term Loans.

"Federal Funds Effective Rate" means, for any day, a fluctuating rate

per annum equal to the weighted average of the rates on overnight federal

funds transactions with members of the Federal Reserve System arranged by

federal funds brokers, as published on the next succeeding Business Day by

the Federal Reserve Bank of New York, or, if such rate is not so published

for any day that is a Business Day, the average of the quotations for such

day for such transactions received by the Administrative Agent from three

federal funds brokers of recognized standing selected by the Borrower.

"Funding Office" means the office of the Administrative Agent

specified in Section 10.2 or such other office as may be specified from

time to time by the Administrative Agent as its funding office by written

notice to the Borrower and the Banks.

"GAAP" means generally accepted accounting principles in effect from

time to time in the United States of America.

"General Mortgage Indenture" means the General Mortgage Indenture,

dated as of October 10, 2002, between the Borrower and JPMorgan Chase Bank,

N.A. (as successor to JPMorgan Chase Bank), as trustee, as amended,

modified or supplemented from time to time.

"Global Coordinators" means J.P. Morgan Securities Inc. and Citigroup

Global Markets Inc., in their capacities as global coordinators.

"Governmental Authority" means any nation or government, any state or

other political subdivision thereof and any entity exercising executive,

legislative, judicial, regulatory or administrative functions of or

pertaining to government.

"Guarantee" means, as to any Person (the "guaranteeing person"), any

obligation of (a) the guaranteeing Person or (b) another Person (including,

without limitation, any bank under any letter of credit) to induce the

creation of which the guaranteeing person has issued a reimbursement,

counterindemnity or similar obligation, in either case guaranteeing or in

effect guaranteeing any principal of any Indebtedness for Borrowed Money

(the "primary obligation") of any other third Person in any manner, whether

directly or indirectly, including, without limitation, any obligation of

the guaranteeing Person, whether or not contingent, (i) to purchase any

such primary obligation or any property constituting direct or indirect

security therefor, (ii) to advance or supply funds for the purchase or

payment of any such primary obligation or (iii) otherwise to assure or hold

harmless the owner of any such primary obligation against loss in respect

thereof. The amount of any Guarantee of any guaranteeing person shall be

deemed to be the lower

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<PAGE>

of (a) an amount equal to the stated or determinable amount of the primary

obligation in respect of which such Guarantee is made and (b) the maximum

amount for which such guaranteeing person may be liable pursuant to the

terms of the instrument embodying such Guarantee, unless such primary

obligation and the maximum amount for which such guaranteeing person may be

liable are not stated or determinable, in which case the amount of such

Guarantee shall be such guaranteeing person's maximum reasonably

anticipated liability in respect thereof as determined by the Borrower in

good faith (and "guaranteed" and "guarantor" shall be construed

accordingly).

"Highest Lawful Rate" means, with respect to each Bank, the maximum

nonusurious interest rate, if any, that at any time or from time to time

may be contracted for, taken, reserved, charged or received with respect to

any Loan or on other amounts, if any, due to such Bank pursuant to this

Agreement or any other Loan Document under applicable law. "Applicable law"

as used in this definition means, with respect to each Bank, that law in

effect from time to time that permits the charging and collection by such

Bank of the highest permissible lawful, nonusurious rate of interest on the

transactions herein contemplated including, without limitation, the laws of

each State that may be held to be applicable, and of the United States, if

applicable.

"Hybrid Preferred Securities" means preferred securities issued by any

Hybrid Preferred Securities Subsidiary.

"Hybrid Preferred Securities Subsidiary" means any Delaware business

trust (or similar entity) (i) all of the common equity interest of which is

owned (either directly or indirectly through one or more Wholly-Owned

Subsidiaries) at all times by the Borrower, (ii) that has been formed for

the purpose of issuing Hybrid Preferred Securities and (iii) substantially

all of the assets of which consist at all times solely of the Junior

Subordinated Debt and payments made from time to time on the Junior

Subordinated Debt.

"Indebtedness" of any Person means the sum of (a) all items (other

than Capital Stock, capital surplus, retained earnings, other comprehensive

income, treasury stock and any other items that would properly be included

in shareholder equity) that, in accordance with GAAP consistently applied,

would be included in determining total liabilities as shown on the

liability side of a balance sheet of such Person as at the date on which

the Indebtedness is to be determined, (b) all obligations of such Person,

contingent or otherwise, as account party or applicant (or equivalent

status) in respect of any standby letters of credit or equivalent

instruments, and (c) without duplication, the amount of Guarantees by such

Person of items described in clauses (a) and (b); provided, however, that

Indebtedness of a Person shall not include (i) any Junior Subordinated Debt

owned by any Hybrid Preferred Securities Subsidiary, (ii) any Guarantee by

the Borrower or its Subsidiaries of payments with respect to any Hybrid

Preferred Securities, (iii) any Securitization Securities or (iv) any

Hybrid Preferred Securities.

"Insolvency" means, with respect to any Multiemployer Plan, the

condition that such Plan is insolvent within the meaning of Section 4245 of

ERISA (and "Insolvent" shall be construed accordingly for such purposes).

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<PAGE>

"Interest Period" means, for each LIBOR Rate Loan comprising part of

the same Borrowing, the period commencing on the date of such LIBOR Rate

Loan or the date of the conversion of any Loan into such LIBOR Rate Loan,

as the case may be, and ending on the last day of the period selected by

the Borrower pursuant to Section 2.2 or 3.6, as the case may be, and,

thereafter, each subsequent period commencing on the last day of the

immediately preceding Interest Period and ending on the last day of the

period selected by the Borrower pursuant to Section 3.6. The duration of

each such Interest Period shall be one, two, three, six or, if available to

all Banks under the Facility, nine or twelve months or periods shorter than

one month, as Borrower may select by notice pursuant to Section 2.2 or 3.6

hereof, provided, however, that:

(i) any Interest Period in respect of a Loan that would otherwise

extend beyond the Revolving Commitment Termination Date shall end on

the Revolving Commitment Termination Date or, if the Revolving Loans

are converted pursuant to Section 2.4, the Term Loan Maturity Date;

(ii) whenever the last day of any Interest Period would otherwise

occur on a day other than a Business Day, the last day of such

Interest Period shall be extended to occur on the next succeeding

Business Day; provided that if such extension would cause the last day

of such Interest Period to occur in the next following calendar month,

the last day of such Interest Period shall occur on the next preceding

Business Day, and

(iii) any Interest Period that begins on the last Business Day of

a calendar month (or on a day for which there is no numerically

corresponding day in the calendar month at the end of such Interest

Period) shall end on the last Business Day of a calendar month.

"Investment" has the meaning specified in Section 7.2(f).

"Junior Subordinated Debt" means subordinated debt of the Borrower or

any Subsidiary of the Borrower (i) that is issued at par to a Hybrid

Preferred Securities Subsidiary in connection with the issuance of Hybrid

Preferred Securities, (ii) the payment of the principal of which and

interest on which is subordinated (with certain exceptions) to the prior

payment in full in cash or its equivalent of all senior indebtedness of the

obligor thereunder and (iii) that has an original tenor no earlier than 30

years from the issuance thereof.

"Lead Arrangers" means Deutsche Bank Securities Inc. and Wachovia

Capital Markets, LLC, in their capacities as joint lead arrangers and

bookrunners.

"LIBOR Rate" means, with respect to each day during each Interest

Period pertaining to a LIBOR Rate Loan, the rate per annum determined on

the basis of the rate for deposits in Dollars for a period equal to such

Interest Period commencing on the first days of such Interest Period

appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London

time, two Business Days prior to the beginning of such Interest Period. In

the event that such rate does not appear on Page 3750 of the Telerate

screen (or otherwise

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<PAGE>

on such screen), the "LIBOR Rate" shall be determined by reference to such

other comparable publicly available service for displaying eurodollar rates

as may be selected by the Administrative Agent or, in the absence of such

availability, by reference to the rate at which the Administrative Agent is

offered Dollar deposits at or about 11:00 A.M., New York City time, two

Business Days prior to the beginning of such Interest Period in the

interbank eurodollar market where its eurodollar and foreign currency and

exchange operations are then being conducted for delivery on the first day

of such Interest Period for the number of days comprised therein.

"LIBOR Rate Loan" means a Loan that bears interest at the LIBOR Rate

as provided in Section 3.3(b).

"Lien" means any mortgage, deed of trust, pledge, hypothecation,

assignment, deposit arrangement, charge, security interest, encumbrance or

lien of any kind whatsoever (including any Capital Lease).

"Loans" means the loans made by the Banks to the Borrower pursuant to

this Agreement.

"Loan Documents" means this Agreement, the Pledge Agreement, any Notes

and any document or instrument executed in connection with the foregoing.

"Majority Banks" means, at any time, Banks having in excess of 50% of

the Total Commitments then in effect or, if the Commitments shall have

terminated, the Total Outstanding Loans then outstanding.

"Mandatory Payment Preferred Stock" means any preference or preferred

stock of the Borrower or of any Consolidated Subsidiary (other than (x) any

preference or preferred stock issued to the Borrower or its Subsidiaries,

(y) Hybrid Preferred Securities and (z) Junior Subordinated Debt) that is

subject to mandatory redemption, sinking fund or retirement provisions

(regardless of whether any portion thereof is due and payable within one

year).

"Margin Stock" has the meaning assigned to such term in Regulation U.

"Material Adverse Effect" means any material adverse effect on the

ability of the Borrower to perform its obligations under the Loan Documents

on a timely basis (it being understood that Material Adverse Effect shall

not include the effect of any True-Up Litigation).

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

rating agency.

"Multiemployer Plan" means a Plan that is a multiemployer plan as

defined in Section 4001(a)(3) of ERISA.

"Net Cash Proceeds" means, in connection with any True-Up

Securitization or any incurrence of Indebtedness for Borrowed Money, the

cash proceeds received from

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<PAGE>

such securitization or incurrence, respectively, net of attorneys' fees,

investment banking fees, accountants' fees, underwriting discounts, escrow

fees, reserves, related swap costs and commissions and other customary fees

and expenses actually incurred in connection therewith and other similar

payment obligations resulting therefrom that are required to be paid

concurrently or otherwise as a result of such securitization or incurrence.

"Net Tangible Assets" means the total assets of the Borrower, its

Consolidated Subsidiaries and the Unrestricted Subsidiaries, minus goodwill

and other intangible assets as shown on the balance sheet of the Borrower,

its Consolidated Subsidiaries and the Unrestricted Subsidiaries delivered

pursuant to Section 7.1(a) in respect of the most recently ended fiscal

quarter of the Borrower.

"Notes" means the collective reference to any promissory note

evidencing Loans.

"Notice of Borrowing" has the meaning specified in Section 2.2.

"Notice of Interest Conversion/Continuation" has the meaning specified

in Section 3.6(a).

"Original Mortgage" means the Mortgage and Deed of Trust, dated as of

November 1, 1944, by the Borrower to South Texas Commercial National Bank

of Houston, as Trustee (JPMorgan Chase Bank, N.A., as successor Trustee),

as amended, modified or supplemented from time to time.

"Other Taxes" has the meaning specified in Section 4.3(b).

"Outstanding Loans" means, as to any Bank at any time, the aggregate

principal amount of all Loans made (or deemed made) by such Bank then

outstanding.

"Participant" has the meaning specified in Section 10.6(b).

"PBGC" means the Pension Benefit Guaranty Corporation established

pursuant to Subtitle A of Title IV of ERISA or any successor.

"Permitted Liens" means with respect to any Person:

(a) Liens for current taxes, assessments or other governmental

charges that are not delinquent or remain payable without any penalty,

or the validity or amount of which is contested in good faith by

appropriate proceedings, provided, however, that adequate reserves

with respect thereto are maintained on the books of such Person in

accordance with GAAP, and provided, further, that any right to

seizure, levy, attachment, sequestration, foreclosure or garnishment

with respect to Property of such Person or any Subsidiary of such

Person by reason of such Lien has not matured, or has been, and

continues to be, effectively enjoined or stayed;

(b) landlord Liens for rent not yet due and payable and Liens for

materialmen, mechanics, warehousemen, carriers, employees, workmen,

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<PAGE>

repairmen and other similar nonconsensual Liens imposed by operation

of law, for current wages or accounts payable or other sums not yet

delinquent, in each case arising in the ordinary course of business or

if overdue, that are being contested in good faith by appropriate

proceedings, provided, however, that any right to seizure, levy,

attachment, sequestration, foreclosure or garnishment with respect to

Property of such Person or any Subsidiary of such Person by reason of

such Lien has not matured, or has been, and continues to be,

effectively enjoined or stayed;

(c) Liens (other than any Lien imposed pursuant to Section

401(a)(29) or 412(n) of the Code, ERISA or any environmental law,

order, rule or regulation) incurred or deposits made, in each case, in

the ordinary course of business, (i) in connection with workers'

compensation, unemployment insurance and other types of social

security or (ii) to secure (or to obtain letters of credit that

secure) the performance of tenders, statutory obligations, surety and

appeal bonds, bids, leases, performance or payment bonds, purchase,

construction, sales contracts and other similar obligations, in each

case not incurred or made in connection with the borrowing of money,

the obtaining of advances or the payment of the deferred purchase

price of property;

(d) Liens arising out of or in connection with any litigation or

other legal proceeding that is being contested in good faith by

appropriate proceedings; provided, however, that adequate reserves

with respect thereto are maintained on the books of such Person in

accordance with GAAP; and provided, further, that, subject to Section

8.1(i) (so long as such Lien is discharged or released within 60 days

of attachment thereof), any right to seizure, levy, attachment,

sequestration, foreclosure or garnishment with respect to Property of

such Person or any Subsidiary of such Person by reason of such Lien

has not matured, or has been, and continues to be, effectively

enjoined or stayed;

(e) precautionary filings under the applicable Uniform Commercial

Code made by a lessor with respect to personal property leased to such

Person or any Subsidiary of such Person;

(f) other non-material Liens or encumbrances none of which

secures Indebtedness for Borrowed Money of the Borrower or any of its

Subsidiaries or interferes materially with the use of the Property

affected in the ordinary conduct of Borrower's or its Subsidiaries'

business and which individually or in the aggregate do not have a

Material Adverse Effect;

(g) easements, rights-of-way, restrictions and other similar

encumbrances and exceptions to title existing or incurred in the

ordinary course of business that, in the aggregate, do not in any case

materially detract from the value of the property subject thereto or

materially interfere with the ordinary conduct of the business of the

Borrower and its Subsidiaries, taken as a whole;

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<PAGE>

(h) (i) Liens created by Capital Leases, provided that the Liens

created by any such Capital Lease attach only to the Property leased

to the Borrower or one of its Subsidiaries pursuant thereto, (ii)

purchase money Liens securing Indebtedness of the Borrower or any of

its Subsidiaries (including such Liens securing such Indebtedness

incurred within twelve months of the date on which such Property was

acquired), provided that all such Liens attach only to the Property

purchased with the proceeds of the Indebtedness secured thereby and

only secure the Indebtedness incurred to finance such purchase, (iii)

Liens on receivables, customer charges, notes, ownership interests,

contracts or contract rights created in connection with a sale,

securitization or monetization of such receivables, customer charges,

notes, ownership interests, contracts or contract rights, and Liens on

rights of the Borrower or any Subsidiary related to such receivables,

customer charges, notes, ownership interests, contracts or contract

rights which are transferred to the purchaser of such receivables,

customer charges, notes, ownership interests, contracts or contract

rights in connection with such sale, securitization or monetization,

provided that such Liens secure only the obligations of the Borrower

or any of its Subsidiaries in connection with such sale,

securitization or monetization and (iv) Liens created by leases that

do not constitute Capital Leases at the time such leases are entered

into, provided that the Liens created thereby attach only to the

Property leased to the Borrower or one of its Subsidiaries pursuant

thereto;

(i) Liens on cash and short-term investments (i) deposited by the

Borrower or any of its Subsidiaries in accounts with or on behalf of

futures contract brokers or other counterparties or (ii) pledged by

the Borrower or any of its Subsidiaries, in the case of clause (i) or

(ii) to secure its obligations with respect to contracts (including

without limitation, physical delivery, option (whether cash or

financial), exchange, swap and futures contracts) for the purchase or

sale of any energy-related commodity or interest rate or currency rate

management contracts;

(j) Liens on (i) Property owned by a Project Financing Subsidiary

or (ii) equity interests in a Project Financing Subsidiary (including

in each case a pledge of a partnership interest, common stock or a

membership interest in a limited liability company) securing

Indebtedness of the Borrower or any of its Subsidiaries incurred in

connection with a Project Financing; and

(k) Liens on equity interests in an Unrestricted Subsidiary

(including in each case a pledge of a partnership interest, common

stock or a membership interest in a limited liability company)

securing, subject to Section 7.2(f), Indebtedness of such Unrestricted

Subsidiary.

"Person" means an individual, partnership, corporation (including a

business trust), joint stock company, trust, unincorporated association,

joint venture, government (or any political subdivision or agency thereof)

or any other entity of whatever nature.

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<PAGE>

"Plan" means, at a particular time with respect to the Borrower, any

employee benefit plan that is covered by ERISA and in respect of which

Borrower or a Commonly Controlled Entity is (or, if such plan were

terminated at such time, would under Section 4069 of ERISA be deemed to be)

an "employer" as defined in Section 3(5) of ERISA.

"Pledge Agreement" means the Pledge Agreement to be executed and

delivered by the Borrower and the collateral agent thereunder,

substantially in the form of Exhibit E, as amended, modified or

supplemented from time to time.

"Pre-Tax Excess Mitigation Credit" means the amount of the credit, if

any, (including the interest component) provided to retail electric

customers under order of the PUC to reflect the refund of an amount equal

to estimated cumulative excess earnings applicable to the years 1998

through 2001 which were used to accelerate depreciation on electric

generation assets in order to reduce or mitigate exposure to stranded costs

associated with electric generation assets or any other credit provided to

customers that will be recovered through securitization or CTC Recoveries.

"Project Financing" means any Indebtedness or lease obligations that

do not constitute Capital Leases at the time such leases are entered into,

in each case that are incurred to finance a project or group of projects

(including any construction financing) to the extent that such Indebtedness

(or other obligations) expressly are not recourse to the Borrower or any of

its Restricted Subsidiaries (other than a Project Financing Subsidiary) or

any of their respective Property other than the Property of a Project

Financing Subsidiary and equity interests in a Project Financing Subsidiary

(including in each case a pledge of a partnership interest, common stock or

a membership interest in a limited liability company).

"Project Financing Subsidiary" means any Restricted Subsidiary of the

Borrower (or any other Person in which Borrower directly or indirectly owns

a 50% or less interest) whose principal purpose is to incur Project

Financing or to become an owner of interests in a Person so created to

conduct the business activities for which such Project Financing was

incurred, and substantially all the fixed assets of which Subsidiary or

Person are those fixed assets being financed (or to be financed) in whole

or in part by one or more Project Financings.

"Property" means any interest or right in any kind of property or

asset, whether real, personal or mixed, owned or leased, tangible or

intangible and whether now held or hereafter acquired.

"Purchasing Banks" has the meaning specified in Section 10.6(c).

"PUC" means the Public Utility Commission of Texas.

"Rating" means the Borrower's corporate credit rating issued by S&P

and the Borrower's issuer rating issued by Moody's (it being understood

that a change in outlook status (e.g., watch status, negative outlook

status) is not a change in Rating as contemplated hereby).

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<PAGE>

"Rating Agencies" means (a) S&P and (b) Moody's.

"Register" has the meaning specified in Section 10.6(d) hereof.

"Regulation U" means Regulation U of the Board or any other regulation

hereafter promulgated by the Board to replace the prior Regulation U and

having substantially the same function.

"Reorganization" means, with respect to any Multiemployer Plan, the

condition that such Plan is in reorganization within the meaning of Section

4241 of ERISA.

"Reportable Event" means any of the events set forth in Section

4043(c) of ERISA and PBGC Reg. Section 4043, other than those events as to

which the thirty-day notice period is waived under PBGC Reg. Section 4043

or other regulations, notices or rulings issued by the PBGC.

"Requirement of Law" means, as to any Person, any law, statute,

ordinance, decree, requirement, order, judgment, rule or regulation of any

Governmental Authority.

"Responsible Officer" means, with respect to any Person, its chief

financial officer, chief accounting officer, assistant treasurer, treasurer

or controller of such Person or any other officer of such Person whose

primary duties are similar to the duties of any of the previously listed

officers of such Person.

"Restricted Subsidiaries" means all Subsidiaries of the Borrower other

than Securitization Subsidiaries and Unrestricted Subsidiaries.

"Revolving Commitment Termination Date" means the earlier to occur of

(a) November 16, 2005 and (b) the date on which no Bank has any Available

Commitment.

"Revolving Loans" has the meaning specified in Section 2.1(a) hereof.

"Revolving Percentage" means, as to any Bank at any time, a fraction

(expressed as a percentage) the numerator of which is the amount of such

Bank's Commitment or, if the Commitments shall have terminated, the

Outstanding Loans of such Bank then outstanding, and the denominator of

which is the Total Commitments then in effect or, if the Commitments shall

have terminated, the Total Outstanding Loans then outstanding.

"S&P" means Standard & Poor's Ratings Group and any successor rating

agency.

"SEC" means the Securities and Exchange Commission and any successor

thereto.

"Secured Indebtedness" means, with respect to any Person, all

Indebtedness secured (or for which the holder of such Indebtedness has an

existing right, contingent or otherwise, to be secured) by any Lien on any

Property (including, without limitation, accounts and contract rights)

owned by such Person or any of its Subsidiaries, even

18

<PAGE>

though such Person has not assumed or become liable for the payment of such

Indebtedness.

"Securitization Securities" means transition bonds issued pursuant to

the Texas Electric Choice Plan if (and only if) no recourse may be had to

the Borrower or any of its Subsidiaries (or to their respective assets) for

the payment of such obligations, other than the issuer of the bonds and its

assets, provided that payment of transition charges by any retail electric

provider ("REP") in accordance with such legislation, whether or not such

REP has collected such charges from the retail electric customers, shall

not be deemed "recourse" hereunder, including any REP that is a Subsidiary

of the Borrower or a division of an Affiliate of the Borrower or any

Affiliate of the Borrower.

"Securitization Subsidiary" means a special purpose subsidiary created

to issue Securitization Securities.

"Significant Subsidiary" means (i) for the purposes of determining

what constitutes an "Event of Default" under Sections 8.1(f), (g), (h), (i)

and (j), a Subsidiary of the Borrower (other than a Project Financing

Subsidiary) whose total assets, as determined in accordance with GAAP,

represent at least 10% of the total assets of the Borrower, on a

consolidated basis, as determined in accordance with GAAP and (ii) for all

other purposes the "Significant Subsidiaries" shall be those Subsidiaries

of the Borrower whose total assets, as determined in accordance with GAAP,

represent at least 10% of the total assets of the Borrower on a

consolidated basis, as determined in accordance with GAAP for the

Borrower's most recently completed fiscal year and identified in the

certificate most recently delivered pursuant to Section 7.1(a)(iv)(C);

provided that no Securitization Subsidiary or Unrestricted Subsidiary shall

be deemed to be a Significant Subsidiary or subject to the restrictions,

covenants or Events of Default under this Agreement.

"Single Employer Plan" means any Plan that is covered by Title IV of

ERISA, but that is not a Multiemployer Plan.

"Subsidiary" means, as to any Person, a corporation, partnership,

limited liability company or other entity of which more than 50% of the

outstanding shares of Capital Stock or other ownership interests having

ordinary voting power (other than Capital Stock or such other ownership

interests having such power only by reason of the happening of a

contingency) to elect directors or other managers of such corporation,

partnership or other entity are at the time owned, directly or indirectly,

through one or more Subsidiaries of such Person, by such Person; provided,

however, that no Securitization Subsidiary shall be deemed to be a

Subsidiary for purposes of this Agreement.

"Swap Agreement" means any agreement with respect to any swap,

forward, future or derivative transaction or option or similar agreement

involving, or settled by reference to, one or more rates, currencies,

commodities, equity or debt instruments or securities, or economic,

financial or pricing indices or measures of economic, financial or pricing

risk or value or any similar transaction or any combination of these

transactions;

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<PAGE>

provided that no phantom stock or similar plan providing for payments only

on account of services provided by current or former directors, officers,

employees or consultants of the Borrower or any of its Subsidiaries shall

be a "Swap Agreement".

"Syndication Agent" has the meaning specified in the introduction to

this Agreement.

"Taxes" has the meaning specified in Section 4.3(a).

"Term Loan Maturity Date" means the second anniversary of the

Revolving Commitment Termination Date.

"Term Loans" has the meaning specified in Section 2.4 hereof

"Texas Genco" means Texas Genco Holdings, Inc.

"Texas Genco Stock" means the Capital Stock of Texas Genco now owned

or hereafter acquired by Utility Holding, LLC, which, as of the date

hereof, constitutes 100% of the issued and outstanding Capital Stock of

Texas Genco.

"Total Commitments" means, at any time, the aggregate amount of the

Commitments of all Banks then in effect.

"Total Outstanding Loans" means, at any time, the aggregate amount of

the Outstanding Loans of all Banks outstanding at such time.

"Tranche" means the collective reference to LIBOR Rate Loans, the

Interest Periods with respect to all of which begin on the same date and

end on the same later date (whether or not such Loans shall originally have

been made on the same day).

"Transferee" has the meaning specified in Section 10.6(f).

"Transfer Effective Date" has the meaning specified in Section

10.6(c).

"Transition Charges Principal and Interest" means the non-bypassable

transition charges billed to customers for payment of debt service on

Securitization Securities.

"Triggering Event" has the meaning specified in Section 4.8(b).

"True-Up Litigation" means any litigation or other proceeding in

connection with the determination by the PUC of the recovery by CenterPoint

and its Subsidiaries of stranded costs and other amounts to be recovered in

the true-up process.

"True-Up Securitization" means a sale or contribution of assets to a

Securitization Subsidiary or series of such transactions, together with the

issuance of Securitization Securities.

"Type" refers to the determination of whether a Loan is an ABR Loan or

a LIBOR Rate Loan (or a Borrowing comprised of such Loans).

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"United States" means the United States of America.

"Unrestricted Subsidiary" means any Subsidiary of the Borrower and its

direct or indirect Subsidiaries that is designated by a Responsible Officer

of the Borrower as an Unrestricted Subsidiary, but only if (x) the

aggregate amount of net tangible assets of all Unrestricted Subsidiaries at

the time of designation does not exceed, or would not exceed as a result of

such designation, 10% of the Net Tangible Assets, (y) such designation and

the Investment of the Borrower in such Subsidiary complies with the

limitations in Section 7.2(f) and (z) such Subsidiary: (i) has no

Indebtedness with recourse to the Borrower and the Restricted Subsidiaries

except that permitted under Section 7.2(f); (ii) is not party to any

agreement, contract, arrangement or understanding with the Borrower or any

Significant Subsidiary of the Borrower unless the terms of any such

agreement, contract, arrangement or understanding and related transactions

are substantially no less favorable to the Borrower or such Significant

Subsidiary than those that might be obtained at the time from Persons who

are not Affiliates of the Borrower; (iii) is a Person with respect to which

neither the Borrower nor any of its Significant Subsidiaries has any direct

or indirect obligation that violates Section 7.2(f) (a) to subscribe for

additional Capital Stock of such Person or (b) to maintain or preserve such

Person's financial condition or to cause such Person to achieve any

specified levels of operating results; and (iv) does not, either alone or

in the aggregate, operate, directly or indirectly, all or substantially all

of the business of the Borrower and its Subsidiaries.

Any designation of a Subsidiary of the Borrower as an Unrestricted

Subsidiary shall be evidenced by a certificate of a Responsible Officer of

the Borrower giving effect to such designation and a certificate executed

by a Responsible Officer certifying that such designation complied with the

preceding conditions and was permitted by Section 7.2(f) delivered to the

Administrative Agent. If, at any time, any Unrestricted Subsidiary would

fail to meet the preceding requirements as an Unrestricted Subsidiary, it

shall thereafter cease to be an Unrestricted Subsidiary for purposes of

this Agreement and any Indebtedness of such Subsidiary shall be deemed to

be incurred by a Significant Subsidiary of the Borrower as of such date

and, if such Indebtedness is not permitted to be incurred as of such date

under Section 7.2(f), the Borrower shall be in default of such covenant. A

Responsible Officer of the Borrower may at any time designate any

Unrestricted Subsidiary to be a Subsidiary of the Borrower that is not an

Unrestricted Subsidiary; provided that such designation shall be deemed to

be an incurrence of Indebtedness by such Subsidiary of any outstanding

Indebtedness of such Unrestricted Subsidiary and such designation shall

only be permitted if (1) such Indebtedness is permitted under this

Agreement calculated on a pro forma basis as if such designation had

occurred at the beginning of the four-quarter reference period; and (2) no

Default or Event of Default would be in existence following such

designation.

"Wholly-Owned" means, with respect to any Subsidiary of any Person,

all the outstanding Capital Stock (other than directors' qualifying shares

required by law) or other ownership interest of such Subsidiary which are

at the time owned by such Person or by one or more Wholly-Owned

Subsidiaries of such Person, or both.

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SECTION 1.2. Other Definitional Provisions. (a) Unless otherwise specified

therein, all terms defined in this Agreement shall have such defined meanings

when used in the other Loan Documents or any certificate or other document made

or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or

other document made or delivered pursuant hereto or thereto, (i) accounting

terms relating to the Borrower or any of its Subsidiaries not defined in Section

1.1 and accounting terms partly defined in Section 1.1, to the extent not

defined, shall have the respective meanings given to them under GAAP, (ii) the

words "include", "includes" and "including" shall be deemed to be followed by

the phrase "without limitation", (iii) the word "incur" shall be construed to

mean incur, create, issue, assume, become liable in respect of or suffer to

exist (and the words "incurred" and "incurrence" shall have correlative

meanings), (iv) the words "asset" and "property" shall be construed to have the

same meaning and effect and to refer to any and all tangible and intangible

assets and properties, including cash, Capital Stock, securities, revenues,

accounts, leasehold interests and contract rights, and (v) references to

agreements or other Contractual Obligations shall, unless otherwise specified,

be deemed to refer to such agreements or Contractual Obligations as amended,

supplemented, restated or otherwise modified from time to time.

(c) The words "hereof", "herein" and "hereunder" and words of similar

import, when used in this Agreement, shall refer to this Agreement as a whole

and not to any particular provision of this Agreement, and Section, Schedule and

Exhibit references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable

to both the singular and plural forms of such terms.

ARTICLE II

AMOUNTS AND TERMS OF THE LOANS

SECTION 2.1. The Commitments. (a) Each Bank severally agrees, on the terms

and subject to the conditions hereinafter set forth, to make revolving credit

Loans ("Revolving Loans") to the Borrower from time to time on any Business Day

during the period from the Closing Date until the Revolving Commitment

Termination Date in an aggregate principal amount outstanding, which does not

exceed at any time such Bank's Commitment; provided that (x) no more than six

Borrowings shall be made hereunder and (y) no Revolving Loan shall be made as a

LIBOR Rate Loan with an Interest Period ending after the Revolving Commitment

Termination Date; and provided, further, that in no event shall (x) the Total

Outstanding Loans at any time exceed the Total Commitments at such time and (y)

the aggregate principal amount of any requested Borrowing on any date exceed the

aggregate principal amount outstanding under the Existing Credit Agreement.

(b) Each Borrowing by the Borrower shall be in an aggregate principal

amount not less than $10,000,000 (in the case of LIBOR Rate Loans) or $5,000,000

(in the case of ABR Loans), or an integral multiple of $1,000,000 in excess

thereof and shall consist of Revolving Loans of

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the same Type made on the same day by the Banks ratably according to their

respective Revolving Percentages. Within the limits of the applicable

Commitments, the Borrower may borrow, prepay pursuant to Section 4.6 and

reborrow under this Section 2.1. Subject to Section 2.4, the principal amount

outstanding on the Revolving Loans shall be due and payable, and the Commitment

of each Bank shall terminate, on the Revolving Commitment Termination Date,

together with accrued and unpaid interest thereon.

SECTION 2.2. Procedure for Revolving Loan Borrowing. (a) The Borrower may

borrow under the Commitments on any Business Day during the period from and

including the Closing Date to and excluding the Revolving Commitment Termination

Date, provided that the Borrower shall give the Administrative Agent irrevocable

oral notice or written notice pursuant to a notice of borrowing, in

substantially the form of Exhibit A hereto ("Notice of Borrowing") which shall

be signed by the Borrower and shall specify therein the requested (i) date of

such Borrowing, (ii) Type of Revolving Loans comprising such Borrowing, (iii)

aggregate amount of such Borrowing and (iv) the Interest Period for each such

Revolving Loan, in the case of any LIBOR Rate Loan,:

(i) not later than 11:00 A.M. (New York City time) on the third

Business Day prior to the date of the proposed Borrowing in the case of a

LIBOR Rate Loan;

(ii) not later than 11:00 A.M. (New York City time) on the Business

Day immediately preceding the date of the proposed Borrowing in the case of

an Early Funding ABR Loan; and

(iii) not later than 11:00 A.M. (New York City time) on the same

Business Day of the proposed Borrowing in the case of any other ABR Loan.

With respect to any oral notice of borrowing given by the Borrower, the Borrower

shall promptly thereafter confirm such notice in writing pursuant to a Notice of

Borrowing. Upon receipt of any such notice, the Administrative Agent shall

promptly notify each Bank thereof. Each Bank shall, before 1:00 P.M. (New York

City time) on the date of such Borrowing, make available to the Administrative

Agent at the Funding Office, in immediately available funds, such Bank's

applicable Revolving Percentage of such Borrowing; provided, however, that, in

the event of a requested ABR Loan with respect to which the Borrower has

delivered its Notice of Borrowing on the Business Day immediately preceding the

requested Borrowing Date (an "Early Funding ABR Loan"), each Bank shall make its

applicable Revolving Percentage of such Borrowing available before 10:00 A.M.

(New York City time) on the requested Borrowing Date. The Administrative Agent

shall, no later than 2:00 P.M. (New York City time) on such date (or no later

than 11:00 A.M. (New York City time), in the case of an Early Funding ABR Loan),

make available to the Borrower the proceeds of the Revolving Loans received by

the Administrative Agent hereunder by crediting such account of the Borrower

which the Administrative Agent and the Borrower shall from time to time

designate. Each Notice of Borrowing shall be irrevocable and binding on the

Borrower.

(b) Unless the Administrative Agent shall have received notice from a Bank

at least two hours prior to the applicable time described in clause (a) above by

which such Bank is required to deliver its funds to the Administrative Agent

with respect to any Borrowing that such Bank

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will not make available to the Administrative Agent such Bank's applicable

Revolving Percentage of such Borrowing, the Administrative Agent may assume that

such Bank has made such portion available to the Administrative Agent on the

date of such Borrowing in accordance with Section 2.2(a) and the Administrative

Agent may, in reliance upon such assumption, make available to the Borrower on

such date a corresponding amount. If such amount is made available to the

Administrative Agent on a date after such date of Borrowing, such Bank shall pay

to the Administrative Agent on demand an amount equal to the product of (i) the

daily average Federal Funds Effective Rate during such period, times (ii) the

amount of such Bank's applicable Revolving Percentage of such Borrowing, times

(iii) a fraction, the numerator of which is the number of days that elapse from

and including such date of Borrowing to the date on which such Bank's applicable

Revolving Percentage of such Borrowing shall have become immediately available

to the Administrative Agent and the denominator of which is 360. A certificate

of the Administrative Agent submitted to any Bank with respect to any amounts

owing under this Section 2.2(b) shall be conclusive in the absence of manifest

error. If such Bank shall repay to the Administrative Agent such corresponding

amount, such amount so repaid shall constitute such Bank's Revolving Loan as

part of such Borrowing for purposes of this Agreement. If such Bank's applicable

Revolving Percentage of such Borrowing is not in fact made available to the

Administrative Agent by such Bank within one (1) Business Day of such date of

Borrowing, the Administrative Agent shall be entitled to recover such amount

with interest thereon at the rate per annum, equal to (i) the ABR (in the case

of ABR Loans) or (ii) the Federal Funds Effective Rate (in the case of LIBOR

Rate Loans), on demand, from the Borrower.

(c) The failure of any Bank to make the Revolving Loan to be made by it as

part of any Borrowing shall not relieve any other Bank of its obligation, if

any, hereunder to make its Revolving Loan on the date of such Borrowing, but no

Bank shall be responsible for the failure of any other Bank to make the

Revolving Loan to be made by such other Bank on the date of any Borrowing.

SECTION 2.3. Minimum Tranches. All Borrowings, prepayments, conversions and

continuations of Loans hereunder and all selections of Interest Periods

hereunder shall be in such amounts and be made pursuant to such elections so

that, after giving effect thereto, the aggregate principal amount of the Loans

comprising each Tranche of LIBOR Rate Loans shall be equal to $10,000,000 or an

integral multiple of $1,000,000 in excess thereof.

SECTION 2.4. Conversion of Revolving Loans to Term Loans. (a) The aggregate

principal amount of the Revolving Loans outstanding on the Revolving Commitment

Termination Date shall be converted into, and the Banks shall be deemed to have

made, term loans to the Borrower on the Revolving Commitment Termination Date in

an aggregate principal amount equal to the aggregate principal amount of the

Revolving Loans so converted ("Term Loans"). The Term Loans may from time to

time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and

notified to the Administrative Agent in accordance with Section 3.6.

(b) The Borrower shall repay all outstanding Term Loans on the Term Loan

Maturity Date.

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ARTICLE III

PROVISIONS RELATING TO ALL LOANS

SECTION 3.1. Evidence of Loans. (a) Each Bank shall maintain in accordance

with its usual practice an account or accounts evidencing indebtedness of the

Borrower to such Bank resulting from each Loan made by such Bank from time to

time, including, without limitation, the amounts of principal and interest

payable and paid to such Bank from time to time under this Agreement.

(b) The Administrative Agent shall maintain the Register pursuant to

Section 10.6(d) and a subaccount therein for each Bank, in which shall be

recorded (i) the amount of each Loan made by each Bank through the

Administrative Agent hereunder, the type thereof and each Interest Period

applicable thereto, (ii) the amount of any principal or interest due and payable

or to become due and payable from the Borrower to each Bank hereunder and (iii)

both the amount of any sum received by the Administrative Agent hereunder from

the Borrower and each Bank's share thereof.

(c) The entries made in the Register and the accounts of each Bank

maintained pursuant to Section 3.1(a) shall, to the extent permitted by

applicable law, be prima facie evidence of the existence and amount of the

obligations of the Borrower therein recorded; provided, however, that the

failure of any Bank or the Administrative Agent to maintain the Register or any

such account, or any error therein, shall not in any manner affect the

obligation of the Borrower to repay (with applicable interest) the Loans

actually made to the Borrower by such Bank in accordance with the terms of this

Agreement.

SECTION 3.2. Fees. (a) The Borrower agrees to pay to the Administrative

Agent for the account of each Bank the Commitment Fee, from the date hereof

until the Revolving Commitment Termination Date payable on the Revolving

Commitment Termination Date.

(b) The Borrower agrees to pay to the Administrative Agent for the account

of each Bank a draw fee in an amount equal to 0.05% of the principal amount of

each Revolving Loan made by such Bank on a Borrowing Date, payable on such

Borrowing Date.

(c) The fees payable under Section 3.2(a) shall be calculated by the

Administrative Agent on the basis of a 365- or 366-day year, as the case may be,

for the actual days (including the first day but excluding the last day)

occurring in the period for which such fee is payable.

(d) The Borrower shall pay to the Administrative Agent, for its own

account, the fees in the amounts and on the dates previously agreed to in

writing by the Borrower and the Administrative Agent.

SECTION 3.3. Interest. The Borrower shall pay interest on the unpaid

principal amount of each Loan made by each Bank from the date of such Loan until

such principal amount shall be paid in full, at the times and at the rates per

annum set forth below:

(a) ABR Loans. Each ABR Loan shall bear interest at a rate per annum equal

at all times to the lesser of (i) the ABR plus the Applicable Margin and (ii)

the Highest Lawful Rate, payable

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quarterly in arrears on the last day of each March, June, September and December

and on the Revolving Commitment Termination Date or, if the Revolving Loans are

converted pursuant to Section 2.4, the Term Loan Maturity Date.

(b) LIBOR Rate Loans. Each LIBOR Rate Loan shall bear interest at a rate

per annum equal at all times to, in the case of each LIBOR Rate Loan, the lesser

of (A) the sum of the LIBOR Rate for the applicable Interest Period for such

Loan plus the Applicable Margin and (B) the Highest Lawful Rate, payable on the

last day of such Interest Period and, with respect to Interest Periods of six,

nine or twelve months, on the ninetieth (90th) day after the commencement of the

Interest Period and on each succeeding ninetieth (90th) day during such Interest

Period, and on the Revolving Commitment Termination Date or, if the Revolving

Loans are converted pursuant to Section 2.4, the Term Loan Maturity Date.

(c) Calculations. Interest that is determined by reference to the ABR shall

be calculated by the Administrative Agent on the basis of a 365- or 366-day

year, as the case may be, for the actual days (including the first day but

excluding the last day) occurring in the period in which such interest is

payable and otherwise shall be calculated by the Administrative Agent on the

basis of a 360-day year for the actual days (including the first day and

excluding the last day) occurring in the period for which such interest is

payable.

(d) Default Rate. Notwithstanding the foregoing, if all or a portion of (i)

the principal amount of any Loan, (ii) any interest payable thereon, or (iii)

any Commitment Fee or other amount payable hereunder shall not be paid when due

(whether at the stated maturity, by acceleration or otherwise), such overdue

amount shall bear interest, payable from time to time on demand, at a rate per

annum equal to the lesser of (A) the Highest Lawful Rate and (B) the Default

Rate, in each case from the date of such non-payment until such amount is paid

in full (as well after as before judgment).

(e) Determination Conclusive. Each determination of an interest rate by the

Administrative Agent pursuant to any provisions of this Agreement shall be

conclusive and binding on the Borrower and the Banks in the absence of manifest

error. The Administrative Agent shall, at the request of the Borrower, deliver

to the Borrower a statement showing in reasonable detail the quotations used by

the Administrative Agent in determining the LIBOR Rate.

SECTION 3.4. Reserve Requirements. (a) The Borrower agrees to pay to each

Bank that requests compensation under this Section 3.4 in accordance with the

provisions set forth in Section 4.8(b), so long as such Bank shall be required

to maintain reserves against "Eurocurrency liabilities" under Regulation D of

the Board (or, so long as such Bank shall be required by the Board or by any

other Governmental Authority to maintain reserves against any other category of

liabilities that includes deposits by reference to which the interest rate on

LIBOR Rate Loans is determined as provided in this Agreement or against any

category of extensions of credit or other assets of such Bank that includes any

LIBOR Rate Loans), an additional amount (determined by such Bank and notified to

the Borrower pursuant to the provisions set forth in Section 4.8(b))

representing such Bank's calculation or, if an accurate calculation is

impracticable, reasonable estimate (using such method of allocation to such

Loans of the Borrower as such Bank shall determine in accordance with Section

4.8(a)) of the actual

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costs, if any, incurred by such Bank during the relevant Interest Period as a

result of the applicability of the foregoing reserves to such LIBOR Rate Loans,

which amount in any event shall not exceed the product of the following for each

day of such Interest Period:

(i) the principal amount of the relevant LIBOR Rate Loans made by such

Bank outstanding on such day;

(ii) the difference between (A) a fraction, the numerator of which is

the LIBOR Rate (expressed as a decimal) applicable to such LIBOR Rate Loan

(expressed as a decimal), and the denominator of which is one minus the

maximum rate (expressed as a decimal) at which such reserve requirements

are imposed by the Board or other Governmental Authority on such date,

minus (B) such numerator; and

(iii) a fraction, the numerator of which is one and the denominator of

which is 360.

(b) The agreements in this Section 3.4 shall survive the termination of

this Agreement and the payment of all amounts payable hereunder; provided,

however, that in no event shall the Borrower be obligated to reimburse or

compensate any Bank for amounts contemplated by this Section 3.4 for any period

prior to the date that is 90 days before the date upon which such Bank requests

in writing such reimbursement or compensation from the Borrower.

SECTION 3.5. Interest Rate Determination and Protection. (a) The rate of

interest for each LIBOR Rate Loan shall be determined by the Administrative

Agent two Business Days before the first day of each Interest Period applicable

to such Loan. The Administrative Agent shall give prompt notice to the Borrower

and the Banks of the applicable interest rate determined by the Administrative

Agent for purposes of Sections 3.3(a) and (b) hereof.

(b) If, with respect to any LIBOR Rate Loans, prior to the first day of an

Interest Period (i) the Administrative Agent shall have determined (which

determination shall be conclusive and binding upon the Borrower) that, by reason

of circumstances affecting the London interbank market, adequate and reasonable

means do not exist for ascertaining the LIBOR Rate for such Interest Period or

(ii) the Administrative Agent shall have received notice from the Majority Banks

that the LIBOR Rate determined or to be determined for such Interest Period will

not adequately and fairly reflect the cost to such Banks (as determined in good

faith and certified by such Banks) of making or maintaining their affected LIBOR

Rate Loans during such Interest Period, the Administrative Agent shall give

facsimile or telephonic notice thereof (with written notice to follow promptly)

to the Borrower and the Banks as soon as practicable thereafter. If such notice

is given, (A) any LIBOR Rate Loans requested to be made on the first day of such

Interest Period shall be made as ABR Loans, (B) any Loans that were to have been

converted on the first day of such Interest Period to LIBOR Rate Loans shall be

continued as ABR Loans and (C) any outstanding LIBOR Rate Loans shall be

converted, on the first day of such Interest Period, to ABR Loans. Until such

notice has been withdrawn by the Administrative Agent, no further LIBOR Rate

Loans shall be made or continued as such, nor shall the Borrower have the right

to convert Loans to LIBOR Rate Loans.

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SECTION 3.6. Voluntary Interest Conversion or Continuation of Loans. (a)The

Borrower may on any Business Day, upon the Borrower's irrevocable oral or

written notice of interest conversion/continuation given by the Borrower to the

Administrative Agent not later than 11:00 A.M. (New York City time) on the third

Business Day prior to the date of the proposed interest conversion or

continuation in the case of a LIBOR Rate Loan, (i) convert Loans of one Type

into Loans of another Type; (ii) convert LIBOR Rate Loans for a specified

Interest Period into LIBOR Rate Loans for a different Interest Period; or (iii)

continue LIBOR Rate Loans for a specified Interest Period as LIBOR Rate Loans

for the same Interest Period-; provided, however, that (A) any conversion of any

LIBOR Rate Loans into LIBOR Rate Loans for a different Interest Period, or into

ABR Loans, or any continuation of LIBOR Rate Loans for the same Interest Period

shall be made on, and only on, the last day of an Interest Period for such LIBOR

Rate Loans; (B) no Loan may be converted into or continued as a LIBOR Rate Loan

by the Borrower so long as an Event of Default has occurred and is continuing,

and (C) no Loan may be converted into or continued as a LIBOR Rate Loan if after

giving effect thereto, Section 2.3 would be contravened. With respect to any

oral notice of interest conversion/continuation given by the Borrower under this

Section 3.6(a), the Borrower shall promptly thereafter confirm such notice in

writing. Each written notice of interest conversion/continuation given by the

Borrower under this Section 3.6(a) and each confirmation of an oral notice of

interest conversion/continuation given by the Borrower under this Section 3.6(a)

shall be in substantially the form of Exhibit B hereto ("Notice of Interest

Conversion/Continuation"). Each such Notice of Interest Conversion/Continuation

shall specify therein the requested (x) date of such interest conversion or

continuation; (y) the Loans to be converted or continued; and (z) if such

interest conversion or continuation is into LIBOR Rate Loans, the duration of

the Interest Period for each such LIBOR Rate Loan. Upon receipt of any such

Notice of Interest Conversion/Continuation, the Administrative Agent shall

promptly notify each Bank thereof. Each Notice of Interest

Conversion/Continuation shall be irrevocable and binding on the Borrower.

(b) If the Borrower shall fail to deliver to the Administrative Agent a

Notice of Interest Conversion/Continuation in accordance with Section 3.6(a)

hereof, or to select the duration of any Interest Period for the principal

amount outstanding under any LIBOR Rate Loan by 11:00 A.M. (New York City time)

on the third Business Day prior to the last day of the Interest Period

applicable to such Loan in accordance with Section 3.6(a), the Administrative

Agent will forthwith so notify the Borrower and the Banks (provided that the

failure to give such notice shall not affect the conversion referred to below)

and such Loans will automatically, on the last day of the then existing Interest

Period therefor, convert into LIBOR Rate Loans with a one month Interest Period.

SECTION 3.7. Funding Losses Relating to LIBOR Rate Loans. (a) The Borrower

agrees, without duplication of any other provision under this Agreement, to

indemnify each Bank and to hold each Bank harmless from any loss or expense that

such Bank may sustain or incur as a consequence of (i) default by the Borrower

in payment when due of the principal amount of or interest on any LIBOR Rate

Loan, (ii) default by the Borrower in making a borrowing of, conversion into or

continuation of any LIBOR Rate Loan after the Borrower has given a notice

requesting the same in accordance with the provisions of this Agreement, (iii)

default by the Borrower in making any prepayment after the Borrower has given a

notice thereof in accordance with the provisions of this Agreement or (iv) the

making of a prepayment of LIBOR Rate Loans or the conversion of LIBOR Rate Loans

into ABR Loans, on a day that is not the last day of an

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Interest Period with respect thereto (excluding any prepayment made pursuant to

Section 3.8) on a day that is not the scheduled maturity date with respect

thereto, including, without limitation, in each case, any such loss or expense

arising from the reemployment of funds obtained by it or from fees payable to

terminate the deposits from which such funds were obtained. The calculation of

all amounts payable to a Bank under this Section 3.7(a) shall be made pursuant

to the method described in Section 4.8(a), but in no event shall such amounts

payable with respect to any LIBOR Rate Loan exceed the amounts that would have

been payable assuming such Bank had actually