<SUBMISSION>
<ACCESSION-NUMBER>0001004980-02-000083
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20021022
<ITEMS>5
<ITEMS>7
<FILING-DATE>20021022
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>PG&E CORP
<CIK>0001004980
<ASSIGNED-SIC>4931
<IRS-NUMBER>943234914
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-12609
<FILM-NUMBER>02794900
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE MARKET SPEAR TOWER
<STREET2>SUITE 2400
<CITY>SAN FRANCISCO
<STATE>CA
<ZIP>94105
<PHONE>4152677000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE MARKET SPEAR TOWER
<STREET2>SUITE 2400
<CITY>SAN FRANCISCO
<STATE>CA
<ZIP>94105
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>PG&E PARENT CO INC
<DATE-CHANGED>19951214
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>finalloan1022.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<html>
<head>
<title>10-22-02 corp loan 8-K</title>
</head>
<body>
<div>
<p align="center"><a name="_DV_M0"></a>SECURITIES AND EXCHANGE
COMMISSION<br />
</p>

<p align="center"><a name="_DV_M1"></a>Washington, D.C.&nbsp;
20549<br />
</p>

<p align="center"><a name="_DV_M2"></a>FORM 8&#8209;K</p>

<p align="center"><a name="_DV_M3"></a>CURRENT REPORT<br />
<a name="_DV_M4"></a>PURSUANT TO SECTION 13 OR 15(d) OF THE<br />
<a name="_DV_M5"></a>SECURITIES EXCHANGE ACT OF 1934<br />
</p>

<p align="center"><a name="_DV_M6"></a>Date of Report: October 22,
2002<br />
</p>

<p align="center"><a name="_DV_M7"></a>PG&amp;E Corporation</p>

<p align="center"><a name=
"_DV_M8"></a>-----------------------------------------------------</p>

<p align="center"><a name="_DV_M9"></a>(Exact Name of Registrant as
Specified in its Charter)</p>

<p align="center"><br />
<br />
</p>

<p align="center"><a name=
"_DV_M10"></a>California&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1-12609&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
94-3234914</p>

<p align="center"><a name=
"_DV_M11"></a>---------------------------------------------------------------------</p>

<p align="center"><a name="_DV_M12"></a>(State or other
Jurisdiction&nbsp;&nbsp;
(Commission&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (IRS Employer<br />
<a name="_DV_M13"></a>of
Incorporation)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
File Number)&nbsp;&nbsp;&nbsp;&nbsp; Identification No.)</p>

<p align="center"><br />
</p>

<p align="center"><a name="_DV_M14"></a>PG&amp;E Corporation<br />
<a name="_DV_M15"></a>One Market, Spear Tower, Suite 2400<br />
<a name="_DV_M16"></a>San Francisco, California 94105</p>

<p align="center"><a name=
"_DV_M17"></a>--------------------------------------------------</p>

<p align="center"><a name="_DV_M18"></a>(Address of principal
executive offices) (Zip Code)</p>

<p align="center"><a name="_DV_M19"></a>(415) 267-7000</p>

<p align="center"><a name=
"_DV_M20"></a>---------------------------------------------------</p>

<p align="center"><a name="_DV_M21"></a>(Registrant's telephone
number, including area code)</p>

<br clear="all" />


<div><a name="_DV_M22"></a>

<hr size="2" width="100%" align="left" />
</div>

<p><a name="_DV_M23"></a><br />
Item 5. Other Events<br />
</p>

<p><a name="_DV_M24"></a><a name=
"_DV_M55"></a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 18, 2002, PG&amp;E Corporation entered into a Second
Amended and Restated Credit Agreement (Credit Agreement), with the
lenders party thereto, Lehman Commercial Paper Inc., as
Administrative Agent, and others, pursuant to which the existing
$420 million Tranche B loan previously made by certain of the
lenders has been modified (as modified, the &ldquo;Tranche B
loan&rdquo;) and certain of the lenders have made new incremental
loans in the aggregate principal amount of $300 million (New Loans)
with the same terms and conditions as&nbsp; those applicable to the
Tranche B Loan.&nbsp; The Tranche B loan and the New Loans are
collectively referred to herein as the &ldquo;Loans.&rdquo;&nbsp;
The New Loans have been funded into a separate escrow account and
will be released to PG&amp;E Corporation on January 17, 2003,
unless a bankruptcy proceeding has been commenced by or against
PG&amp;E Corporation.&nbsp; The Loans are payable in a single
installment on September 2, 2006, unless prepaid earlier in
accordance with the Credit Agreement.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Tranche B loan and the New Loans are senior, unsubordinated
obligations of PG&amp;E Corporation, which are pari passu with each
other.&nbsp; Notwithstanding the foregoing, so long as the options
granted to certain lenders of PG&amp;E Corporation to purchase
shares of PG&amp;E National Energy Group, Inc. (NEG, Inc.) pursuant
to the Amended and Restated Option Agreement entered into on June
25, 2002 (Option Agreement) remain outstanding, the obligations of
PG&amp;E Corporation in respect of such options are senior to its
obligations in respect of the Loans to the extent provided in the
Intercreditor Agreement previously entered into on June 25, 2002,
among the lenders party to the Amended and Restated Credit
Agreement dated as of June 25, 2002.&nbsp; So long as the options
remain outstanding, the Intercreditor Agreement will remain in
effect to define the extent to which the obligations of PG&amp;E
Corporation in respect of such options are senior to its
obligations in respect of the Loans.&nbsp; GPSF-F Inc. (GPSF), an
affiliate of General Electric Capital Corporation, the Tranche A
lender under the Amended and Restated Credit Agreement dated as of
June 25, 2002, has exercised its put option under the Option
Agreement, and GPSF and PG&amp;E Corporation are in the process of
conducting the appraisal process provided under the Option
Agreement.&nbsp; PG&amp;E Corporation and PG&amp;E National Energy
Group, LLC, (LLC), a subsidiary of PG&amp;E Corporation which owns
100% of the common stock of NEG, Inc., have agreed with the other
holders of options under the Option Agreement that they may
exercise their put option on the same terms as those received by
GPSF within 45 days after the closing of the put option of GPSF,
and, that if not exercised within such 45-day period, the put
option is exercisable during any time prior to March 1, 2003.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
obligations of PG&amp;E Corporation with respect to the Loans are
secured by a perfected first priority security interest in 100% of
the equity interests in LLC and 100% of the common stock of NEG,
Inc., and all proceeds thereof (NEG Collateral); such security
interests secure equally and ratably the portions of the Loans held
by each lender.&nbsp; PG&amp;E Corporation is not permitted to
dispose of the NEG Collateral except under certain
circumstances.&nbsp; Any proceeds of a permitted disposition of the
NEG Collateral must be applied to prepay the Loans.&nbsp; PG&amp;E
Corporation may spin off the NEG Collateral only with the consent
of lenders holding more than 50.1% of the aggregate outstanding
principal amount of the Loans.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, all obligations of PG&amp;E Corporation with respect to
the Loans are secured by a perfected first priority security
interest in the outstanding common stock of PG&amp;E
Corporation&rsquo;s subsidiary, Pacific Gas and Electric Company
(Utility), and all proceeds thereof.&nbsp; With respect to 35% of
such common stock pledged for the benefit of the lenders, the
lenders have customary rights of a pledgee of common stock,
provided that certain regulatory approvals may be required in
connection with any foreclosure on such stock.&nbsp; With respect
to the remaining 65%, such common stock has been pledged for the
benefit of the lenders, but the lenders have no ability to control
such common stock under any circumstances and do not have any of
the typical rights and remedies of a secured creditor.&nbsp;
However, the lenders do have the right to receive any cash proceeds
received upon a disposition of such common stock.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the consummation of the Utility&rsquo;s proposed
plan of reorganization (PG&amp;E Plan) in the Utility&rsquo;s
bankruptcy proceeding pending in the U.S. Bankruptcy Court for the
Northern District of California, the Utility has formed a new
corporation (Newco) to hold the equity interests in three limited
liability companies (Reorganization Subsidiaries) formed to hold
certain assets of the Utility.&nbsp; The PG&amp;E Plan contemplates
that, after the transfer of such assets to the Reorganization
Subsidiaries, the Utility will distribute the common stock of Newco
to PG&amp;E Corporation (the &ldquo;Newco Spin&rdquo;) and PG&amp;E
Corporation will distribute the common stock of the Utility to the
shareholders of PG&amp;E Corporation (collectively, the
&ldquo;Spin&rdquo;).&nbsp; Pursuant to the Credit Agreement and the
Pledge Agreements pledging the common stock of the Utility,
PG&amp;E Corporation may substitute common stock of Newco for the
common stock of the Utility in connection with the consummation of
the PG&amp;E Plan.&nbsp;<br />
</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally,
all obligations of PG&amp;E Corporation with respect to the Loans
are secured by a perfected first priority security interest in
substantially all other personal property assets of PG&amp;E
Corporation with certain exceptions, including, without limitation,
deposit accounts, securities accounts and cash equivalents (other
than proceeds of other collateral).<br />
</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E
Corporation is required to make an offer to prepay the Loans
(including prepayment premiums) upon a change in control of
PG&amp;E Corporation.&nbsp; PG&amp;E Corporation also is required
to make an offer to prepay the Loans (including prepayment
premiums), at least 45 days before (1)&nbsp;a spin-off under any
plan of reorganization: (a) to the shareholders of PG&amp;E
Corporation of (i) all or any portion of Utility, Newco or any of
the Reorganization Subsidiaries or (ii) any of the material assets
that are contemplated by the PG&amp;E Plan to be transferred to
Newco or any Reorganization Subsidiary or retained by the Utility
(Material Reorganization Assets), or (b) to PG&amp;E Corporation of
(i) all or any portion of Newco or any of the Reorganization
Subsidiaries or (ii) any Material Reorganization Assets or
(2)&nbsp;the sale or issuance of more than 15% of the capital stock
of the Utility pursuant to a plan of reorganization.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, if on the date 31 days after confirmation of any plan of
reorganization that does not involve a spin-off or sale of more
than 15% of the capital stock of the Utility or on the first day of
any calendar quarter thereafter, the ratio of (i) the aggregate
market value of the common stock of PG&amp;E Corporation for the
preceding 30 trading days to (ii)&nbsp;the aggregate outstanding
amount of the Loans is less than 5.0:1.0, then PG&amp;E Corporation
is required to make an offer to prepay the Loans (including
prepayment premiums) on the date 30 days thereafter.<br />
</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E
Corporation is required to maintain an interest reserve account of
at least $130 million until September 2, 2005, and thereafter, an
amount equal to the lesser of $130 million or the interest to
accrue on the Loans through maturity.&nbsp;<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Credit Agreement continues to contain certain limitations on the
ability of PG&amp;E Corporation and certain of its subsidiaries to
grant liens, consolidate, merge, purchase or sell assets, declare
or pay dividends, incur indebtedness, or make advances, loans
<b></b>and investments.&nbsp; However, the Credit Agreement does
not limit (1) the ability of LLC, NEG, Inc., or their respective
subsidiariesto <b></b>grant liens or incur debt and (2) PG&amp;E
Corporation&rsquo;s and the Utility&rsquo;s ability to consummate
the transactions contemplated in the PG&amp;E Plan.&nbsp; The
Credit Agreement generally permits LLC, NEG, Inc. and their
respective subsidiaries to enter into sales and other disposition
of assets in the ordinary course of business and in certain
qualified transactions.&nbsp; In addition, in connection with
certain sales and debt restructuring transactions of NEG, Inc. and
its subsidiaries, PG&amp;E Corporation is permitted to make
investments funded from existing cash and future earnings in NEG,
Inc. and its subsidiaries or in entities that acquire such assets
from NEG, Inc. and its subsidiaries in such transactions.&nbsp; The
amount of such investments is limited to 75% of the net cash tax
savings (less certain costs and expenses) actually received by
PG&amp;E Corporation after October 1, 2002 as a result of certain
transactions of NEG, Inc. and its subsidiaries.&nbsp; PG&amp;E
Corporation also is permitted to make investments funded from
existing cash and future earnings in NEG, Inc. and its
subsidiaries, and pay obligations of NEG, Inc. and its subsidiaries
(including, without limitation, any obligations for which PG&amp;E
Corporation becomes a surety or a guarantor) up to a cumulative
amount not to exceed $15 million, provided that no default or event
of default has occurred under the Credit Agreement, and provided
further that LLC and NEG, Inc, are not in bankruptcy.&nbsp; The
proceeds of the New Loans may not be used to make investments in
LLC or NEG, Inc. or any of their Subsidiaries.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Credit Agreement has been amended to delete provisions that
required NEG, Inc. to maintain certain credit ratings and required
that a certain ratio of fair market value of NEG, Inc. to the
aggregate amount of the outstanding Loans be maintained.&nbsp;
Further, the Credit Agreement no longer provides that a default or
event of default under agreements of NEG, Inc. or its subsidiaries
constitutes a cross-default under the Credit Agreement.&nbsp;<br />
</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among
other events, the Credit Agreement provides that an event of
default occurs if PG&amp;E Corporation fails to pay any
indebtedness of $100 million or more when due, if the holders of
PG&amp;E Corporation indebtedness of $100 million or more become
entitled to accelerate such indebtedness, or if any PG&amp;E
Corporation indebtedness of $100 million or more is accelerated.
Upon the occurrence of an event of default, the lenders may declare
the Loans immediately due and payable.&nbsp;<br />
 </p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Loans may be prepaid upon payment of a prepayment fee equal to (1)
if such prepayment is made on or prior to October 1, 2003, the
discounted present value of 2.50% of the principal amount of such
prepayment plus the aggregate amount of interest that would accrue
on the principal amount of such prepayment from the date of such
prepayment to October 1, 2003, (2) if such prepayment is made after
October 1, 2003 and on or prior to October 1, 2004, 2.5% of the
principal amount prepaid, and (3) if such prepayment is made after
October 1, 2004, 0.5% of the principal amount prepaid.<br />
</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Credit Agreement also generally requires mandatory prepayments of
the Loans with the net cash proceeds from (1) incurrence of
indebtedness, (2) issuance or sale of equity by PG&amp;E
Corporation or the Utility, (3) sales of assets by PG&amp;E
Corporation, NEG, Inc., LLC, or any subsidiary of NEG, Inc. (with a
carve-out for proceeds retained by NEG), (4) the receipt of
condemnation or insurance proceeds, (5) and distributions or
dividends paid to PG&amp;E Corporation or LLC.&nbsp; PG&amp;E
Corporation must also pay a prepayment fee upon mandatory
prepayment.<br />
 </p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E
Corporation also has agreed to issue to the lenders additional
warrants to purchase shares of common stock of PG&amp;E Corporation
with a value equal to 3.5% of the aggregate principal amount of the
Loans ($25.2 million).&nbsp; The actual number of warrants to be
issued will be calculated by dividing such value by the average of
the volume weighted average price of PG&amp;E Corporation common
stock as reported on the New York Stock Exchange for each of the 10
trading days beginning on October 10, 2002 and ending October 24,
2002.&nbsp; The terms and provisions of the warrants, including a
warrant exercise price of $0.01 per share, are substantially
identical to the warrants previously issued to the Tranche B
lenders on June 25, 2002.&nbsp; <a name="_DV_M67"></a><a name=
"_DV_M73"></a><a name="_DV_M96"></a><a name="_DV_M121"></a><a name=
"_DV_M125"></a><a name="_DV_M126"></a><a name=
"_DV_M129"></a>PG&amp;E Corporation has agreed to provide,
following consummation of a plan of reorganization of the Utility,
<a name="_DV_M271"></a>registration rights in connection with the
shares issuable upon exercise of these warrants.<br />
</p>

<p><a name=
"_DV_M133"></a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
net proceeds of the New Loans will be used to fund corporate
working capital and general corporate purposes and may not be used
to make investments in LLC or NEG, Inc. or any of their respective
subsidiaries or, except as required by applicable law or the
conditions adopted by the California Public Utilities Commission
with respect to holding companies, in the Utility. <a name=
"_DV_M140"></a><br />
</p>

<p align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E
Corporation&rsquo;s 7.50% Convertible Subordinated Notes due 2007
in the aggregate principal amount of $280 million issued on June
25, 2002 (Notes) and the Indenture relating to the Notes have been
amended to delete certain cross-default provisions which provided
that a non-payment or an acceleration of indebtedness of NEG, Inc.
or any of its subsidiaries, or a bankruptcy event with respect to
NEG, Inc. or any of its subsidiaries, constituted a default or
event of default under the Notes and the Indenture.&nbsp; Further,
the Indenture and the Notes have been amended, among other things,
to increase the interest rate on the Notes to 9.5% from 7.5%, to
extend the maturity of the Notes to June 30, 2010, from June 30,
2007, and to provide the holder of the Notes with a one-time right
to require PG&amp;E Corporation to repurchase the Notes on June 30,
2007 at a purchase price equal to the principal amount plus accrued
and unpaid interest (including any liquidated damages and
pass-through dividends, if any).<br />
<br />
Item 7. Financial Statements, Pro Forma Financial Information, and
Exhibits<br />
<br />
Exhibit No.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Description
of Exhibit</p>

<table border="0" cellspacing="0" cellpadding="0" width="672">
<tr>
<td valign="top">
<p>99.1<br />
 </p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td colspan="3" valign="top">
<p>Second and Amended Restated Credit Agreement, dated as of
October 18, 2002, among PG&amp;E Corporation, the lenders party
thereto, Lehman Commercial Paper Inc., as Administrative Agent, and
other parties<br />
 </p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td colspan="2" valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top"></td>
<td>
<p>&nbsp;</p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.2<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement
(35%)&oacute;Continued Tranche B Loan, dated as of October 18,
2002<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.3<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement (35%)&mdash;New
Tranche B Loan, dated as of October&nbsp;18, 2002<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.4<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement
(65%)&mdash;Continued Tranche B Loan, dated as of October&nbsp;18,
2002<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.5<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement (65%)&mdash;New
Tranche B Loan, dated as of October&nbsp;18, 2002<br />
 </p>
</td>
</tr>
</table>

<b><br clear="all" />
</b>

<p><b></b></p>

<p><a name="_DV_C199"><br />
</a></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p align="center">SIGNATURE</p>
</td>
</tr>
</table>

<p><a name="_DV_M141"></a>Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.</p>

<table border="0" cellspacing="0" cellpadding="0" width="649">
<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>PG&amp;E CORPORATION<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>&nbsp;</p>
</td>
<td valign="top">
<p>By:&nbsp; CHRISTOPHER P. JOHNS</p>
</td>
</tr>

<tr>
<td valign="top">
<p>&nbsp;</p>
</td>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
</td>
</tr>

<tr>
<td valign="top">
<p>&nbsp;</p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CHRISTOPHER P.
JOHNS</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President
and Controller&nbsp;<br />
<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>&nbsp;</p>
</td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top"></td>
</tr>
</table>

<p><a name="_DV_M142"></a>Dated:&nbsp; October 22, 2002</p>

<br clear="all" />


<p align="center">EXHIBIT INDEX</p>

<p>Exhibit
No.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Description
of Exhibit</p>

<table border="0" cellspacing="0" cellpadding="0" width="672">
<tr>
<td valign="top">
<p>99.1<br />
 </p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td colspan="3" valign="top">
<p>Second and Amended Restated Credit Agreement, dated as of
October 18, 2002, among PG&amp;E Corporation, the lenders party
thereto, Lehman Commercial Paper Inc., as Administrative Agent, and
other parties<br />
 </p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td colspan="2" valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top"></td>
<td>
<p>&nbsp;</p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.2<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement
(35%)&oacute;Continued Tranche B Loan, dated as of October 18,
2002<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.3<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement (35%)&mdash;New
Tranche B Loan, dated as of October&nbsp;18, 2002<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.4<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement
(65%)&mdash;Continued Tranche B Loan, dated as of October&nbsp;18,
2002<br />
 </p>
</td>
</tr>

<tr>
<td valign="top">
<p>99.5<br />
 </p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="left">Utility Stock Pledge Agreement (65%)&mdash;New
Tranche B Loan, dated as of October&nbsp;18, 2002<br />
 </p>
</td>
</tr>
</table>

<p><b></b></p>
</div>
</body>
</html>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>exhibit991.htm
<DESCRIPTION>SECOND AND AMENDED RESTATED CREDIT AGREEMENT, DATED AS OF OCTOBER 18, 2002
<TEXT>
<head>
<title>Second Amended and Restated Credit Agreement</title>
</head>
<body>
<div>
<p><font size="2" face="Courier New"><br />
<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
$720,000,000<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
among<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Borrower,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the LENDERS party hereto,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Syndication Agent and Administrative Agent,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN BROTHERS INC.<br />
<br />
&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Sole Lead Arranger and Sole Bookrunner,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
GOLDMAN SACHS CREDIT PARTNERS L.P.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Co-Arranger<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_______________________________________<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dated as of October 18, 2002<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_______________________________________<br />
<br />
<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
TABLE OF CONTENTS<br />
<br />
&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Page<br />
<br />
SECTION 1.&nbsp;&nbsp; DEFINITIONS AND RULES OF
INTERPRETATION....................1<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 1.1&nbsp;&nbsp; Defined
Terms..........................................1<br />
&nbsp;&nbsp;&nbsp;&nbsp; 1.2&nbsp;&nbsp; Rules of
Interpretation..................................1<br />
&nbsp;&nbsp;&nbsp;&nbsp; 1.3&nbsp;&nbsp; Accounting
Principles....................................1<br />
<br />
SECTION 2.&nbsp;&nbsp; AMOUNTS AND TERMS OF CREDIT
FACILITY.......................2<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.1&nbsp;&nbsp; Existing Loans; the New
Tranche B Commitment.................2<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.2&nbsp;&nbsp; Notice of
Funding.......................................2<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.3&nbsp;&nbsp; Disbursement of
Funds....................................3<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.4&nbsp;&nbsp;
Notes.................................................3<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.5&nbsp;&nbsp;
Interest...............................................3<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.6&nbsp;&nbsp; Interest
Periods........................................5<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.7&nbsp;&nbsp; Increased Costs,
Illegality, etc...........................6<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2.8&nbsp;&nbsp;
Compensation...........................................8<br />
<br />
SECTION 3.&nbsp;&nbsp; PREPAYMENTS; PAYMENTS;
TAXES.............................8<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.1&nbsp;&nbsp; Voluntary
Prepayments....................................8<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.2&nbsp;&nbsp; Mandatory
Repayments.....................................8<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.3&nbsp;&nbsp; Method and Place of
Payment..............................11<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.4&nbsp;&nbsp; Net
Payments..........................................12<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.5&nbsp;&nbsp;
Allocation............................................14<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.6&nbsp;&nbsp;
[OMITTED].............................................14<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.7&nbsp;&nbsp; Application of Payments;
Sharing..........................14<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.8&nbsp;&nbsp; Offers to
Repay........................................15<br />
<br />
SECTION 4.&nbsp;&nbsp; CONDITIONS
PRECEDENT...................................17<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 4.1&nbsp;&nbsp; Conditions to
Closing...................................17<br />
<br />
SECTION 5.&nbsp;&nbsp; REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.................21<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.1&nbsp;&nbsp;
Standing..............................................21<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.2&nbsp;&nbsp; Requisite Authority;
Etc................................22<br />
&nbsp;&nbsp; &nbsp;&nbsp; 5.3&nbsp;&nbsp; No
Conflict...........................................22<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.4&nbsp;&nbsp;
Consents..............................................22<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.5&nbsp;&nbsp; Compliance with
Law....................................23<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.6&nbsp;&nbsp; Litigation
Claims......................................23<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.7&nbsp;&nbsp; Contracts and
Commitments...............................23<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.8&nbsp;&nbsp;
Liens................................................23<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.9&nbsp;&nbsp;
Insurance.............................................24<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.10&nbsp;&nbsp; Capitalization and
Ownership............................24<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.11&nbsp;&nbsp; Financial Statements;
Absence of Certain Changes; Cash Flow Forecasts<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
......................................................25<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.12&nbsp;&nbsp;
Taxes...............................................26<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 5.13&nbsp;&nbsp;
Disclosure...........................................26<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.14&nbsp;&nbsp; Environmental
Matters..................................26<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.15&nbsp;&nbsp; Brokers' or Finders'
Fees...............................27<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.16&nbsp;&nbsp; Certain Regulatory
Matters..............................27<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.17&nbsp;&nbsp; Transactions With
Affiliates............................27<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.18&nbsp;&nbsp; Use of
Proceeds.......................................27<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.19&nbsp;&nbsp; Compliance with
ERISA..................................28<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.20&nbsp;&nbsp; Investment Company
Act.................................29<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.21&nbsp;&nbsp;
Regulation...........................................29<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.22&nbsp;&nbsp; Security
Documents....................................30<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.23&nbsp;&nbsp;
[Reserved]...........................................30<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.24&nbsp;&nbsp;
[Reserved]...........................................30<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.25&nbsp;&nbsp; Intellectual
Property..................................30<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.26&nbsp;&nbsp; No
Default...........................................31<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.27&nbsp;&nbsp; Single-Purpose
Entity..................................31<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.28&nbsp;&nbsp; Trust Indenture
Act....................................31<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.29&nbsp;&nbsp; Existing
Indebtedness..................................31<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.30&nbsp;&nbsp; No Event of
Default....................................31<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.31&nbsp;&nbsp; Certain
Obligations....................................31<br />
&nbsp;&nbsp;&nbsp;&nbsp; 5.32&nbsp;&nbsp;
Solvency.............................................32<br />
<br />
SECTION 6.&nbsp;&nbsp; AFFIRMATIVE
COVENANTS..................................32<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.1&nbsp;&nbsp; Information
Covenants...................................32<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.2&nbsp;&nbsp; Books, Records and
Inspections...........................35<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.3&nbsp;&nbsp; Maintenance of Property;
Insurance........................35<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.4&nbsp;&nbsp; Corporate
Franchises....................................35<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.5&nbsp;&nbsp; Compliance with Statutes,
etc............................36<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.6&nbsp;&nbsp; Compliance with
Environmental Laws........................36<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.7&nbsp;&nbsp;
ERISA................................................37<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.8&nbsp;&nbsp; End of Fiscal Years;
Fiscal Quarters......................38<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.9&nbsp;&nbsp; Payment of
Taxes.......................................38<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.10&nbsp;&nbsp;
[OMITTED]............................................38<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.11&nbsp;&nbsp; Performance of
Obligations..............................38<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.12&nbsp;&nbsp; Use of
Proceeds.......................................38<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.13&nbsp;&nbsp; Regulatory
Compliance..................................38<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.14&nbsp;&nbsp; Form
8-K.............................................39<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.15&nbsp;&nbsp; Charter
Documents.....................................39<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.16&nbsp;&nbsp; Further Assurances;
etc................................39<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.17&nbsp;&nbsp; Regarding
LLC.........................................39<br />
&nbsp;&nbsp;&nbsp;&nbsp; 6.18&nbsp;&nbsp;
Warrants.............................................39<br />
<br />
SECTION 7.&nbsp;&nbsp; NEGATIVE
COVENANTS.....................................39<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.1&nbsp;&nbsp;
Liens................................................39<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.2&nbsp;&nbsp; Consolidation, Merger,
Purchase or Sale of Assets, etc.......41<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.3&nbsp;&nbsp;
Dividends.............................................43<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.4&nbsp;&nbsp;
Indebtedness..........................................43<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.5&nbsp;&nbsp; Advances, Investments and
Loans..........................44<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 7.6&nbsp;&nbsp; Transactions with
Affiliates.............................46<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.7&nbsp;&nbsp; Capital
Expenditures....................................46<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.8&nbsp;&nbsp; Limitations on Liens on
Collateral; Modifications of Certain<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indebtedness; Modifications of Certificate of Incorporation,
By-Laws<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and Certain
Other Agreements, etc.........................46<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.9&nbsp;&nbsp; Limitation on Issuance of
Capital Stock....................47<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.10&nbsp;&nbsp;
Business.............................................48<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.11&nbsp;&nbsp; Regulatory
Compliance..................................48<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.12&nbsp;&nbsp;
[OMITTED]............................................48<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.13&nbsp;&nbsp; Limitation on Optional
Payments and Modifications of Convertible Notes<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
......................................................48<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.14&nbsp;&nbsp; Interest Reserve
Amounts...............................48<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.15&nbsp;&nbsp; Plan of
Reorganization.................................49<br />
&nbsp;&nbsp;&nbsp;&nbsp; 7.16&nbsp;&nbsp; Certain
Transactions...................................49<br />
<br />
SECTION 8.&nbsp;&nbsp; EVENTS OF DEFAULT AND
REMEDIES...........................50<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 8.1&nbsp;&nbsp; Events of
Default......................................50<br />
&nbsp;&nbsp;&nbsp;&nbsp; 8.2&nbsp;&nbsp;
Acceleration..........................................52<br />
&nbsp;&nbsp;&nbsp;&nbsp; 8.3&nbsp;&nbsp; Other
Remedies.........................................53<br />
<br />
SECTION 9.&nbsp;&nbsp;
MISCELLANEOUS.........................................53<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.1&nbsp;&nbsp; Costs and
Expenses.....................................53<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.2&nbsp;&nbsp;
Indemnity.............................................54<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.3&nbsp;&nbsp;
Notices..............................................56<br />
&nbsp;&nbsp;&nbsp; &nbsp; 9.4&nbsp;&nbsp; Benefit of
Agreement....................................56<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.5&nbsp;&nbsp; No Waiver; Remedies
Cumulative...........................56<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.6&nbsp;&nbsp; No Third Party
Beneficiaries.............................57<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.7&nbsp;&nbsp;
Reinstatement.........................................57<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.8&nbsp;&nbsp; No
Immunity...........................................57<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.9&nbsp;&nbsp;
Counterparts..........................................57<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.10&nbsp;&nbsp; Amendment or
Waiver....................................57<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.11&nbsp;&nbsp; Assignments,
Participations, etc.........................58<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.12&nbsp;&nbsp;
Survival.............................................60<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.13&nbsp;&nbsp; WAIVER OF JURY
TRIAL...................................60<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.14&nbsp;&nbsp; Right of
Set-off......................................60<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.15&nbsp;&nbsp;
Severability.........................................61<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.16&nbsp;&nbsp; Governing Law; Submission
to Jurisdiction.................61<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.17&nbsp;&nbsp; Waiver by
Borrower....................................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.18&nbsp;&nbsp;
Recourse.............................................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.19&nbsp;&nbsp; Complete
Agreement....................................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.20&nbsp;&nbsp;
Publicity............................................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.21&nbsp;&nbsp;
Effectiveness.........................................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.22&nbsp;&nbsp; Certain Representations
and Warranties....................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.23&nbsp;&nbsp;
Confidentiality.......................................62<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.24&nbsp;&nbsp; Release of
Liens......................................63<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.25&nbsp;&nbsp; Delivery of Lender
Addendum.............................63<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.26&nbsp;&nbsp; Special
Exculpation....................................63<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.27&nbsp;&nbsp; Intercreditor
Agreement................................64<br />
&nbsp;&nbsp;&nbsp;&nbsp; 9.28&nbsp;&nbsp; Amended and Restated
Security Documents...................64<br />
&nbsp; &nbsp;&nbsp;&nbsp; 9.29&nbsp;&nbsp; Consent to Convertible
Note Amendment.....................64<br />
<br />
SECTION 10.&nbsp;&nbsp; THE ADMINISTRATIVE AGENT; THE SYNDICATION
AGENT, THE LEAD ARRANGER<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; AND
THE BOOKRUNNER.....................................64<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.1&nbsp;&nbsp;
Appointment..........................................64<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.2&nbsp;&nbsp; Nature of
Duties......................................65<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.3&nbsp;&nbsp; Lack of Reliance on the
Administrative Agent...............65<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.4&nbsp;&nbsp; Certain Rights of the
Administrative Agent................65<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.5&nbsp;&nbsp;
Reliance.............................................66<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.6&nbsp;&nbsp;
Indemnification.......................................66<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.7&nbsp;&nbsp; The Administrative Agent
in its Individual Capacity.........66<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.8&nbsp;&nbsp;
Holders..............................................66<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.9&nbsp;&nbsp; Resignation or
Replacement of the Administrative Agent......67<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.10&nbsp;&nbsp; The Syndication Agent,
Lead Arranger and Bookrunner........67<br />
&nbsp;&nbsp;&nbsp;&nbsp; 10.11&nbsp;&nbsp; Direction to
Administrative Agent and Collateral Agent......67<br />
<br />
SECTION 11.&nbsp;&nbsp; COLLATERAL
AGENT......................................68<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.1&nbsp;&nbsp;
Appointment..........................................68<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.2&nbsp;&nbsp; Exculpatory
Provisions.................................68<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.3&nbsp;&nbsp; Reliance by Collateral
Agent............................68<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.4&nbsp;&nbsp; Notice of
Default.....................................69<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.5&nbsp;&nbsp;
Indemnification.......................................69<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.6&nbsp;&nbsp; Successor Collateral
Agent..............................70<br />
&nbsp;&nbsp;&nbsp;&nbsp; 11.7&nbsp;&nbsp;
Miscellaneous.........................................70<br />
<br />
<br />
APPENDICES:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Appendix
A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Defined Terms and Rules of
Interpretation<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; EXHIBITS:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form of Notice of
Funding<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
B-1&nbsp;&nbsp;&nbsp;&nbsp; Form of Continued Tranche B Loan
Note<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
B-2&nbsp;&nbsp;&nbsp;&nbsp; Form of New Tranche B Loan Note<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
C&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form of Section 3.4(b)(ii)
Certificate<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
D&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form of Process Agent
Letter<br />
<br />
&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
E-1&nbsp;&nbsp;&nbsp;&nbsp; Form of Offer to Repay Notice<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibit
E-2&nbsp;&nbsp;&nbsp;&nbsp; Form of Response to Offer to Repay
Notice<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; SCHEDULES:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form of Lender Addendum<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
B&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SEC Filings<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
3.5&nbsp;&nbsp;&nbsp;&nbsp; Allocation - Investment Unit<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.6&nbsp;&nbsp;&nbsp;&nbsp; Litigation<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.7&nbsp;&nbsp;&nbsp;&nbsp; Covered Contracts<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.8&nbsp;&nbsp;&nbsp;&nbsp; Liens<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.9&nbsp;&nbsp;&nbsp;&nbsp; Insurance<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.10(a) Stock of PGE Utility<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.10(e) Warrants, etc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.10(f) Ownership<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.14&nbsp;&nbsp;&nbsp; Environmental Matters<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.15&nbsp;&nbsp;&nbsp; Brokers' or Finders' Fees<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.17&nbsp;&nbsp;&nbsp; Transactions with Affiliates<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.19&nbsp;&nbsp;&nbsp; ERISA Plans<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.31(a) Indebtedness of the Borrower to Subsidiaries<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
5.31(b) Indebtedness of Subsidiaries to the Borrower<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
7.1&nbsp;&nbsp;&nbsp;&nbsp; Certain Liens<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Schedule
9.3&nbsp;&nbsp;&nbsp;&nbsp; Notices<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; ANNEXES<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annex
A&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section 13 of the
LLC Agreement<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annex
B&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of
Utility Spin-Off<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECOND
AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"),<br />
dated as of October 18, 2002, among PG&amp;E Corporation, a
California<br />
corporation, as the Borrower, the Lenders party hereto, Lehman
Commercial<br />
Paper Inc., a New York corporation, as Syndication Agent and
Administrative<br />
Agent, and Lehman Brothers Inc., a Delaware corporation, as Lead
Arranger and<br />
Bookrunner.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
W I T N E S S E T H:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Borrower is a party to the Amended and Restated<br />
Credit Agreement, dated as of June 25, 2002 (as amended,
supplemented or<br />
otherwise modified from time to time, the "Existing Credit
Agreement"), with<br />
the lenders party thereto, Lehman Commercial Paper Inc., as
Administrative<br />
Agent, and others, pursuant to which such lenders made the Tranche
A Loan (as<br />
defined in the Existing Credit Agreement, the "Existing Tranche A
Loan") and<br />
the Tranche B Loan (as defined in the Existing Credit Agreement,
the<br />
"Existing Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
parties hereto wish to amend and restate the<br />
Existing Credit Agreement in its entirety to modify certain of the
terms<br />
applicable to the Existing Tranche B Loan, to reflect the repayment
of the<br />
Existing Tranche A Loan and to provide for the making of an
additional<br />
Tranche B Loan to the Borrower; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, (i)
the Existing Credit Agreement is being amended and<br />
restated pursuant to this Agreement, (ii) certain indebtedness
under the<br />
Existing Credit Agreement, as amended and restated in connection
with this<br />
Agreement, will be continued under this Agreement and (iii) all
obligations<br />
of the Borrower, LLC and NEG, Inc. under the Financing Documents
(as such<br />
term is defined herein) and all liens and security interests
created under<br />
the Financing Documents will be continued, amended and restated as
provided<br />
herein and therein and will not be cancelled or discharged;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW,
THEREFORE, in consideration of the premises and the mutual<br />
agreements hereinafter contained, the parties hereto agree that,
upon the<br />
Closing Date, the Existing Credit Agreement shall be amended and
restated in<br />
its entirety as follows:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
1.&nbsp;&nbsp; DEFINITIONS AND RULES OF
INTERPRETATION.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.1&nbsp;&nbsp; Defined Terms.&nbsp; Except as otherwise expressly
provided<br />
herein, capitalized terms used in this Agreement and its Schedules
and<br />
Exhibits shall have the respective meanings assigned to such terms
in<br />
Appendix A hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.2&nbsp;&nbsp; Rules of Interpretation.&nbsp; Except as otherwise
expressly<br />
provided herein, the rules of interpretation set forth in Appendix
A hereto<br />
shall apply to this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.3&nbsp;&nbsp; Accounting Principles.&nbsp; Except as otherwise
provided in<br />
this Agreement, all computations and determinations as to financial
matters,<br />
and all financial statements to be delivered under this Agreement
shall be<br />
made or prepared in accordance with U.S. GAAP (including principles
of<br />
consolidation where appropriate) applied on a consistent basis
(except to the<br />
extent approved or required by the independent public accountants
certifying<br />
such statements and disclosed therein).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
2.&nbsp;&nbsp; AMOUNTS AND TERMS OF CREDIT
FACILITY.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.1&nbsp;&nbsp; Existing Loans; the New Tranche B Commitment.&nbsp;
(a)&nbsp;&nbsp;Prior<br />
to the date hereof, the Existing Tranche A Loan was repaid in
full.&nbsp; Subject<br />
to and upon the terms and conditions set forth herein, on the
Closing Date,<br />
(i)&nbsp; the Existing Tranche B Loan shall be continued as a loan
hereunder (the<br />
"Continued Tranche B Loan"), which shall mature on the Tranche B
Maturity<br />
Date, and (ii) (A) each New Tranche B Lender shall make available
to the<br />
Administrative Agent, in immediately available funds, an amount
equal to the<br />
New Tranche B Commitment of such Lender and (B) the Administrative
Agent<br />
shall transfer such amount to the Tranche B Escrow Account (from
which such<br />
amount shall be released (x) to the Borrower on the Escrow Release
Date, if<br />
the Escrow Release Date occurs, and upon such release such amount
shall<br />
constitute term loans (collectively, the "New Tranche B Loan") made
by each<br />
New Tranche B Lender to the Borrower in an amount equal to the
amount of the<br />
New Tranche B Commitment of such Lender or (y) to the
Administrative Agent,<br />
to be returned to each New Tranche B Lender ratably in accordance
with the<br />
amounts made available by the New Tranche B Lenders to the
Administrative<br />
Agent on the Closing Date, if the Bankruptcy Termination Event
occurs, in<br />
which case no New Tranche B Loans shall be made).&nbsp; The New
Tranche B Loans<br />
(A) shall be denominated in Dollars, (B) shall be incurred and
maintained as<br />
Eurodollar Loans, except as otherwise specifically provided in
Section 2.7(b)<br />
and (C) shall mature on the Tranche B Maturity Date.&nbsp; For the
avoidance of<br />
doubt, the aggregate principal amount of the Continued Tranche B
Loan and the<br />
New Tranche B Loan outstanding on the Escrow Release Date (after
giving<br />
effect to the release of funds from the Tranche B Escrow Account on
the<br />
Escrow Release Date, but without giving effect to any pay-in-kind
interest<br />
pursuant to Section 2.5(g)) shall be $420,000,000 and
$300,000,000,<br />
respectively.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; If the Closing Date has not occurred on or prior
to<br />
October 18, 2002, then, in such event, (i) except as set forth in
clause (ii)<br />
below, the Lenders shall have no further obligations or liabilities
under any<br />
of the Financing Documents and the Financing Documents shall have
no further<br />
force or effect with respect to the Lenders, but the Borrower's
obligation to<br />
pay the costs, fees and expenses as provided herein and to
indemnify the<br />
other parties to the Financing Documents shall not be terminated,
modified or<br />
diminished in any respect, and (ii) the Existing Credit Agreement
and the<br />
other Existing Financing Documents shall remain in full force and
effect, and<br />
no modification thereof shall have been made pursuant hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Loans are available only on the terms and
conditions<br />
specified hereunder, and once repaid, in whole or in part, at
maturity or by<br />
prepayment, may not be reborrowed in whole or in part.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; The Continued Tranche B Loan and the New Tranche B
Loan<br />
shall be separate and distinct loans that shall have identical
terms except<br />
as expressly set forth in the Financing
Documents.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.2&nbsp;&nbsp; Notice&nbsp; of&nbsp; Funding.&nbsp;&nbsp;&nbsp;
The&nbsp; Borrower&nbsp; shall&nbsp; give&nbsp; the<br />
Administrative Agent prior notice requesting the funding by each
New Tranche<br />
B Lender to the Administrative Agent of an amount equal to the New
Tranche<br />
Commitment of such New Tranche B Lender, provided that any such
notice shall<br />
be deemed to have been given on a certain day only if given before
1:00 P.M.<br />
(New York time) on such day.&nbsp; Such notice (the "Notice of
Funding") shall be<br />
irrevocable and shall be in writing, or by telephone promptly
confirmed in<br />
<br />
writing, in the form of Exhibit A, appropriately completed to
specify the<br />
aggregate principal amount of the New Tranche B Commitments to be
funded, and<br />
the date selected to be the Closing Date (which shall be a Business
Day).&nbsp;<br />
 The Administrative Agent shall promptly advise the New Tranche B
Lenders of<br />
the contents of such Notice of Funding.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.3&nbsp;&nbsp; Disbursement of Funds.&nbsp; No later than 1:00
P.M. (New York<br />
time) on the Closing Date, each New Tranche B Lender will make
available to<br />
the Administrative Agent such Lender's pro rata share of the amount
of the<br />
amount requested in the Notice of Funding.&nbsp; Such amounts will
be transferred<br />
by the Administrative Agent to the Tranche B Escrow Account.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.4&nbsp;&nbsp; Notes.&nbsp; (a)&nbsp;&nbsp;The Borrower's
obligation to pay the principal<br />
of, and interest on, the Continued Tranche B Loan and the New
Tranche Loan<br />
made by a Lender shall be evidenced by promissory notes duly
executed and<br />
delivered by the Borrower substantially in the form of Exhibits B-1
and B-2,<br />
respectively, with blanks appropriately completed in conformity
herewith<br />
(each, a "Note").<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; The Notes issued to a Lender shall (i) be executed
by the<br />
Borrower, (ii) be payable to such Lender or its Assignee and be
dated the<br />
date of issuance thereof, (iii) be in a stated principal amount
equal to the<br />
Loan made or continued by, or assigned to, such Lender, as the case
may be,<br />
and be payable in the outstanding principal amount of the Loan
evidenced<br />
thereby, (iv) mature on the Tranche B Maturity Date, (v) bear
interest as<br />
provided in the appropriate clause of Section 2.5 in respect of a
Base Rate<br />
Loan (if converted pursuant to Section 2.7(b)) or a Eurodollar
Loan, as the<br />
case may be, evidenced thereby, (vi) be subject to voluntary
prepayment as<br />
provided in Section 3.1, and mandatory repayment as provided in
Section 3.2,<br />
and (vii) be entitled to the benefits of this Agreement and the
other<br />
Financing Documents.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Each Lender will note on its internal records the
amount of<br />
the Loan made by it and each payment in respect thereof and will
prior to any<br />
transfer of its Notes endorse on the reverse side thereof the
outstanding<br />
principal amount of the Loan evidenced thereby.&nbsp; Failure to
make any such<br />
notation or any error in such notation shall not affect the
Borrower's<br />
obligations in respect of such Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.5&nbsp;&nbsp; Interest.&nbsp; (a)&nbsp;&nbsp;The Borrower agrees
to pay interest in<br />
respect of the unpaid principal amount of any Base Rate Loan from
the date of<br />
conversion thereof pursuant to Section 2.7(b) until the maturity
thereof<br />
(whether by acceleration or otherwise) at a rate per annum which
shall be<br />
equal to the sum of the Applicable Margin plus the Base Rate each
as in<br />
effect from time to time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; The Borrower agrees to pay interest in respect of
the<br />
unpaid principal amount of each Eurodollar Loan from the date of
Borrowing or<br />
conversion thereof until the earlier of (i) the maturity thereof
(whether by<br />
acceleration or otherwise) and (ii) the conversion of such
Eurodollar Loan to<br />
a Base Rate Loan pursuant to Section 2.7(b) at a rate per annum
which shall,<br />
during each Interest Period applicable thereto, be equal to the sum
of the<br />
Applicable Margin as in effect from time to time during such
Interest Period<br />
plus the Eurodollar Rate for such Interest Period.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Overdue principal and, to the extent permitted by
law,<br />
overdue interest in respect of each Loan and any other overdue
amount payable<br />
by the Borrower shall, in each case, bear interest at a rate per
annum equal<br />
to the rate which is 2% in excess of the rate then borne by such
Loan.&nbsp;<br />
 Interest which accrues under this Section 2.5(c) shall be payable
on demand.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; Accrued (and theretofore unpaid) interest shall be
payable<br />
(i) in respect of each Base Rate Loan, (x) quarterly in arrears on
each<br />
Quarterly Date, (y) on the date of any repayment or prepayment of
the<br />
outstanding principal amount of such Base Rate Loan, and (z) at
maturity<br />
(whether by acceleration or otherwise) and, after such maturity, on
demand,<br />
and (ii) in respect of each Eurodollar Loan, (x) on the last day of
each<br />
Interest Period applicable thereto and, in the case of an Interest
Period in<br />
excess of three months, on each date occurring at three month
intervals after<br />
the first day of such Interest Period, and (y) on the date of any
repayment<br />
or prepayment (on the amount repaid or prepaid), at maturity
(whether by<br />
acceleration or otherwise) and, after such maturity, on demand
(each such<br />
date upon which interest shall be payable, an "Interest Payment
Date").<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; Upon each Interest Determination Date with respect
to any<br />
Eurodollar Loan, the Administrative Agent shall determine the
Eurodollar Rate<br />
for the relevant Interest Period applicable to such Eurodollar Loan
and shall<br />
promptly notify the Borrower thereof.&nbsp; Each such determination
shall, absent<br />
manifest error, be final and conclusive and binding on all parties
hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; (i)&nbsp; Until the Consolidation Date, upon each
Interest<br />
Payment Date in respect of the Continued Tranche B Loan, if the
Borrower does<br />
not on such Interest Payment Date pay the amount of interest
payable on such<br />
Interest Payment Date in respect of the Continued Tranche B Loan,
the amount<br />
of such interest shall be withdrawn from the Tranche B Interest
Reserve<br />
Account (Continued Tranche B Loan) and applied to pay such
interest.&nbsp; The<br />
Continued Tranche B Lenders hereby authorize and direct the
Collateral Agent<br />
to request such withdrawal under the Tranche B Interest Reserve
Account<br />
Control Agreement (Continued Tranche B Loan) and to pay such
interest.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; (ii)&nbsp;
Until the Consolidation Date, upon each Interest Payment<br />
Date in respect of the New Tranche B Loan, if the Borrower does not
on such<br />
Interest Payment Date pay the amount of interest payable on such
Interest<br />
Payment Date in respect of the New Tranche B Loan, the amount of
such<br />
interest shall be withdrawn from the Tranche B Interest Reserve
Account (New<br />
Tranche B Loan) and applied to pay such interest.&nbsp; The New
Tranche B Lenders<br />
hereby authorize and direct the Collateral Agent to request such
withdrawal<br />
under the Tranche B Interest Reserve Account Control Agreement (New
Tranche B<br />
Loan) and to pay such interest.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iii)&nbsp;
On or after the Consolidation Date, upon each Interest<br />
Payment Date in respect of the Tranche B Loan, if the Borrower does
not on<br />
such Interest Payment Date pay the amount of interest payable on
such<br />
Interest Payment Date in respect of the Tranche B Loan, the amount
of such<br />
interest shall be withdrawn from the Tranche B Interest Reserve
Account<br />
(Combined Tranche B Loan) and applied to pay such interest.&nbsp;
The Tranche B<br />
Lenders hereby authorize and direct the Collateral Agent to request
such<br />
withdrawal under the Tranche B Interest Reserve Account Control
Agreement<br />
(Combined Tranche B Loan) and to pay such interest.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;&nbsp; Upon each Interest Payment Date in respect of any
portion<br />
of the Tranche B Loan, in addition to the interest payable in cash
as<br />
described above, the principal amount of such portion will be
increased by a<br />
pay-in-kind interest amount calculated on the principal amount of
such<br />
portion at the rate per annum of 4.00% for the period from the
immediately<br />
preceding Interest Payment Date with respect to such portion to the
current<br />
Interest Payment Date, and such increased principal amount of the
Tranche B<br />
Loan shall thereafter bear interest (both cash-pay and pay-in-kind)
at the<br />
same rates as the original principal amount of the Tranche B
Loan.&nbsp; For<br />
purposes of this paragraph (g), the Escrow Release Date shall be
deemed to be<br />
an Interest Payment Date in respect of the New Tranche B Loan, and
pay-in-<br />
kind interest in respect of the New Tranche B Loan shall accrue
from the<br />
Closing Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.6&nbsp;&nbsp; Interest Periods.&nbsp; At the time the Borrower
gives the<br />
Notice of Funding, or prior to 1:00 P.M. (New York time) on the
third<br />
Business Day prior to the expiration of an Interest Period
applicable to a<br />
Eurodollar Loan (in the case of any subsequent Interest Period),
the Borrower<br />
shall have the right to elect the interest period (each an
"Interest Period")<br />
applicable to such Eurodollar Loan, which Interest Period shall, at
the<br />
option of the Borrower, be a one, two, three or six-month period;
provided<br />
that (in each case):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; the initial Interest Period for any Eurodollar Loan
shall<br />
&nbsp;&nbsp;&nbsp;&nbsp; commence on the date of Borrowing or
conversion of such Eurodollar Loan<br />
&nbsp;&nbsp;&nbsp;&nbsp; and each Interest Period occurring
thereafter in respect of such<br />
&nbsp;&nbsp;&nbsp;&nbsp; Eurodollar Loan shall commence on the day
on which the next preceding<br />
&nbsp;&nbsp;&nbsp;&nbsp; Interest Period applicable thereto
expires;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; if any Interest Period for a Eurodollar Loan
begins on a<br />
&nbsp;&nbsp;&nbsp;&nbsp; day for which there is no numerically
corresponding day in the calendar<br />
&nbsp;&nbsp;&nbsp;&nbsp; month at the end of such Interest Period,
such Interest Period shall<br />
&nbsp;&nbsp;&nbsp;&nbsp; end on the last Business Day of such
calendar month;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; if any Interest Period for a Eurodollar Loan
would<br />
&nbsp;&nbsp;&nbsp;&nbsp; otherwise expire on a day which is not a
Business Day, such Interest<br />
&nbsp;&nbsp;&nbsp;&nbsp; Period shall expire on the next succeeding
Business Day; provided,<br />
&nbsp;&nbsp;&nbsp;&nbsp; however, that if any Interest Period for
such Eurodollar Loan would<br />
&nbsp;&nbsp;&nbsp;&nbsp; otherwise expire on a day which is not a
Business Day but is a day of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the month after which no further Business
Day occurs in such month,<br />
&nbsp;&nbsp;&nbsp;&nbsp; such Interest Period shall expire on the
next preceding Business Day;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; no Interest Period may be selected at any time
when a<br />
&nbsp;&nbsp;&nbsp;&nbsp; Default or an Event of Default is then in
existence;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; no Interest Period in respect of any Borrowing of
any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Eurodollar Loan shall be selected which
extends beyond the Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Maturity Date; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi)&nbsp;&nbsp; on the Closing Date, the Interest Period in
respect of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan shall expire
(subject to payment by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower of any breakage costs pursuant to
Section 2.8, determined as<br />
&nbsp;&nbsp;&nbsp;&nbsp; if the expiration of such existing
Interest Period on the Closing Date<br />
&nbsp;&nbsp;&nbsp;&nbsp; were a prepayment made on the Closing
Date), and the next Interest<br />
&nbsp;&nbsp;&nbsp;&nbsp; Period selected on or after the Closing
Date shall end on the first<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; Business Day which occurs on or after the
date which is 91 days after<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Closing Date.<br />
<br />
If upon the expiration of any Interest Period applicable to any
Eurodollar<br />
Loan, the Borrower has failed to elect, or is not permitted to
elect, a new<br />
Interest Period to be applicable to such Eurodollar Loan as
provided above,<br />
the Borrower shall be deemed to have elected a one-month Interest
Period<br />
effective as of the expiration date of such current Interest
Period.&nbsp; For<br />
purposes of calculating the funding fee payable pursuant to
Paragraph 4 of<br />
the Escrow Agreement, such funding fee shall be calculated as if an
Interest<br />
Period in respect of the New Tranche B Loan began on the Closing
Date and<br />
ended on the first Business Day to occur on or after the date which
is 91<br />
days after the Closing Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.7&nbsp;&nbsp; Increased Costs, Illegality, etc.&nbsp;
(a)&nbsp;&nbsp;In the event that a<br />
Lender shall have determined (which determination shall, absent
manifest<br />
error, be final and conclusive and binding upon all parties
hereto):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; on any Interest Determination Date that, by reason
of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; changes arising after the date of this
Agreement affecting the<br />
&nbsp;&nbsp;&nbsp;&nbsp; interbank Eurodollar market, adequate and
fair means do not exist for<br />
&nbsp;&nbsp;&nbsp;&nbsp; ascertaining the applicable interest rate
on the basis provided for in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the definition of Eurodollar Rate;
or<br />
<br />
&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; at any time, that such Lender shall incur
increased costs<br />
&nbsp;&nbsp;&nbsp;&nbsp; or reductions in the amounts received or
receivable hereunder with<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect to any Eurodollar Loan of such
Lender because of (x) any change<br />
&nbsp;&nbsp;&nbsp;&nbsp; since the Closing Date in any applicable
law or governmental rule,<br />
&nbsp;&nbsp;&nbsp;&nbsp; regulation, order, guideline or request
(whether or not having the<br />
&nbsp;&nbsp;&nbsp;&nbsp; force of law) or in the interpretation or
administration thereof and<br />
&nbsp;&nbsp;&nbsp;&nbsp; including the introduction of any new law
or governmental rule,<br />
&nbsp;&nbsp;&nbsp;&nbsp; regulation, order, guideline or request,
such as, for example, but not<br />
&nbsp;&nbsp;&nbsp;&nbsp; limited to:&nbsp; (A) a change in the
basis of taxation of payment to such<br />
&nbsp;&nbsp;&nbsp;&nbsp; Lender of the principal of or interest on
such Lender's Loan or Note or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any other amounts payable to such Lender
hereunder (except for changes<br />
&nbsp;&nbsp;&nbsp;&nbsp; in the rate of tax on, or determined by
reference to, the net income or<br />
&nbsp;&nbsp;&nbsp;&nbsp; net profits of such Lender pursuant to the
laws of the jurisdiction in<br />
&nbsp;&nbsp;&nbsp;&nbsp; which it is doing business, organized or
in which its principal office<br />
&nbsp;&nbsp;&nbsp;&nbsp; or applicable lending office is located or
any subdivision thereof or<br />
&nbsp;&nbsp;&nbsp;&nbsp; therein) or (B) a change in official
reserve requirements, but, in all<br />
&nbsp;&nbsp;&nbsp;&nbsp; events, excluding reserves required under
Regulation D to the extent<br />
&nbsp;&nbsp;&nbsp;&nbsp; included in the computation of the
Eurodollar Rate and/or (y) other<br />
&nbsp;&nbsp;&nbsp;&nbsp; circumstances (other than with respect to
taxes) arising since the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Closing Date affecting such Lender (or its
Source), the interbank<br />
&nbsp;&nbsp;&nbsp;&nbsp; Eurodollar market or the position of such
Lender in such market; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; at any time, that the making or continuance of
any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Eurodollar Loan has been made (x) unlawful
by any law or governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; rule, regulation or order, (y) impossible
by compliance by such Lender<br />
&nbsp;&nbsp;&nbsp;&nbsp; in good faith with any governmental
request (whether or not having<br />
&nbsp;&nbsp;&nbsp;&nbsp; force of law) or (z) impracticable as a
result of a contingency<br />
&nbsp;&nbsp;&nbsp;&nbsp; occurring after the Closing Date which
materially and adversely affects<br />
&nbsp;&nbsp;&nbsp;&nbsp; the interbank Eurodollar market;<br />
<br />
then, and in any such event, such Lender shall promptly give notice
(by<br />
telephone&nbsp; promptly&nbsp; confirmed&nbsp; in&nbsp;
writing)&nbsp; to&nbsp; the&nbsp; Borrower&nbsp; of&nbsp;
such<br />
determination.&nbsp; Thereafter (x) in the case of clause (i)
above, Eurodollar<br />
Loans shall no longer be available until such time as such Lender
notifies<br />
the Borrower that the circumstances giving rise to such notice by
the Lender<br />
no longer exist, (y) in the case of clause (ii) above, the Borrower
agrees to<br />
pay to such Lender, upon such Lender's written request therefor,
such<br />
additional amounts (in the form of an increased rate of, or a
different<br />
method of calculating, interest or otherwise as such Lender in its
sole<br />
discretion shall determine) as shall be required to compensate such
Lender<br />
for such increased costs or reductions in amounts received or
receivable<br />
hereunder (a written notice as to the additional amounts owed to
such Lender,<br />
showing in reasonable detail the basis for the calculation thereof,
submitted<br />
to the Borrower by such Lender shall, absent manifest error, be
final and<br />
conclusive and binding on all the parties hereto) and (z) in the
case of<br />
clause (iii) above, the Borrower shall take one of the actions
specified in<br />
Section 2.7(b) as promptly as possible and, in any event, within
the time<br />
period required by Law.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Each Lender,
at the sole cost and expense of the Borrower<br />
(including, but not limited to, such Lender's internal costs for
use of its<br />
personnel and resources), will use its reasonable efforts to
minimize taxes<br />
indemnifiable by the Borrower under this Section 2.7(a), including
by<br />
complying with reasonable requests by the Borrower to do or to
refrain from<br />
doing any act (including the execution of any certificates or
similar<br />
documents required to establish an exemption or relief from any
tax), if such<br />
efforts or any such compliance is, in the good faith discretion of
such<br />
Lender, of a purely ministerial nature and has no adverse impact on
such<br />
Lender or any Affiliate or on the business or operations of the
foregoing<br />
(unless such adverse impact is one of a nature and quality such
that it is<br />
subject to indemnification and the Borrower has indemnified such
Lender<br />
against such adverse impact in a manner satisfactory to such
Lender<br />
determined in its sole discretion).&nbsp; The Borrower shall
indemnify such Lender<br />
for any taxes that may be imposed on it as a consequence of such
compliance.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; At any time that any Eurodollar Loan is affected by
the<br />
circumstances described in Section 2.7(a)(i) or (ii), the Borrower
may, and<br />
in the case of a Eurodollar Loan affected by the circumstances
described in<br />
Section 2.7(a)(iii), the Borrower shall, upon at least three
Business Days'<br />
written notice to such Lender, require the affected Lender to
convert such<br />
Eurodollar Loan into a Base Rate Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; If a Lender determines that after the Closing Date
the<br />
introduction of or any change in any applicable law or governmental
rule,<br />
regulation, order, guideline, directive or request (whether or not
having the<br />
force of law) concerning capital adequacy, or any change in
interpretation or<br />
administration thereof by the NAIC or any governmental authority,
central<br />
bank or comparable agency, will have the effect of increasing the
amount of<br />
capital required or expected to be maintained by such Lender (or
its Source)<br />
or any corporation controlling such Lender based on the existence
of such<br />
Lender's obligations hereunder, then the Borrower agrees to pay to
such<br />
Lender, upon its written demand therefor, such additional amounts
as shall be<br />
required to compensate such Lender or such other corporation for
the<br />
increased cost to such Lender or such other corporation or the
reduction in<br />
the rate of return to such Lender or such other corporation as a
result of<br />
such increase of capital.&nbsp; In determining such additional
amounts, each<br />
Lender will act reasonably and in good faith and will use averaging
and<br />
attribution methods which are reasonable, provided that such
Lender's<br />
determination of compensation owing under this Section 2.7(c)
shall, absent<br />
manifest error, be final and conclusive and binding on all the
parties<br />
hereto.&nbsp; Such Lender, upon determining that any additional
amounts will be<br />
payable pursuant to this Section 2.7(c), will give prompt written
notice<br />
thereof to the Borrower, which notice shall show in reasonable
detail the<br />
basis for calculation of such additional amounts.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.8&nbsp;&nbsp; Compensation.&nbsp; The Borrower agrees to
compensate each<br />
Lender, upon its written request (which request shall set forth in
reasonable<br />
detail the basis for requesting such compensation), for all losses,
expenses<br />
and liabilities (including, without limitation, any loss, expense
or<br />
liability incurred by reason of the liquidation or reemployment of
deposits<br />
or other funds required by such Lender to fund its Eurodollar Loan
but<br />
excluding loss of anticipated profits) which such Lender may
sustain:&nbsp; (i) if<br />
any prepayment or repayment (including any prepayment or repayment
made<br />
pursuant to Section 3.1, Section 3.2, Section 3.8 or as a result of
an<br />
acceleration of the Loans pursuant to Section 8.2) or conversion of
any<br />
Eurodollar Loan is made on a date other than the last day of the
Interest<br />
Period applicable thereto; or (ii) as a consequence of (x) any
other default<br />
by the Borrower to repay such Eurodollar Loan when required by the
terms of<br />
this Agreement or any Note held by such Lender or (y) any election
made<br />
pursuant to Section 2.7(b).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
3.&nbsp;&nbsp; PREPAYMENTS; PAYMENTS; TAXES.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.1&nbsp;&nbsp; Voluntary Prepayments.&nbsp; The Borrower shall
have the right<br />
to prepay the Tranche B Loan, ratably, in whole or in part at any
time and<br />
from time to time on the following terms and conditions:&nbsp; the
Borrower shall<br />
give each affected Lender prior to 12:00 Noon (New York time) (x)
at least<br />
one Business Day's prior written notice (or telephonic notice
promptly<br />
confirmed in writing) of its intent to prepay a Base Rate Loan and
(y) at<br />
least three Business Days' prior written notice (or telephonic
notice<br />
promptly confirmed in writing) of its intent to prepay a Eurodollar
Loan,<br />
which notice (in each case) shall specify the amount of such
prepayment which<br />
shall be in an aggregate principal amount of at least $10,000,000,
and<br />
minimum increments of $1,000,000 in excess thereof; provided that,
the<br />
Tranche B Loan may not be prepaid until after all amounts payable
to each<br />
Holder under the Option Agreement in respect of any Put Notice (as
defined in<br />
the Option Agreement) theretofore delivered by such Holder.&nbsp;
Each prepayment<br />
of the Tranche B Loan made pursuant to this Section 3.1 shall be
accompanied<br />
by payment of a prepayment fee equal to (i) if such prepayment is
made on or<br />
prior to October 1, 2003, the Voluntary Make-Whole Amount, (ii) if
such<br />
prepayment is made after October 1, 2003 and on or prior to October
1, 2004,<br />
2.5% of the principal amount prepaid and (iii) if such prepayment
is made<br />
after October 1, 2004, 0.5% of the principal amount prepaid, which
fee shall<br />
be distributed among each Tranche B Lender ratably according to
the<br />
respective outstanding principal amounts of the Tranche B Loan held
by such<br />
Tranche B Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.2&nbsp;&nbsp; Mandatory Repayments.&nbsp; (a)&nbsp;&nbsp;The
principal amount of each<br />
Loan, to the extent then outstanding, shall be repaid at its
maturity<br />
(whether by acceleration or otherwise).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, on each date on or after the Closing Date upon
which the<br />
Borrower receives any cash proceeds from any incurrence by the
Borrower of<br />
Indebtedness for borrowed money, an amount equal to 100% of the Net
Debt<br />
<br />
Proceeds of such incurrence shall be applied on such date in
accordance with<br />
the requirements of Section 3.2(i); provided that up to $5,000,000
of such<br />
Net Debt Proceeds from any incurrence by the Borrower of
Indebtedness under<br />
Section 7.4(ix) need not be so applied.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, on each date on or after the Closing Date upon
which the<br />
Borrower receives any cash proceeds from any sale or issuance of
its equity,<br />
including any preferred stock and any instrument that has both
equity-like<br />
and debt-like components, an amount equal to 100% of the Net Equity
Proceeds<br />
of such sale or issuance of equity shall be applied on such date
in<br />
accordance with the requirements of Section 3.2(i); provided, that
any such<br />
Net Equity Proceeds received from the sale or issuance of equity of
the<br />
Borrower shall not be required to be applied to repay the Loans (i)
to the<br />
extent that such Net Equity Proceeds are invested by the Borrower
in PGE<br />
Utility to the extent permitted by clauses (v) and (vi) of Section
7.5,<br />
(ii) to the extent that such Net Equity Proceeds are held by the
Borrower as<br />
cash or Cash Equivalents and thereafter used solely to prepay the
Loans in<br />
accordance with the requirements of Section 3.2(i) or to make
investments in<br />
PGE Utility to the extent permitted by clauses (v) and (vi) of
Section 7.5,<br />
or (iii) to the extent that the Net Equity Proceeds arose in
conjunction with<br />
the sale by the Borrower (directly or through any of its
Subsidiaries) of the<br />
Borrower's common stock to the trustee for the PG&amp;E Corporation
Retirement<br />
Savings Plan, stock option and other equity based incentives under
the PG&amp;E<br />
Corporation Long Term Incentive Program and the Dividend
Reinvestment Plan or<br />
the trustee of the PGE Utility Savings Fund Plan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp;In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, (A) on each date on or after the Closing Date
upon which<br />
(i) PGE Utility conveys, sells, leases, spins-off, transfers or
otherwise<br />
disposes of assets having a fair market value exceeding (on a
cumulative<br />
basis, including all prior conveyances, sales, leases, spin-offs,
transfers<br />
and other dispositions consummated after the Closing Date)
$250,000,000 in<br />
the aggregate (other than in connection with a Spin-Off, provided
that the<br />
Borrower complies with the requirements of Section 3.8) or (ii) PGE
Utility<br />
issues (other than as a pro rata dividend) common stock (or
options, warrants<br />
or other rights to acquire, or securities convertible into, common
stock)<br />
representing (on a cumulative basis, including all prior such
issuances after<br />
the Closing Date) over 15% of its issued and outstanding common
stock as of<br />
the Closing Date, the Borrower shall on such date repay in full the
Tranche B<br />
Loan, all accrued and unpaid interest thereon and all other amounts
owing to<br />
the Tranche B Lenders under the Financing Documents; and (B) on
each date on<br />
or after the Closing Date upon which PGE Utility issues (i) any
preferred<br />
Capital Stock or (ii) any common stock (or options, warrants or
other rights<br />
to acquire, or securities convertible into, common stock)
representing (on a<br />
cumulative basis, including all prior such issuances after the
Closing Date)<br />
up to 15% of its issued and outstanding common stock as of the
Closing Date,<br />
an amount equal to 100% of the Net Equity Proceeds thereof shall be
applied<br />
on such date in accordance with the requirements of Section
3.2(i).<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, (A) on each date on or after the Closing Date
upon which<br />
the Borrower receives any cash proceeds from any Asset Sale by the
Borrower,<br />
LLC, NEG, Inc. or any NEG Subsidiary (including, without
limitation, any<br />
Qualified Asset Sale and any sale of the common stock of PGE
Utility owned by<br />
the Borrower to the extent permitted by Section 7.2(xi)), an amount
equal to<br />
100% of the Net Sale Proceeds therefrom shall be applied in
accordance with<br />
the requirements of Section 3.2(i); and (B) on each date after the
date of a<br />
Spin-Off on which the Borrower or any Reorganization Subsidiary
receives any<br />
cash proceeds from any Asset Sale by the Borrower or any
Reorganization<br />
Subsidiary, an amount equal to 100% of the Net Sale Proceeds
therefrom shall<br />
be applied in accordance with the requirements of Section
3.2(i).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, on each date on or after the Closing Date upon
which the<br />
Borrower receives any cash proceeds from any Recovery Event, an
amount equal<br />
to 100% of the Net Insurance Proceeds from such Recovery Event
shall be<br />
applied in accordance with the requirements of Section 3.2(i);
provided that<br />
such Net Insurance Proceeds shall not be required to be so applied
to the<br />
extent such Net Insurance Proceeds are (i) in respect of Recovery
Events for<br />
one or more Subsidiaries of the Borrower and arise from insurance
programs<br />
maintained by the Borrower for such Subsidiaries to the extent that
such Net<br />
Insurance Proceeds are made available to, and actually received by,
such<br />
Subsidiaries; or (ii) utilized to repair the damages which resulted
in such<br />
Net Insurance Proceeds or are reinvested in assets similar to the
assets with<br />
respect to which such Net Insurance Proceeds were received.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, on each date on or after the Closing Date upon
which the<br />
Borrower or LLC receives any cash proceeds from any Qualified NEG
Sale, an<br />
amount equal to 100% of the Net Sale Proceeds therefrom, minus any
net tax<br />
liability of the Borrower resulting from such Qualified NEG Sale,
shall be<br />
applied in accordance with the requirements of Section
3.2(i).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, on each date on or after the Closing Date upon
which the<br />
Borrower receives any principal repayment in respect of borrowed
money owing<br />
to the Borrower by any member of the NEG Group or a distribution or
Dividend<br />
of any sort from LLC, PGE Utility or any Reorganization Subsidiary
(other<br />
than distribution to the Borrower of shares of Reorganization
Subsidiaries or<br />
the shares or related preferred stock purchase rights of PGE
Utility in<br />
connection with a Spin-Off or a Non-Spin Plan of Reorganization),
an amount<br />
equal to 100% of such proceeds (and, other than in the case of a
distribution<br />
or Dividend from PGE Utility, net of any amount thereof used to
reimburse the<br />
Borrower for (i) any expense related to any income or franchise
Taxes of NEG,<br />
Inc. or any NEG Subsidiary (computed as if NEG, Inc. and each of
its<br />
Subsidiaries filed a consolidated federal income Tax return and
state<br />
consolidated or combined income or franchise Tax returns, where
applicable,<br />
separate from the Borrower, PGE Utility and Subsidiaries of PGE
Utility, for<br />
all taxable periods) or (ii) any expenses then due and payable
under the<br />
Expense Sharing Agreement) shall be applied in accordance with
the<br />
requirements of Section 3.2(i).&nbsp; In addition to any other
mandatory<br />
repayments pursuant to this Section 3.2, on each date on or after
the Closing<br />
Date upon which LLC receives any principal repayment in respect of
borrowed<br />
money owing to LLC by any member of the NEG Group or a distribution
or<br />
Dividend of any sort from any member of the NEG Group, an amount
equal to<br />
100% of such proceeds (net of any amount thereof used to reimburse
LLC and/or<br />
the Borrower for (i) any expense related to any income or franchise
Taxes of<br />
NEG, Inc. or any NEG Subsidiary (computed as if NEG, Inc. and each
of its<br />
Subsidiaries filed a consolidated federal income Tax return and
state<br />
consolidated or combined income or franchise Tax returns, where
applicable,<br />
separate from LLC, the Borrower, PGE Utility and Subsidiaries of
PGE Utility,<br />
for all taxable periods) or (ii) any expenses then due and payable
under the<br />
<br />
Expense Sharing Agreement) shall be applied in accordance with
the<br />
requirements of Section 3.2(i).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; Each amount required to be applied pursuant to this
Section<br />
3.2(i) shall be, first, used to repay all amounts due and payable
to each<br />
Holder under the Option Agreement in respect of any Put Notice (as
defined in<br />
the Option Agreement) theretofore delivered by such Holder, and,
second, paid<br />
to each Tranche B Lender ratably according to the respective
outstanding<br />
principal amounts of the Tranche B Loan held by such Tranche B
Lender and<br />
shall be applied by each such Tranche B Lender to payment of any
amount owing<br />
to such Tranche B Lender under Section 2.8, then to payment of any
interest<br />
and fees then due and payable to such Tranche B Lender on account
of the<br />
Tranche B Loan, and then to reduce the remaining principal balance
of the<br />
Tranche B Loan of such Tranche B Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;&nbsp; (i)&nbsp; Each repayment or prepayment of the
Tranche B Loan<br />
made pursuant to Sections 3.2(a) through (c) above shall be
accompanied by<br />
payment of a payment fee equal to (A) if such repayment or
prepayment is made<br />
on or prior to October 1, 2003, the Mandatory Make-Whole Amount,
(B) if such<br />
repayment or prepayment is made after October 1, 2003 and on or
prior to<br />
October 1, 2004, 2.5% of the principal amount repaid or prepaid and
(C) if<br />
such repayment or prepayment is made after October 1, 2004, 0.5% of
the<br />
principal amount repaid or prepaid, which fee shall be distributed
among each<br />
Tranche B Lender ratably according to the respective outstanding
principal<br />
amounts of the Tranche B Loan held by such Tranche B Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii)&nbsp;
Each repayment of the Tranche B Loan made pursuant to<br />
Sections 3.2(d) through (h) above shall be accompanied by payment
of a<br />
repayment fee equal to (A) if such repayment is made on or prior to
October<br />
1, 2003, 3.5% of the principal amount repaid, (B) if such repayment
is made<br />
after October 1, 2003 and on or prior to October 1, 2004, 2.5% of
the<br />
principal amount repaid and (C) if such repayment is made after
October 1,<br />
2004, 0.5% of the principal amount repaid, which fee shall be
distributed<br />
among each Tranche B Lender ratably according to the respective
outstanding<br />
principal amounts of the Tranche B Loan held by such Tranche B
Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;&nbsp; In addition to any other mandatory repayments
pursuant to<br />
this Section 3.2, all of the then outstanding Tranche B Loan shall
be repaid<br />
in full on the Tranche B Maturity Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (l)
&nbsp;&nbsp; The application of any proceeds received by LLC to
be<br />
applied for mandatory repayment under Sections 3.2(b), (c), (e),
(f), (g) and<br />
(h) shall be subject to Compliance by LLC with the requirements
for<br />
Distribution under Section 13 of the LLC Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;&nbsp; Nothing in this Section 3.2 shall limit any other
rights or<br />
remedies a Lender may have under Section 8 of this Agreement or
under<br />
applicable law in connection with any Event of Default.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.3&nbsp;&nbsp; Method and Place of Payment.&nbsp; Except as
otherwise<br />
specifically provided herein, all payments under this Agreement and
under any<br />
Note shall be made to the Administrative Agent for the account of
the Lenders<br />
entitled thereto not later than 12:00 Noon (New York time) on the
date when<br />
due and shall be made in Dollars in immediately available funds at
the<br />
Payment Office or pursuant to such other instruction as the
Administrative<br />
Agent shall designate to the Borrower in writing.&nbsp; Except as
otherwise<br />
provided herein, whenever any payment to be made hereunder or under
any Note<br />
shall be stated to be due on a day which is not a Business Day, the
due date<br />
thereof shall be extended to the next succeeding Business Day and,
with<br />
respect to payments of principal, interest shall be payable at the
applicable<br />
rate during such extension.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.4&nbsp;&nbsp; Net Payments.&nbsp; (a)&nbsp;&nbsp;All payments
made by the Borrower to<br />
the Administrative Agent or any Lender hereunder and under any Note
will be<br />
made without setoff, counterclaim or other defense.&nbsp; Except as
provided in<br />
Section 3.4(b), all such payments will be made free and clear of,
and without<br />
deduction or withholding for, any present or future taxes, levies,
imposts,<br />
duties, fees, assessments or other charges of whatever nature now
or<br />
hereafter imposed by any jurisdiction or by any political
subdivision or<br />
taxing authority thereof or therein with respect to such payments
(but<br />
excluding, except as provided in the second succeeding sentence,
any tax<br />
imposed on or measured by the net income or net profits of a Lender
pursuant<br />
to the laws of the jurisdiction in which it is doing business,
organized or<br />
the jurisdiction in which the principal office or applicable
lending office<br />
of such Lender is located or any subdivision thereof or therein)
and all<br />
interest, penalties or similar liabilities with respect to such
non-excluded<br />
taxes, levies, imposts, duties, fees, assessments or other charges
(all such<br />
non-excluded taxes, levies, imposts, duties, fees, assessments or
other<br />
charges being referred to collectively as "Taxes").&nbsp; If any
Taxes are so<br />
levied or imposed, the Borrower agrees to pay the full amount of
such Taxes,<br />
and such additional amounts as may be necessary so that every
payment of all<br />
amounts due under this Agreement or under any Note, after
withholding or<br />
deduction for or on account of any Taxes, will not be less than the
amount<br />
provided for herein or in such Note.&nbsp; If any amounts are
payable in respect<br />
of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse<br />
each Lender, upon the written request of such Lender, for taxes
imposed on or<br />
measured by the net income or net profits of such Lender pursuant
to the laws<br />
of the jurisdiction in which such Lender is doing business,
organized or in<br />
which the principal office or applicable lending office of such
Lender is<br />
located or under the laws of any political subdivision or taxing
authority of<br />
any such jurisdiction in which such Lender is doing business,
organized or in<br />
which the principal office or applicable lending office of such
Lender is<br />
located and for any withholding of taxes as such Lender shall
reasonably<br />
determine are payable by, or withheld from, such Lender, in respect
of such<br />
amounts so paid to or on behalf of such Lender pursuant to the
preceding<br />
sentence and in respect of any amounts paid to or on behalf of such
Lender<br />
pursuant to this sentence.&nbsp; The Borrower will furnish to such
Lender within<br />
45 days after the date the payment of any Taxes is due pursuant to
applicable<br />
law certified copies of tax receipts evidencing such payment by
such<br />
Borrower.&nbsp; The Borrower agrees to indemnify and hold harmless
each Lender,<br />
and reimburse such Lender upon its written request, for the amount
of any<br />
Taxes so levied or imposed and paid by such Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Any Lender that is not a United States person (as
such term<br />
is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax<br />
purposes agrees to deliver to the Administrative Agent and the
Borrower on or<br />
prior to the Closing Date or, in the case of a Lender that is an
assignee or<br />
transferee of an interest under this Agreement pursuant to Section
9.11(a)<br />
(unless such Assignee was already a Lender hereunder immediately
prior to<br />
such assignment in which case such assignee shall reaffirm its
ability to<br />
deliver the forms set forth below in clause (i) or (ii), as
applicable), on<br />
the date of the assignment to such Assignee, (i) two accurate and
complete<br />
original signed copies of Internal Revenue Service Form W-8ECI or
Form W-8BEN<br />
(with respect to a complete exemption under an income tax treaty)
(or<br />
successor forms) certifying to such Lender's entitlement as of such
date to a<br />
complete exemption from United States withholding tax with respect
to<br />
payments to be made under this Agreement and under any Note, or
(ii) if any<br />
such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the<br />
Code and cannot deliver either Internal Revenue Service Form W-8ECI
or Form<br />
W-8BEN (with respect to a complete exemption under an income tax
treaty) (or<br />
any successor forms) pursuant to clause (i) above, (x) a
certificate<br />
substantially in the form of Exhibit C (any such certificate, a
"Section<br />
3.4(b)(ii) Certificate") and (y) two accurate and complete original
signed<br />
copies of Internal Revenue Service Form W-8BEN (with respect to the
portfolio<br />
interest exemption) (or successor form) certifying to such
Lender's<br />
entitlement as of such date to a complete exemption from United
States<br />
withholding tax with respect to payments of interest to be made
under this<br />
Agreement and under any Note.&nbsp; In addition, each such Lender
agrees that from<br />
time to time after the Closing Date, when a lapse in time or change
in<br />
circumstances renders the previous certification obsolete or
inaccurate in<br />
any material respect, such Lender will deliver to the
Administrative Agent<br />
and the Borrower two new accurate and complete original signed
copies of<br />
Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to
the<br />
benefits of any income tax treaty), or Form W-8BEN (with respect to
the<br />
portfolio interest exemption) and a Section 3.4(b)(ii) Certificate,
as the<br />
case may be, and such other forms as may be required in order to
confirm or<br />
establish the entitlement of such Lender to a continued exemption
from or<br />
reduction in United States withholding tax with respect to payments
under<br />
this Agreement and any Note, or such Lender shall immediately
notify the<br />
Administrative Agent and the Borrower of its inability to deliver
any such<br />
Form or Certificate, in which case such Lender shall not be
required to<br />
deliver any such Form or Certificate pursuant to this Section
3.4(b).&nbsp;<br />
 Notwithstanding anything to the contrary contained in Section
3.4(a) but<br />
subject to the immediately succeeding sentence, (x) the Borrower
shall be<br />
entitled, to the extent it is required to do so by law, to deduct
or withhold<br />
income or similar taxes imposed by the United States (or any
political<br />
subdivision or taxing authority thereof or therein) from interest,
fees or<br />
other amounts payable hereunder for the account of any Lender which
is not a<br />
United States person (as such term is defined in Section
7701(a)(30) of the<br />
Code) for U.S. Federal income tax purposes to the extent that such
Lender has<br />
not provided to the Administrative Agent and the Borrower U.S.
Internal<br />
Revenue Service Forms that establish a complete exemption from such
deduction<br />
or withholding and (y) the Borrower shall not be obligated pursuant
to<br />
Section 3.4(a) to gross-up payments to be made to a Lender in
respect of<br />
income or similar taxes imposed by the United States if (I) such
Lender has<br />
not provided to the Administrative Agent and the Borrower the
Internal<br />
Revenue Service Forms required to be provided to the Administrative
Agent and<br />
the Borrower pursuant to this Section 3.4(b) or (II) in the case of
a<br />
payment, other than interest, to a Lender described in clause (ii)
above, to<br />
the extent that such Forms do not establish a complete exemption
from<br />
withholding of such taxes.&nbsp; Notwithstanding anything to the
contrary<br />
contained in the preceding sentence or elsewhere in this Section
3.4, the<br />
Borrower agrees to pay any additional amounts and to indemnify each
Lender in<br />
the manner set forth in Section 3.4(a) (without regard to the
identity of the<br />
jurisdiction requiring the deduction or withholding) in respect of
any<br />
amounts deducted or withheld by it as described in the immediately
preceding<br />
sentence as a result of any changes that are effective after the
Closing Date<br />
in any applicable law, treaty, governmental rule, regulation,
guideline or<br />
order, or in the interpretation thereof, relating to the deducting
or<br />
withholding of such Taxes.&nbsp; The sole consequence of any Lender
failing to<br />
comply with the requirement to deliver the Internal Revenue Service
Forms or<br />
the Section 3.4(b)(ii) Certificate shall be that the Borrower shall
not be<br />
obligated pursuant to Section 3.4(a) to gross-up payments to be
made to such<br />
Lender in respect of any resulting U.S. income or similar
taxes.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Any Lender that is (i) an Assignee pursuant to
Section<br />
9.11(a) and (ii) not a United States person (as such term is
defined in<br />
Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes will<br />
certify to the Borrower on or prior to the date of the assignment
to such<br />
Lender that payments to such Lender hereunder and under any Note
are, as of<br />
the date of such assignment, not subject to any withholding tax
imposed by<br />
any taxing jurisdiction located outside of the United States.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; Each Lender, at the sole cost and expense of the
Borrower<br />
(including, but not limited to, the Lender's internal costs for use
of its<br />
personnel and resources), will use its reasonable efforts to
minimize taxes<br />
indemnifiable by the Borrower under this Section 3.4, including by
complying<br />
with reasonable requests by the Borrower to do or to refrain from
doing any<br />
act (including the execution of any certificates or similar
documents<br />
required to establish an exemption or relief from any tax), if such
efforts<br />
or any such compliance is, in the good faith discretion of such
Lender, of a<br />
purely ministerial nature and has no adverse impact on such Lender
or any<br />
Affiliate or on the business or operations of the foregoing (unless
such<br />
adverse impact is one of a nature and quality such that it is
subject to<br />
indemnification and the Borrower has indemnified such Lender
against such<br />
adverse impact in a manner satisfactory to such Lender determined
in its sole<br />
discretion).&nbsp; The Borrower shall indemnify such Lender for any
taxes that may<br />
be imposed on it as a consequence of such compliance.&nbsp; No
Lender shall be<br />
required to disclose any tax return or filing or any related
information it<br />
deems confidential and all positions taken by each Lender in any
tax return,<br />
filing or proceeding shall be within the sole control of such
Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.5&nbsp;&nbsp; Allocation.&nbsp; The parties agree that the Notes
issued by the<br />
Borrower to the New Tranche B Lenders under this Agreement and the
New<br />
Warrants issued by the Borrower to the New Tranche B Lenders under
the New<br />
Warrant Agreement will, for federal tax purposes, be treated as
an<br />
"investment unit" as such term is defined under Section 1273(c)(2)
of the<br />
Code and the parties agree that the consideration paid by each New
Tranche B<br />
Lender for its Note and New Warrants shall be allocated as set
forth on<br />
Schedule 3.5.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.6&nbsp;&nbsp; [OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.7&nbsp;&nbsp; Application of Payments; Sharing.&nbsp; (a)&nbsp;
Subject to the<br />
provisions of the Intercreditor Agreement and this Section 3.7,
the<br />
Administrative Agent agrees that promptly after its receipt of each
payment<br />
from or on behalf of the Borrower in respect of any Obligations of
the<br />
Borrower hereunder, it shall promptly distribute such payment to
the Lenders<br />
pro rata based upon their respective shares, if any, of the
Obligations with<br />
respect to which such payment was received.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b) Each of
the Lenders agrees that, except to the extent that<br />
this Agreement provides for payments to be allocated to particular
Lenders or<br />
to Lenders holding a particular Loan, if it should receive any
payment<br />
hereunder on account of the Obligations (whether by voluntary
payment, by<br />
realization upon security, by the exercise of the right of setoff
or banker's<br />
lien, by counterclaim or cross action, by the enforcement of any
right under<br />
the Financing Documents, or otherwise), which, in any such case, is
in excess<br />
of its ratable share of payments on account of the Obligations
obtained by<br />
all Lenders, then such Lender receiving such excess payment shall
purchase<br />
for cash without recourse or warranty from the other Lenders an
interest in<br />
the Obligations of the Borrower to such Lenders in such amount as
shall<br />
result in a proportional participation by all the Lenders in such
amount;<br />
provided, however, that if all or any portion of such excess amount
is<br />
thereafter recovered from such Lender, such purchase shall be
rescinded and<br />
the purchase price restored to the extent of such recovery, but
without<br />
interest.&nbsp; Notwithstanding the foregoing provisions of this
paragraph, in the<br />
event that (i) during the period between the Closing Date and the
date which<br />
is 91 days after the Closing Date, an Event of Default occurs under
Section<br />
8.1(e) and (ii) during the proceeding constituting such Event of
Default any<br />
payment made by the Borrower in respect of either the Continued
Tranche B<br />
Loan or the New Tranche B Loan, as the case may be, prior to the
commencement<br />
of any such proceeding is avoided or otherwise recovered pursuant
to Sections<br />
547 and 550 of the Bankruptcy Code, or any lien granted by the
Borrower prior<br />
to the commencement of any such proceeding to secure either the
Continued<br />
Tranche B Loan or the New Tranche B Loan, as the case may be, is
avoided or<br />
otherwise recovered pursuant to Section 547 of the Bankruptcy
Code,&nbsp; then, in<br />
any such case, solely for purposes of this paragraph, such payment
or such<br />
lien shall be deemed not to have been avoided or recovered, and
(for greater<br />
certainty) any amount that would have been received in respect of
the<br />
Continued Tranche B Loan or the New Tranche B Loan, as the case may
be, if<br />
such lien had not been so avoided shall be deemed to have been
received and<br />
not avoided.&nbsp; Anything to the contrary in this Agreement
notwithstanding, all<br />
proceeds of the Tranche B Escrow Account (including all
substitutions and<br />
replacements therefor) shall be applied solely to the New Tranche B
Loan<br />
ratably among the New Tranche B Lenders according to the
respective<br />
outstanding principal amounts of the New Tranche B Loan held by the
New<br />
Tranche B Lenders, and shall not be shared with the Continued
Tranche B<br />
Lenders on account of the Continued Tranche B Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.8&nbsp;&nbsp; Offers to Repay.&nbsp; (a)&nbsp;&nbsp;Upon a Change
of Control, the<br />
Borrower shall prepare and provide to each Lender an Offer to Repay
Notice,<br />
which shall include an offer (the "Change of Control Offer to
Repay") to<br />
prepay on the date (each, a "Change of Control Offer Settlement
Date") that<br />
is ten (10) Business Days after the date of the Offer to Repay
Notice, such<br />
Lender's Loan, together with a prepayment fee (the "Change of
Control<br />
Prepayment Fee") equal to 1.5% of the aggregate principal amount of
such<br />
Lender's Loan, and each Lender wishing to accept the Change of
Control Offer<br />
to Repay (which shall be determined by such Lender in its sole
discretion)<br />
shall reply, in the form of Exhibit E-2, indicating whether such
offer is<br />
accepted or rejected in whole or in part (and if so, to what
extent) by the<br />
close of business on the Business Day preceding the Change of
Control Offer<br />
Settlement Date, failing which such offer will be deemed to have
been<br />
accepted in whole by such Lender and such repayment will be made by
the<br />
Borrower to such Lender.&nbsp; On the Change of Control Offer
Settlement Date, the<br />
Borrower shall pay to those Lenders who have accepted (or are
deemed to have<br />
accepted) the Change of Control Offer to Repay the aggregate amount
necessary<br />
to prepay that portion of the outstanding Loans, together with the
Change of<br />
Control Prepayment Fee, in respect of which such Lenders have
accepted (or<br />
are deemed to have accepted) the Change of Control Offer to Repay
in<br />
accordance with this Section 3.8(a).<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Not later than 45 days prior to the date (the
"Spin-Off<br />
Date") of any Spin-Off, the Borrower shall prepare and provide to
each Lender<br />
an Offer to Repay Notice, which shall include an offer (the "Spin
Offer to<br />
Repay") to prepay on a date (each, a "Spin Offer Settlement Date")
that is on<br />
or before the Spin-Off Date, such Lender's Loan, together with a
prepayment<br />
fee (the "Spin Prepayment Fee") equal to the Put Prepayment Fee
Percentage of<br />
the aggregate principal amount of such Lender's Loan, and each
Lender wishing<br />
to accept the Spin Offer to Repay (which shall be determined by
such Lender<br />
in its sole discretion) shall reply, in the form of Exhibit E-2,
indicating<br />
whether such offer is accepted or rejected in whole or in part (and
if so, to<br />
what extent) by the close of business on the date that is ten (10)
days after<br />
the date of receipt of the Offer to Repay Notice by such Lender,
failing<br />
which such offer will be deemed to have been accepted in whole by
such Lender<br />
and such repayment will be made by the Borrower to such
Lender.&nbsp; On the Spin<br />
Offer Settlement Date, the Borrower shall pay to those Lenders who
have<br />
accepted (or are deemed to have accepted) the Spin Offer to Repay
the<br />
aggregate amount necessary to prepay that portion of the
outstanding Loans,<br />
together with the Spin Prepayment Fee, in respect of which such
Lenders have<br />
accepted (or are deemed to have accepted) the Spin Offer to Repay
in<br />
accordance with this Section 3.8(b); provided, that in the event
that both<br />
(1) the PGE Plan is confirmed and (2) immediately upon the
consummation of<br />
the Newco Spin, the Borrower has delivered to the Collateral Agent
the stock<br />
certificates representing the common stock of Newco received by the
Borrower<br />
in the Newco Spin such that the Lenders shall have a perfected
first priority<br />
security interest in the common stock of Newco pursuant to the
Utility Pledge<br />
Agreements, the Spin-Off Date shall be deemed to be the earlier of
(i) the<br />
date of the PGE Spin and (ii) the date 30 days after the date of
the Newco<br />
Spin.&nbsp; For avoidance of doubt, no Spin-Off shall be permitted
prior to the<br />
prepayment of all amounts owing to Lenders that accept the
Borrower's Spin<br />
Offer to Repay in accordance with this Section 3.8(b).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Upon and after the confirmation of any Non-Spin
Plan of<br />
Reorganization, if on any Test Date the Post-Confirmation Market
Value to<br />
Loan Ratio is less than 85% of the Pre-Closing Market Value to Loan
Ratio,<br />
then, not later than 5 Business Days after such Test Date, the
Borrower shall<br />
prepare and provide to each Lender an Offer to Repay Notice, which
shall<br />
include an offer (the "Non-Spin Offer to Repay") to prepay on a
date (each, a<br />
"Non-Spin Offer Settlement Date") that is on or before the date
twenty-five<br />
(25) Business Days after the date of the Offer to Repay Notice,
such Lender's<br />
Loan, together with a prepayment fee (the "Non-Spin Prepayment
Fee") equal to<br />
the Put Prepayment Fee Percentage of the aggregate principal amount
of such<br />
Lender's Loan, and each Lender wishing to accept the Non-Spin Offer
to Repay<br />
(which shall be determined by such Lender in its sole discretion)
shall<br />
reply, in the form of Exhibit E-2, indicating whether such offer is
accepted<br />
or rejected in whole or in part (and if so, to what extent) by the
close of<br />
business on the date that is ten (10) days after the date of
receipt of the<br />
Offer to Repay Notice by such Lender, failing which such offer will
be deemed<br />
to have been accepted in whole by such Lender and such repayment
will be made<br />
by the Borrower to such Lender.&nbsp; On the Non-Spin Offer
Settlement Date, the<br />
Borrower shall pay to those Lenders who have accepted (or are
deemed to have<br />
accepted) the Non-Spin Offer to Repay the aggregate amount
necessary to<br />
prepay that portion of the outstanding Loans, together with the
Non-Spin<br />
Prepayment Fee, in respect of which such Lenders have accepted (or
are deemed<br />
to have accepted) the Non-Spin Offer to Repay in accordance with
this Section<br />
3.8(c).<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
4.&nbsp;&nbsp; CONDITIONS PRECEDENT.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.1&nbsp;&nbsp; Conditions to Closing.&nbsp; The obligation of any
Lender to<br />
make or continue its Loan, and the occurrence of the Closing Date,
shall be<br />
subject to the conditions precedent that such Lender shall have
received, or<br />
shall have waived receipt of, the following (in the case of
documents<br />
described below to be delivered to such Lender), each of which
shall be in<br />
form and substance satisfactory to such Lender, and that the other
conditions<br />
set forth below shall have been satisfied or waived in accordance
with this<br />
Agreement:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)
&nbsp;&nbsp; Financing Documents.&nbsp; Each of the Financing
Documents<br />
(including the acknowledgments under the LLC Pledge Agreement and
the Stock<br />
Pledge Agreement, the Utility Pledge Agreements, the Security
Agreements, the<br />
Option Agreement, the New Warrant Agreement and the Tranche B
Interest<br />
Reserve Account Control Agreements (other than the Tranche B
Interest Reserve<br />
Account Control Agreement (Combined Tranche B Loan))) shall have
been duly<br />
authorized, executed and delivered by each party thereto.&nbsp;
Such Lender shall<br />
have received an original of each Financing Document executed by
all parties<br />
thereto.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Notes.&nbsp; The Borrower shall have duly
authorized, executed<br />
and delivered a Note for the Continued Tranche B Loan and the New
Tranche B<br />
Loan (as applicable) of such Lender.&nbsp; Each Note shall be
appropriately<br />
completed with the name of the payee, the maximum principal amount
thereof<br />
and the date of issuance (which shall be the Closing Date) inserted
therein.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Charter Documents.&nbsp; Such Lender shall have
received the<br />
following documents, each certified as indicated below:&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; a copy of the Charter Documents of the Borrower, as
in<br />
&nbsp;&nbsp;&nbsp;&nbsp; effect on the Closing Date, certified by
the Secretary of State of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; State of such Person's organization, as
applicable, and a certificate,<br />
&nbsp;&nbsp;&nbsp;&nbsp; where available, as to the good standing
of and payment of franchise<br />
&nbsp;&nbsp;&nbsp;&nbsp; taxes by the Borrower from the Secretary
of State of the State of such<br />
&nbsp;&nbsp;&nbsp;&nbsp; Person's organization, dated as of a date
no earlier than five (5) days<br />
&nbsp;&nbsp;&nbsp;&nbsp; prior to the Closing Date;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; a certificate of an Authorized Officer of the
Borrower,<br />
&nbsp;&nbsp;&nbsp;&nbsp; dated the Closing Date, certifying (A)
that attached thereto is a true<br />
&nbsp; &nbsp;&nbsp;&nbsp; and complete copy of the Charter
Documents of such Person, as in effect<br />
&nbsp;&nbsp;&nbsp;&nbsp; at all times from the date on which the
resolutions referred to in<br />
&nbsp;&nbsp;&nbsp;&nbsp; clause (B) below were adopted to and
including the date of such<br />
&nbsp;&nbsp;&nbsp;&nbsp; certificate, (B) that attached thereto is
a true and complete copy of<br />
&nbsp;&nbsp;&nbsp;&nbsp; resolutions duly adopted by the board of
directors (or other equivalent<br />
&nbsp;&nbsp;&nbsp;&nbsp; body) or evidence of all corporate,
partnership or limited liability<br />
&nbsp;&nbsp;&nbsp;&nbsp; company action, as the case may be, of
such Person, authorizing the<br />
&nbsp;&nbsp;&nbsp;&nbsp; execution, delivery and performance of the
Financing Documents to which<br />
&nbsp;&nbsp;&nbsp;&nbsp; such Person is or is intended to be a
party, and that such resolutions<br />
&nbsp;&nbsp;&nbsp;&nbsp; have not been modified, rescinded or
amended and are in full force and<br />
&nbsp;&nbsp; &nbsp;&nbsp; effect, and (C) as to the name,
incumbency and specimen signature of<br />
&nbsp;&nbsp;&nbsp;&nbsp; each officer of such Person executing the
Financing Documents to which<br />
&nbsp;&nbsp;&nbsp;&nbsp; such Person is intended to be a party and
each other document to be<br />
&nbsp;&nbsp;&nbsp;&nbsp; delivered by such Person from time to time
in connection therewith; and<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; a certificate of another Authorized Officer of
the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower as to the name, incumbency and
specimen signature of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Authorized Officer of such Person that
signed the certificate referred<br />
&nbsp;&nbsp;&nbsp;&nbsp; to in clause (ii) above.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; Filings,&nbsp; Registrations,&nbsp;
Recordings;&nbsp; Other&nbsp; Perfection<br />
Actions.&nbsp; (i)&nbsp;&nbsp;On or prior to the Closing Date, such
Lender shall have<br />
received certified copies of Requests for Information or Copies
(Form UCC-<br />
11), or equivalent reports, each of a recent date listing all
effective<br />
financing statements that name the Borrower, LLC or NEG, Inc., as
debtor,<br />
together with copies of such financing
statements.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; Any document required to be filed, registered,
notarized<br />
&nbsp;&nbsp;&nbsp;&nbsp; or recorded in order to create and perfect
the security interest of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral Agent under the Security
Documents as a first priority Lien<br />
&nbsp;&nbsp;&nbsp;&nbsp; shall have been properly filed,
registered, notarized or recorded in<br />
&nbsp;&nbsp;&nbsp;&nbsp; each office in each jurisdiction in which
such filings, registrations,<br />
&nbsp;&nbsp;&nbsp;&nbsp; notarizations and recordations are
required, and any other action<br />
&nbsp;&nbsp;&nbsp;&nbsp; required in the judgment of any Lender to
perfect such security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interest as such first priority Lien shall
have been effected, and such<br />
&nbsp;&nbsp;&nbsp;&nbsp; Lender shall have received acknowledgment
copies or other evidence<br />
&nbsp;&nbsp;&nbsp;&nbsp; satisfactory to it that all necessary
filing, notarization, recording<br />
&nbsp;&nbsp;&nbsp;&nbsp; and other fees and all taxes and expenses
related to such filings,<br />
&nbsp;&nbsp;&nbsp;&nbsp; notarizations, registrations and
recordings have been paid in full.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; The Collateral Agent shall have received the
stock<br />
&nbsp;&nbsp;&nbsp;&nbsp; certificates representing 100% of the
Capital Stock of NEG, Inc. and<br />
&nbsp;&nbsp;&nbsp;&nbsp; 100% of the Capital Stock of PGE Utility
owned by the Borrower,<br />
&nbsp;&nbsp;&nbsp;&nbsp; together with related appropriate stock
powers, duly executed in blank.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; The Collateral Agent shall have received the
certificates<br />
&nbsp;&nbsp;&nbsp;&nbsp; representing 100% of the Pledged Interest
of the Borrower being pledged<br />
&nbsp;&nbsp;&nbsp;&nbsp; pursuant to the LLC Pledge Agreement,
together with related powers,<br />
&nbsp;&nbsp;&nbsp;&nbsp; duly executed in blank.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; Borrower's Certificate.&nbsp; Such Lender shall
have received an<br />
original counterpart of a certificate of an Authorized Officer of
the<br />
Borrower, dated the Closing Date, to the effect that:&nbsp;&nbsp;
(i) the<br />
representations and warranties of the Borrower contained in Section
5 hereof<br />
and the representations and warranties of the Borrower contained in
each of<br />
the other Financing Documents to which the Borrower is a party are
true and<br />
correct in all material respects (or in the event any such
representation or<br />
warranty shall be qualified by a "Material Adverse Effect" or a
materiality<br />
threshold, in all respects) on and as of the Closing Date (or, if
stated to<br />
have been made solely as of an earlier date, were true and correct
as of such<br />
earlier date), (ii) all covenants required to be performed by the
Borrower<br />
contained in any Financing Document to which it is a party prior to
the<br />
Closing Date have been performed in all material respects, (iii)
all<br />
Financing Documents are in full force and effect under the terms
and<br />
conditions set forth in such Financing Documents, and (iv) no
Default or<br />
Event of Default (after giving effect to the transactions
contemplated<br />
hereby) has occurred and is continuing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; [OMITTED].<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;&nbsp; Financial Information, etc.&nbsp;
(i)&nbsp;&nbsp;Such Lender shall have<br />
received copies of the most recent audited and unaudited (x)
consolidated<br />
financial statements from the Borrower, in form and substance
satisfactory to<br />
such Lender together with a certificate from the Chief Financial
Officer,<br />
Chief Accounting Officer, Treasurer or other Authorized Officer of
such<br />
Person, dated the Closing Date, to the effect that, to the best of
such<br />
officer's knowledge, (A) such financial statements or information
are true,<br />
complete and correct in all material respects and (B) except as
disclosed in<br />
the SEC Filings by the Borrower or NEG, Inc. since December 31,
2001 but<br />
prior to the Closing Date, there has been no material adverse
change in the<br />
condition (financial or otherwise), results of operations,
business,<br />
Properties, liabilities, management or prospects of such Person
since the<br />
date of the most recent financial statements or information of such
Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; Such Lender shall have received such other
financial,<br />
business and other information regarding any other Subsidiary of
the Borrower<br />
as such Lender shall have reasonably requested.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;&nbsp; Process Agent.&nbsp; Such Lender shall have
received a copy of a<br />
letter from Corporation Service Company accepting its appointment
as process<br />
agent in New York for the Borrower, LLC and NEG, Inc., in
substantially the<br />
form of Exhibit D hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; Legal Opinions.&nbsp; Such Lender shall have
received original<br />
counterparts of the legal opinions of counsel to the Borrower, LLC
and NEG,<br />
Inc., which legal opinions shall be dated the Closing Date,
addressed to such<br />
Lender, and in form, scope and substance satisfactory to such
Lender; such<br />
legal opinions shall cover substantially the same matters as were
covered by<br />
the legal opinions delivered on behalf of the Borrower on the
Initial Closing<br />
Date; provided, that the legal opinion with respect to
substantive<br />
consolidation shall address the substantive consolidation of the
Borrower and<br />
NEG, Inc., and PGE Utility and NEG, Inc., in each case in a
bankruptcy with<br />
respect to NEG, Inc, as well as the substantive consolidation of
the Borrower<br />
and PGE Utility.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;&nbsp; Material Adverse Change.&nbsp; Since December 31,
2001, and<br />
except as disclosed in the SEC Filings by the Borrower or NEG, Inc.
since<br />
December 31, 2001 but prior to the Closing Date, there shall not
have<br />
occurred and be continuing any Material Adverse Change of the
Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;&nbsp; Fees; Expenses.&nbsp; Lehman Commercial Paper Inc.
shall have<br />
received the fees payable to it pursuant to the Lehman Fee Letter,
and all<br />
other fees, costs and charges due and owing to any Person under the
Financing<br />
Documents on or prior to the Closing Date shall have been received
by such<br />
Person.&nbsp; The Collateral Agent shall have received the CA Fee
for payment of<br />
its services as Collateral Agent under the Financing
Documents.&nbsp; The<br />
Administrative Agent shall have received payment of all
out-of-pocket<br />
expenses payable by the Borrower to such Person (including, in its
capacity<br />
as a Lender as well as an agent) pursuant to Section 9.1
(including<br />
reasonable fees and expenses and disbursements of legal
counsel).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;&nbsp; Interest.&nbsp; On or prior to the Closing Date,
the Borrower<br />
shall have deposited in the Tranche B Interest Reserve Account
(Continued<br />
Tranche B Loan) at least $75,833,333.33, and the Collateral Agent
shall have<br />
confirmed receipt of such amount and the amount of the account
balance of<br />
such account.&nbsp; The Borrower shall have paid in cash all
interest (both cash-<br />
pay and pay-in-kind) on the Continued Tranche B Loan that accrued
(and was<br />
not previously paid in cash) to the Closing Date under the Existing
Credit<br />
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;&nbsp; [OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(n)&nbsp;&nbsp; Notice of Funding.&nbsp; The Administrative Agent
shall have<br />
received a Notice of Funding pursuant to and in compliance with
Section 2.2.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(o)&nbsp;&nbsp; Governmental&nbsp; Approvals,&nbsp;
etc.&nbsp;&nbsp;&nbsp; (i)&nbsp; All&nbsp; Governmental<br />
Approvals and consents or approvals from any third party which
under<br />
applicable Law or any agreement, contract or document are required
to be<br />
obtained by the Borrower or its Subsidiaries with respect to the
transactions<br />
contemplated by the Financing Documents prior to the Closing Date
shall have<br />
been duly obtained and shall be final, non-appealable and in full
force and<br />
effect; (ii) there shall have been no change in any applicable Law,
and no<br />
issuance of any order, writ, injunction or decree of any
Governmental<br />
Authority or arbitral tribunal, which, in either such case, could
reasonably<br />
be expected to have a Material Adverse Effect; and (iii) there
shall have<br />
been no proposed change in or modification of any applicable Law
which could<br />
reasonably be expected to be enacted and which if enacted could
reasonably be<br />
expected to have a Material Adverse Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(p)&nbsp;&nbsp; Material&nbsp; Adverse&nbsp;
Effect.&nbsp;&nbsp;&nbsp; There&nbsp; shall&nbsp; exist&nbsp;
no<br />
circumstance, event or condition which has had or could reasonably
be<br />
expected to have a Material Adverse Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(q)&nbsp;&nbsp; Litigation.&nbsp; Except as set forth on Schedule
5.6, no legal<br />
or arbitral proceedings or investigations, or any proceedings by or
before<br />
any Governmental Authority or any Person, shall be pending or
threatened<br />
against the transactions contemplated by the Financing Documents or
any<br />
document executed in connection therewith which, if adversely
determined,<br />
could reasonably be expected to have a Material Adverse Effect, and
no other<br />
legal or arbitral proceedings or investigations, or any proceedings
by or<br />
before any Governmental Authority or any Person, shall be pending
in respect<br />
of the Borrower, LLC or NEG, Inc. which, if adversely determined,
could<br />
reasonably be expected to result in a Material Adverse Change to
the<br />
Borrower. &nbsp; No legal or arbitral proceedings or
investigations, or any<br />
proceedings by or before any Governmental Authority or any Person,
shall be<br />
pending in respect of PGE Utility which could reasonably be
expected to<br />
result in a Material Adverse Change to the Borrower.&nbsp;
Notwithstanding the<br />
foregoing,&nbsp; there&nbsp; shall&nbsp; exist&nbsp; no&nbsp;
legal&nbsp; or&nbsp; arbitral&nbsp; proceedings&nbsp; or<br />
investigations, or any proceedings by or before any Governmental
Authority or<br />
any Person, pending or threatened, which, if adversely determined,
could<br />
reasonably be expected to have a material adverse effect on (i) the
legality,<br />
validity or enforceability of any material provision of any
Financing<br />
Document, (ii) the rights and remedies of the Collateral Agent,
the<br />
Administrative Agent, any Holder or any Lender under any of the
Financing<br />
Documents or (iii) the security interests provided under the
Security<br />
Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(r)&nbsp;&nbsp; Solvency Certificate.&nbsp; On or before the
Closing Date, the<br />
Borrower shall cause to be delivered to such Lender a solvency
certificate<br />
from the Chief Financial Officer or Treasurer of the Borrower in
form, scope<br />
and substance satisfactory to such Lender, dated the Closing Date,
setting<br />
forth the conclusion that, after giving effect to the
transaction<br />
contemplated by the Financing Documents and the incurrence of all
the<br />
financings contemplated herein, the Borrower (on a stand-alone
basis) and the<br />
Borrower and its Subsidiaries (on a consolidated basis) are not
insolvent and<br />
will not be rendered insolvent by the indebtedness incurred in
connection<br />
therewith, and will not be left with unreasonably small capital
with which to<br />
engage in its or their businesses and will not have incurred debts
beyond its<br />
or their ability to pay debts as they mature and become due.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(s)&nbsp;&nbsp; No Breach.&nbsp; Immediately prior to and after
giving effect to<br />
the transactions contemplated by the Financing Documents, except as
disclosed<br />
in Part E of the Disclosure Letter, there shall exist no default or
event of<br />
default under any material agreement or contract to which the
Borrower is a<br />
party which would result in a Material Adverse Change to the
Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(t)&nbsp;&nbsp; Disclosure Letter.&nbsp; Such Lender shall have
received the<br />
Disclosure Letter.<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(u)&nbsp;&nbsp; Proceedings.&nbsp; All corporate and other
proceedings, and all<br />
Charter Documents, other documents, instruments and other legal
matters in<br />
connection with the transactions contemplated hereby and the other
Financing<br />
Documents shall be satisfactory in form and substance to such
Lender and such<br />
Lender shall have received such other documents, certificates and
instruments<br />
relating to the Financing Documents or the transactions
contemplated thereby<br />
as it shall have reasonably requested, in each case, in form and
substance<br />
satisfactory to it.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; Convertible&nbsp; Notes.&nbsp;&nbsp;&nbsp;
The&nbsp; Convertible&nbsp; Notes&nbsp; and&nbsp; the<br />
Convertible Notes Indenture shall have been modified in a manner
reasonably<br />
satisfactory to the Required Waiver Lenders such that no
non-payment or<br />
acceleration of indebtedness of NEG, Inc. or any of its
Subsidiaries, and no<br />
bankruptcy event with respect to NEG, Inc. or any of its
Subsidiaries, will<br />
constitute a default or event of default under the Convertible
Notes and the<br />
Convertible Notes Indenture.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
5.&nbsp;&nbsp; REPRESENTATIONS, WARRANTIES AND AGREEMENTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In order to
induce the Administrative Agent and each Lender to<br />
enter into this Agreement, and to induce each Lender to make or
continue its<br />
Loan, the Borrower makes the following representations, warranties
and<br />
agreements as of the date hereof, all of which shall survive the
execution<br />
and delivery of this Agreement and the Notes and the making and
continuance<br />
of the Loans:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.1&nbsp;&nbsp; Standing.&nbsp; (a)&nbsp;&nbsp;Each of the Borrower
and LLC (collectively,<br />
the "Covered Parties") is a corporation or limited liability
company duly<br />
formed, validly existing and in good standing under the laws of
its<br />
jurisdiction of organization and has the requisite power and
authority to<br />
own, lease and operate its Properties and to carry on its business
as now<br />
being conducted.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Each Covered Party is duly qualified or licensed to
do<br />
business as a foreign entity and is in good standing in each
jurisdiction in<br />
which the use and ownership of its Property or the conduct of its
business<br />
requires such license or qualification, except where the failure to
be so<br />
qualified or licensed would not have a Material Adverse
Effect.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.2&nbsp;&nbsp; Requisite Authority; Etc.&nbsp; Each Covered Party
has all<br />
requisite power and authority to enter into the Financing Documents
to which<br />
it is a party.&nbsp; All necessary action on the part of each
Covered Party has<br />
been taken to authorize the execution and delivery of the Financing
Documents<br />
to which it is a party, the performance of its obligations under
such<br />
Financing Documents and the consummation of the transactions
contemplated<br />
hereby and thereby.&nbsp; Each of the Financing Documents has been
duly and<br />
validly executed and delivered by each Covered Party that is a
party thereto,<br />
and constitutes valid and binding agreements of each such Covered
Party,<br />
enforceable in accordance with their respective terms, except as
the<br />
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent<br />
transfer, reorganization, moratorium and similar laws of general
application<br />
relating to or affecting creditors' rights generally and to
general<br />
principles of equity (regardless of whether such enforceability is
considered<br />
in an proceeding in equity or at law).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.3&nbsp;&nbsp; No Conflict.&nbsp; Neither the execution and
delivery of the<br />
Financing Documents nor the consummation of the transactions
contemplated by<br />
such Financing Documents nor compliance by any Covered Party with
any of the<br />
provisions of such Financing Documents to which it is a party
will<br />
(i) violate or conflict with any provision of the charter,
certificate of<br />
formation, by-laws or limited liability company agreement or other
governing<br />
documents of such Covered Party, or any Law, judgment, order, writ,
decree or<br />
injunction applicable to such Covered Party, or (ii) except as set
forth in<br />
Part F of the Disclosure Letter, violate, or conflict with, or
result in a<br />
breach of any provision of, or constitute a default (or any event
which, with<br />
or without due notice or lapse of time, or both, would constitute a
default)<br />
under, or result in the termination of, accelerate the performance
required<br />
by, or, except for the Liens created by the Financing Documents,
result in<br />
the creation of any Lien upon any of the Properties or assets of
such Covered<br />
Party, under any contract, note, bond, mortgage, indenture, deed of
trust,<br />
license, lease, agreement, permit or other instrument or obligation
of which<br />
such Covered Party is a party or by which it or any of its assets
are bound.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.4&nbsp;&nbsp; Consents.&nbsp; (a)&nbsp;&nbsp;No permit,
application, notice, transfer,<br />
consent, approval, order, qualification, waiver from or
authorization of, or<br />
declaration, filing or registration with, any Governmental
Authority or any<br />
third party is currently required to be made or obtained by any
Covered Party<br />
or any of its Subsidiaries in connection with (i) the execution,
delivery and<br />
performance of the Financing Documents or the consummation of
the<br />
transactions contemplated by such Financing Documents, (ii) the
grant by the<br />
Borrower or LLC, or the perfection and maintenance, of the Liens
contemplated<br />
by the Financing Documents (including the first priority nature
thereof) or<br />
(iii) the exercise by any party to the Financing Documents of any
of its<br />
rights under any such Financing Document or any remedies pursuant
to the<br />
Financing Documents, except that (A) the exercise by any Holder of
its right<br />
to convert the Option to Option Shares under the Option Agreement
or the<br />
exercise of Warrants by any holder thereof, in each case, may
require filing<br />
under the HSR Act or with FERC, (B) the exercise of the foreclosure
rights<br />
with respect to the stock of NEG, Inc. or the LLC Interests which
may require<br />
filing with FERC and certain state regulatory agencies and (C) the
exercise<br />
of foreclosure rights with respect to the common stock of PGE
Utility or<br />
Newco may require filing with FERC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; No right of first refusal, preemptive right, right
of first<br />
offer or other similar rights to acquire (each a "Preferential
Right") are<br />
required to be complied with by the Borrower, LLC or NEG, Inc. in
connection<br />
with the execution, delivery or performance of the Financing
Documents or the<br />
consummation of the transactions contemplated by the Financing
Documents.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.5&nbsp;&nbsp; Compliance with Law.&nbsp; Each Covered Party has
been and on<br />
the Closing Date is in compliance in all material respects with all
Laws,<br />
Governmental Approvals, orders, writs, injunctions or decrees or
its Charter<br />
Documents applicable to or otherwise concerning such Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.6&nbsp;&nbsp; Litigation Claims.&nbsp; Except as set forth on
Schedule 5.6,<br />
there are no legal or arbitral proceedings or investigations, or
any<br />
proceedings by or before any Governmental Authority or any Person,
pending or<br />
threatened against the transactions contemplated by the Financing
Documents<br />
or any document executed in connection therewith which, if
adversely<br />
determined, could reasonably be expected to have a Material Adverse
Effect,<br />
and there are no other legal or arbitral proceedings or
investigations, or<br />
any proceedings by or before any Governmental Authority or any
Person pending<br />
against the Borrower, LLC or NEG, Inc. which, if adversely
determined, could<br />
reasonably be expected to result in a Material Adverse Change to
the<br />
Borrower.&nbsp; There are no legal or arbitral proceedings or
investigations, or<br />
any proceedings by or before any Governmental Authority or any
Person pending<br />
against PGE Utility or its Subsidiaries which could reasonably be
expected to<br />
result in a Material Adverse Change to the Borrower.&nbsp;
Notwithstanding the<br />
foregoing, there are no legal or arbitral proceedings or
investigations, or<br />
any proceedings by or before any Governmental Authority or any
Person,<br />
pending or threatened, which, if adversely determined, could
reasonably be<br />
expected to have a material adverse effect on (i) the legality,
validity or<br />
enforceability of any material provision of any Financing Document,
(ii) the<br />
rights and remedies of the Collateral Agent, the Administrative
Agent, any<br />
Holder or any Lender under any of the Financing Documents or (iii)
the<br />
security interests provided under the Security Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.7&nbsp;&nbsp; Contracts and Commitments.&nbsp;
(a)&nbsp;&nbsp;Schedule 5.7 reflects a<br />
complete and accurate list of all material contracts, agreements or
letters<br />
of intent or written understandings (including all amendments and
supplements<br />
thereto)&nbsp; entered&nbsp; into&nbsp; by&nbsp; the&nbsp;
Borrower&nbsp; (collectively,&nbsp; the&nbsp; "Covered<br />
Contracts").<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Except as otherwise set forth on Part E of the
Disclosure<br />
Letter, (i) each of the Covered Contracts is a valid and binding
obligation<br />
of the Borrower and enforceable by the Borrower in accordance with
its terms,<br />
except&nbsp; as&nbsp; enforcement&nbsp; may&nbsp; be&nbsp;
limited&nbsp; by&nbsp; bankruptcy,&nbsp; insolvency,<br />
reorganization or similar laws or equitable principles relating to
creditors'<br />
rights generally; (ii) the Borrower is not in default or alleged to
be in<br />
default under any Covered Contract, and no other asserted or, to
the best<br />
knowledge of the Borrower, unasserted claim or dispute under any
Covered<br />
Contract exists; and (iv) to the best knowledge of the Borrower,
there exists<br />
no event, condition or occurrence that, after notice or lapse of
time, or<br />
both, would constitute such a default, claim or dispute by the
Borrower or,<br />
to the best knowledge of the Borrower, any other party to any such
Covered<br />
Contract.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.8&nbsp;&nbsp; Liens.&nbsp; Except as set forth on Schedule 5.8,
none of the<br />
Properties of the Borrower or LLC are subject to any Lien, other
than the<br />
Liens created by this Agreement and the Security Documents.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.9&nbsp;&nbsp; Insurance.&nbsp; All insurance policies and
fidelity bonds<br />
relating to the Borrower and its Properties, including summary
descriptions<br />
and the termination dates thereof, in force as of the date of this
Agreement<br />
are set forth on Schedule 5.9.&nbsp; The insurance coverage
provided by such<br />
policies will not terminate or lapse as a result of the
transactions<br />
contemplated by this Agreement or the other Financing
Documents.&nbsp; Except as<br />
set forth on Schedule 5.9, all such insurance policies and fidelity
bonds are<br />
in the name of the Borrower.&nbsp; None of the Borrower or, to the
best knowledge<br />
of the Borrower, any other party to any such policy or bond is in
breach,<br />
violation or default (including with respect to the payment of
premiums or<br />
the giving of notices), and, to the best knowledge of the Borrower,
no event<br />
has occurred that, with notice or the lapse of time or both, could
constitute<br />
such a breach, violation or default by the Borrower or any other
party, or<br />
permit termination, modification or acceleration, under such policy
or bond,<br />
except where any such breach, violation, default, termination,
modification<br />
or acceleration could not reasonably be expected to have a Material
Adverse<br />
Effect.<br />
<br />
&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.10&nbsp;&nbsp; Capitalization and Ownership.&nbsp;
(a)&nbsp;&nbsp;As of the Closing<br />
Date, the Borrower and Energy NEG Corp. are the sole members of
LLC, with the<br />
Borrower owning all of the Class A membership interests of the LLC,
which<br />
entitle the Borrower to 100% of the economic interest in LLC, and
Energy NEG<br />
Corp. owning all of the Class B membership interests of LLC, which
entitle<br />
Energy NEG Corp. to vote solely on certain bankruptcy matters of
LLC as<br />
provided for in the LLC Agreement.&nbsp; The Borrower is (and at
all times prior<br />
to the Closing Date from and after January 12, 2001, was) the owner
of 100%<br />
of the Class A membership interests in LLC and is (and at all times
prior to<br />
the Closing Date from and after January 12, 2001, was) the indirect
owner<br />
(through the Limited Liability Company Interests) of 100% of NEG,
Inc. and<br />
the NEG Subsidiaries.&nbsp; Set forth on Schedule 5.10(a) is a
schedule setting<br />
forth the outstanding Capital Stock of PGE Utility and the owners
thereof as<br />
of the Closing Date.&nbsp; The Capital Stock of PGE Utility owned
by the Borrower<br />
is free and clear of all Liens and adverse claims, other than the
Liens in<br />
favor of the Collateral Agent created by the Security
Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; LLC is (and at all times prior to the Closing Date
from and<br />
after January 12, 2001, was) the sole direct owner of all of the
outstanding<br />
Capital Stock of NEG, Inc., free and clear of all Liens and adverse
claims,<br />
other than the Liens in favor of the Collateral Agent created by
the Security<br />
Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; [Reserved]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; (i)&nbsp;&nbsp;All of the Limited Liability Company
Interests have<br />
been duly authorized and, at the Closing Date, are and will be
validly<br />
issued, free and clear of all Liens and adverse claims, other than
the Liens<br />
in favor of the Collateral Agent created by the Security
Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; All shares of the Capital Stock of NEG, Inc. and
PGE<br />
Utility have been duly authorized and, at the Closing Date, are and
will be<br />
validly issued and fully paid and nonassessable and are owned by
LLC or the<br />
Borrower, respectively, free and clear of all Liens and adverse
claims, other<br />
than the Liens in favor of the Collateral Agent created by the
Security<br />
Documents.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; Except as set forth in Schedule 5.10(e) and as
provided<br />
under the Option Agreement, no Person other than an employee or
former<br />
employee of a member of the NEG Group owns (i) any outstanding
option,<br />
warrant, purchase right, subscription right, conversion right,
exchange right<br />
or other contract, commitment, arrangement or understanding
relating to the<br />
issuance by or purchase from the Borrower of its LLC Interests or
LLC or NEG,<br />
Inc. of its Equity Interests, or (ii) any outstanding stock
appreciation,<br />
phantom stock, profit participation or similar rights with respect
to LLC or<br />
NEG, Inc., and there are no voting trusts, proxies or other
agreements or<br />
understandings with respect to the voting of LLC Interests or
Equity<br />
Interests to which the Borrower, LLC or NEG, Inc. is party.&nbsp;
Except as set<br />
forth in Schedule 5.10(e), no Person owns (i) any outstanding
option,<br />
warrant, purchase right, subscription right, conversion right,
exchange right<br />
or other contract, commitment, arrangement or understanding
relating to the<br />
issuance by or purchase from the Borrower or PGE Utility of Capital
Stock of<br />
PGE Utility, or (ii) any outstanding stock appreciation, phantom
stock,<br />
profit participation or similar rights with respect to PGE Utility,
and there<br />
are no voting trusts, proxies or other agreements or understandings
with<br />
respect to the voting of the common stock of PGE Utility to which
the<br />
Borrower or PGE Utility is party.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; Schedule 5.10(f) sets forth for each of the
Borrower, LLC,<br />
NEG, Inc. and PGE Utility a complete and accurate listing of (i)
its name and<br />
jurisdiction of organization, (ii) its form of organization and
(iii) in the<br />
case of LLC, NEG, Inc. and PGE Utility, the percentage (and,
where<br />
applicable, the amount) of capital stock, membership interests or
other<br />
equity interests ("Equity Interests") held directly or indirectly
by the<br />
Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.11&nbsp;&nbsp; Financial Statements; Absence of Certain Changes;
Cash<br />
Flow Forecasts.&nbsp; (a)&nbsp;&nbsp;Prior to the execution of this
Agreement, the Borrower<br />
has delivered to the Administrative Agent and each Lender (i) the
audited<br />
consolidated financial statements of the Borrower as at December
31, 2001 and<br />
(ii) the unaudited consolidated financial statements of the
Borrower as at<br />
June 30, 2002, each of which has been certified by the Chief
Financial<br />
Officer of the Borrower.&nbsp; The audited financial statements
(the "Audited<br />
Financial Statements") described in this Section 5.11(a) (complete
with any<br />
appropriate footnote disclosures) present fairly the financial
position of<br />
the Borrower as at December 31, 2001, and were prepared in
accordance with<br />
U.S. GAAP, consistently applied.&nbsp; The unaudited financial
statements (the<br />
"Unaudited Financial Statements") described in this Section 5.11(a)
present<br />
fairly the financial position of the Borrower as at such dates and
were<br />
prepared on a management basis without accompanying notes.&nbsp;
Such Audited<br />
Financial Statements and Unaudited Financial Statements have been
prepared<br />
from the books of account and financial records of the
Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Since December 31, 2001 and except as disclosed in
the SEC<br />
Filings by the Borrower or NEG, Inc. since December 31, 2001 but
prior to the<br />
Closing Date, the Borrower has conducted its business only in the
ordinary<br />
course of business, and there has not been (i) any event or
development that<br />
could, individually or in the aggregate, reasonably be expected to
have a<br />
Material Adverse Effect or (ii) any damage, destruction or loss,
whether or<br />
not covered by insurance, that could, individually or in the
aggregate,<br />
reasonably be expected to have a Material Adverse Effect.&nbsp;
Except as set<br />
forth in the Audited Financial Statements or otherwise disclosed in
writing<br />
to each Lender in the Disclosure Letter or incurred in the ordinary
course of<br />
<br />
business,&nbsp; the&nbsp; Borrower&nbsp; has&nbsp; no&nbsp;
outstanding&nbsp; claims,&nbsp; liabilities&nbsp; or<br />
indebtedness, contingent or otherwise.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The cash flow forecasts, dated October 17, 2002
and<br />
denominated by the Borrower as "Case 1 and Case 2 Cash Forecasts"
have been<br />
delivered to the Lenders.&nbsp; Such forecasts were prepared by the
Borrower in<br />
good faith based upon assumptions (which are disclosed in such
forecasts)<br />
believed by the Borrower to be reasonable, and on the date hereof
the<br />
Borrower believes that such forecasts and the assumptions upon
which they<br />
were based continue to be reasonable on the date hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.12&nbsp;&nbsp; Taxes.&nbsp; (a)&nbsp;&nbsp;Each of the Borrower
and its Subsidiaries has<br />
filed or caused to be filed with the appropriate taxing authorities
all<br />
material federal, state and local tax returns ("Returns") which are
required<br />
to be filed by or with respect to each of the Borrower, its
Subsidiaries, or<br />
any assets thereof.&nbsp; The Returns accurately reflect (or will
accurately<br />
reflect) all liabilities for Taxes of the Borrower and each such
Subsidiary<br />
for the periods covered thereby in all material respects.&nbsp; All
material Taxes<br />
due by or with respect to the Borrower and each such Subsidiary, or
any<br />
assets thereof, whether or not shown on any Return, have been or
will be<br />
timely paid in full on or prior to the Closing Date or accrued and
provided<br />
for on the books and records of each such Person, as applicable,
in<br />
accordance with U.S. GAAP.&nbsp; There is no dispute or claim
concerning any<br />
liability for Taxes of the Borrower and each of its Subsidiaries,
or any<br />
assets thereof that has been claimed or raised by any Governmental
Authority,<br />
except for disputes or claims for Taxes that have been provided for
on the<br />
books and records of each such Person, as applicable, in accordance
with U.S.<br />
GAAP.&nbsp; No Return of the Borrower, its Subsidiaries, or the
affiliated group<br />
of the Borrower is currently, or has been, the subject of an audit
by any<br />
taxing authority and no notice of such an audit has been received,
except for<br />
audits with respect to Taxes that have been provided for on the
books and<br />
records of the Borrower and its Subsidiaries, as applicable, in
accordance<br />
with U.S. GAAP.&nbsp; None of the Borrower or any of its
Subsidiaries have waived<br />
any statute of limitations in respect of Taxes or agreed to any
extension of<br />
time with respect to a Tax assessment or deficiency, except with
respect to<br />
Taxes that have been provided for on the books and records of the
Borrower<br />
and its Subsidiaries, as applicable, in accordance with U.S.
GAAP.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; All material Taxes which the Borrower or any of
its<br />
Subsidiaries is (or was) required by Law to withhold or collect
with respect<br />
to any payments made in connection with its Property have been duly
withheld<br />
or collected, and have been timely paid over to the appropriate
authorities<br />
to the extent due and payable.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.13&nbsp;&nbsp; Disclosure.&nbsp; All documents, reports or other
written<br />
information pertaining to the Borrower or its Affiliates that have
been<br />
furnished to the Lenders by or on behalf of the Borrower, taken as
a whole,<br />
are true and correct in all material respects and do not contain
any untrue<br />
statement of a material fact or omit to state any material fact
necessary to<br />
make the statements contained therein not misleading.&nbsp; There
is no fact,<br />
event or circumstance that has not been disclosed to the Lenders in
writing,<br />
the existence of which could reasonably be expected to have a
Material<br />
Adverse Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.14&nbsp;&nbsp; Environmental Matters.&nbsp; Except as set forth
in Schedule<br />
5.14 or as disclosed in the SEC Filings by the Borrower or NEG,
Inc. since<br />
<br />
December 31, 2001 but prior to the Closing Date, (a) each of the
Borrower and<br />
PGE Utility is in compliance in all material respects with all
applicable<br />
Environmental Laws, (b) there is no Environmental Claim outstanding
or<br />
pending against the Borrower or PGE Utility or, to the best
knowledge of the<br />
Borrower, threatened against the Borrower or PGE Utility, which,
individually<br />
or in the aggregate, could reasonably be expected to have a
Material Adverse<br />
Effect, and (c) to the best knowledge of the Borrower, neither the
Borrower<br />
nor PGE Utility has made any past or present releases, emissions,
discharges<br />
or disposals of any Hazardous Material in violation of any
Environmental Laws<br />
or that would give rise to any liability which, individually or in
the<br />
aggregate, could reasonably be expected to have a Material Adverse
Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.15&nbsp;&nbsp; Brokers' or Finders' Fees.&nbsp; Except as set
forth in<br />
Schedule 5.15 (as to which the Borrower is solely responsible for
the payment<br />
of any such investment banker's, brokers' or finders' fee or other
commission<br />
or similar fee), no agent, broker, investment banker, Person or
firm acting<br />
on behalf of the Borrower or any of its Affiliates or under the
authority of<br />
the Borrower or any of its Affiliates is or will be entitled to any
brokers'<br />
or finders' fee or any other commission or similar fee directly or
indirectly<br />
from any of the parties hereto in connection with any of the
transactions<br />
contemplated hereby.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.16&nbsp;&nbsp; Certain Regulatory Matters.&nbsp;
(a)&nbsp;&nbsp;Neither the Borrower nor<br />
any Subsidiary of the Borrower is a "registered holding company" or
a<br />
"subsidiary company" or an "affiliate" of a "registered holding
company" or a<br />
company which is required to be registered as a "holding company"
as such<br />
terms are defined under PUHCA.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Neither the Borrower nor LLC directly owns any
assets<br />
subject to the jurisdiction of FERC pursuant to the FPA.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Borrower and each of its Subsidiaries is in
material<br />
compliance with all orders of the CPUC applicable to it, including
without<br />
limitation, the conditions set forth in the orders setting forth
the<br />
conditions for the creation of the Borrower and any subsequent
CPUC<br />
proceedings, Pacific Gas and Electric Company, 69 CPUC2nd 167 (Nov.
6, 1996),<br />
Pacific Gas and Electric Company, 194 PUR4th 1 (April 22, 1999),
and all<br />
other CPUC orders purporting to apply to the Borrower or its
Subsidiaries<br />
regardless of whether the CPUC had jurisdiction.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;
&nbsp; Each of the Borrower and PGE Utility is in material<br />
compliance with the requirements of Utility Regulation applicable
to it.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; Neither the Borrower nor PGE Utility is subject to
any<br />
statute or regulation which would prohibit or require approval of
the<br />
transactions contemplated under this Agreement and the other
Financing<br />
Documents, including any Utility Regulation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.17&nbsp;&nbsp; Transactions With Affiliates.&nbsp; Except as set
forth on<br />
Schedule 5.17, neither the Borrower nor any of its Subsidiaries is
a party to<br />
any material contract (i) with PGE Utility on the one hand and the
Borrower<br />
or any member of the NEG Group on the other, or (ii) with the
Borrower on the<br />
one hand and any member of the NEG Group on the other.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.18&nbsp;&nbsp; Use of Proceeds.&nbsp; The proceeds of the
Existing Tranche A<br />
Loan and the Existing Tranche B Loan were used for the purposes set
forth in<br />
the Existing Credit Agreement.&nbsp; The amount funded in respect
of the New<br />
Tranche B Commitments on the Closing Date shall be transferred by
the<br />
Administrative Agent to the Tranche B Escrow Account; and upon the
withdrawal<br />
on the Escrow Release Date of amounts in the Tranche B Escrow
Account, a<br />
Tranche B Loan shall be deemed to be made on the Escrow Release
Date by each<br />
New Tranche B Lender in an amount equal to the amount funded by
such New<br />
Tranche B Lender on the Closing Date, and the proceeds thereof will
be used<br />
on the Escrow Release Date to fund the Tranche B Interest Reserve
Account<br />
(New Tranche B Loan) in the amount specified in clause (b) of
Section 7.14(a)<br />
and, thereafter, for general corporate purposes of the Borrower and
its<br />
Subsidiaries, and in no event shall any of such proceeds be used to
make<br />
Investments in LLC or NEG, Inc. or any of their Subsidiaries or,
except to<br />
the extent permitted by clauses (v) and (vi) of Section 7.5, in PGE
Utility.&nbsp;<br />
 The Borrower is not engaged principally, or as one of its
important<br />
activities, in the business of extending credit for the purpose,
whether<br />
immediate, incidental or ultimate, of buying or carrying Margin
Stock and no<br />
part of the proceeds of the Loans will be used to purchase or carry
any<br />
Margin Stock.&nbsp; Neither the making of the Loans nor the use of
the proceeds<br />
thereof will violate or be inconsistent with the provisions of
Regulation U<br />
or Regulation X.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.19&nbsp;&nbsp; Compliance with ERISA.&nbsp;
(a)&nbsp;&nbsp;Schedule 5.19 sets forth each<br />
Plan; each Plan (and each related trust, insurance contract or
fund) is in<br />
substantial compliance with its terms and with all applicable laws,
including<br />
without limitation ERISA and the Code; each Plan (and each related
trust, if<br />
any) which is intended to be qualified under Section 401(a) of the
Code has<br />
received (or, in the case of the Retirement Savings Plan for
Union-<br />
Represented Employees, applied for) a determination letter from the
Internal<br />
Revenue Service to the effect that it meets the requirements of
Sections<br />
401(a) and 501(a) of the Code; no Reportable Event (other than
the<br />
commencement of the bankruptcy proceeding in 2001 by PGE Utility)
has<br />
occurred; no Plan which is a multiemployer plan (as defined in
Section<br />
4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has
an<br />
Unfunded Current Liability; no Plan which is subject to Section 412
of the<br />
Code or Section 302 of ERISA has an accumulated funding deficiency,
within<br />
the meaning of such sections of the Code or ERISA, or has applied
for or<br />
received a waiver of an accumulated funding deficiency or an
extension of any<br />
amortization period, within the meaning of Section 412 of the Code
or Section<br />
303 or 304 of ERISA; all contributions required to be made with
respect to a<br />
Plan have been timely made; neither the Borrower nor any Subsidiary
of the<br />
Borrower nor any ERISA Affiliate has incurred any material
liability<br />
(including any indirect, contingent or secondary liability) to or
on account<br />
of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063,
4064,<br />
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or
4975 of the<br />
Code or expects to incur any such liability under any of the
foregoing<br />
sections with respect to any Plan; no condition exists which
presents a<br />
material risk to the Borrower or any Subsidiary of the Borrower or
any ERISA<br />
Affiliate of incurring a liability to or on account of a Plan
pursuant to the<br />
foregoing provisions of ERISA and the Code; no proceedings have
been<br />
instituted to terminate or appoint a trustee to administer any Plan
which is<br />
subject to Title IV of ERISA; no action, suit, proceeding, hearing,
audit or<br />
investigation with respect to the administration, operation or the
investment<br />
of assets of any Plan (other than routine claims for benefits) is
pending,<br />
expected or threatened (other than an ongoing Department of
Labor<br />
investigation of the impact of insurance company demutualization on
benefit<br />
plans of the Borrower and its Subsidiaries); using actuarial
assumptions and<br />
computation methods consistent with Part 1 of subtitle E of Title
IV of<br />
ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its<br />
ERISA Affiliates to all Plans which are multiemployer plans (as
defined in<br />
Section 4001(a)(3) of ERISA) in the event of a complete withdrawal
therefrom,<br />
as of the close of the most recent fiscal year of each such Plan
ended prior<br />
to the date of the most recent Credit Event, would not exceed
$100,000; each<br />
group health plan (as defined in Section 607(1) of ERISA or
Section<br />
4980B(g)(2) of the Code) which covers or has covered employees or
former<br />
employees of the Borrower, any Subsidiary of the Borrower, or any
ERISA<br />
Affiliate has at all times been operated in compliance with the
provisions of<br />
Part 6 of subtitle B of Title I of ERISA and Section 4980B of the
Code; no<br />
lien imposed under the Code or ERISA on the assets of the Borrower
or any<br />
Subsidiary of the Borrower or any ERISA Affiliate exists or is
likely to<br />
arise on account of any Plan; and the Borrower and its Subsidiaries
may cease<br />
contributions to or terminate any employee benefit plan maintained
by any of<br />
them without incurring any material liability, except as such
cessation or<br />
termination may be limited by the terms of a collective bargaining
agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Each&nbsp; Foreign&nbsp; Pension&nbsp; Plan&nbsp;
has&nbsp; been&nbsp; maintained&nbsp; in<br />
substantial compliance with its terms and with the requirements of
any and<br />
all applicable laws, statutes, rules, regulations and orders and
has been<br />
maintained, where required, in good standing with applicable
regulatory<br />
authorities.&nbsp; All contributions required to be made with
respect to a Foreign<br />
Pension Plan have been timely made.&nbsp; Neither the Borrower nor
any of its<br />
Subsidiaries has incurred any obligation in connection with the
termination<br />
of, or withdrawal from, any Foreign Pension Plan.&nbsp; The present
value of the<br />
accrued benefit liabilities (whether or not vested) under each
Foreign<br />
Pension Plan, determined as of the end of the Borrower's most
recently ended<br />
fiscal year on the basis of actuarial assumptions, each of which
is<br />
reasonable, did not exceed the current value of the assets of such
Foreign<br />
Pension Plan allocable to such benefit liabilities.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.20&nbsp;&nbsp; Investment Company&nbsp; Act.&nbsp;&nbsp; The
Borrower is not an<br />
"investment company," or an "affiliated person" of, or "promoter"
or<br />
"principal underwriter" for, an "investment company," as such terms
are<br />
defined in the Investment Company Act of 1940, as amended.&nbsp;
Neither the<br />
making of any Loan, nor the application of the proceeds or
repayment thereof<br />
by the Borrower, nor the consummation of the other transactions
contemplated<br />
hereby will violate any provisions of such Act or any rule,
regulation or<br />
order of the SEC thereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.21&nbsp;&nbsp; Regulation.&nbsp; Solely by virtue of the
execution, delivery<br />
and performance of, or the consummation of the transactions
contemplated by<br />
the Financing Documents (including, without limitation, the
assignment of or<br />
transfer into any trust, or any realization or foreclosure upon
(pursuant to<br />
the provisions of the applicable Security Agreement), any of the
LLC<br />
Interests pledged under the LLC Pledge Agreement or any of the
collateral<br />
pledged under the Stock Pledge Agreement or the Utility Base
Pledge<br />
Agreement, or the exercise of any right under the Option Agreement
or the<br />
Warrant Agreement), neither any Holder nor any Lender shall be or
become<br />
subject to regulation (i) as a "holding company," or an "affiliate"
of a<br />
"holding company" or a "subsidiary company" of a "holding company,"
within<br />
the meaning of PUHCA, provided that, if, pursuant to the exercise
of the<br />
remedies contained in Section 7 of the Utility Base Pledge
Agreements the<br />
voting securities of Newco or PGE Utility are transferred into the
Collateral<br />
Agent's name or the name of its nominee or nominees, or if,&nbsp;
whether or not<br />
so transferred, the Collateral Agent shall acquire the right to
vote or take<br />
the other actions referenced in Section 7(iii) of the Utility Base
Pledge<br />
Agreements with respect to such Collateral, then, (x) the
Collateral Agent<br />
and any Lender, to the extent an exemption from registration as a
holding<br />
company under PUHCA is not otherwise available, may be required to
register<br />
as a holding company under PUHCA, and (y) prior to exercising any
such remedy<br />
the Collateral Agent and any Lender may be required to obtain
approval<br />
pursuant to Section 9(a)(2) of PUHCA to the extent that, in the
case of<br />
exercise of such remedies with respect to securities of PGE
Utility, such<br />
parties, individually or collectively, would directly or indirectly
own,<br />
control or hold with power to vote 5% or more of the voting
securities of PGE<br />
Utility and any other "public-utility company" or "holding
company", as<br />
defined under PUHCA, or to the extent that, in the case of the
exercise of<br />
such remedies with respect to the securities of Newco, such
parties,<br />
individually or collectively, would&nbsp; directly or indirectly,
own, control or<br />
hold with power to vote 5% or more of the voting securities of
Newco;<br />
provided, further, that&nbsp; subject to compliance with its terms,
Rule 3<br />
promulgated under PUHCA provides an exemption from the requirements
set forth<br />
in subclauses (x) and (y) above, to&nbsp; companies primarily
engaged in business<br />
as a commercial bank or trust company, or both, and subject to
regulation or<br />
examination under the laws of the United States or any State, or
any<br />
receiver, conservator, or liquidating agent thereof in his capacity
as such;<br />
(ii) under the FPA, provided that any person acquiring the voting
securities<br />
of NEG, Inc., PGE Utility or Newco or the LLC Interests may require
prior<br />
approval from FERC, or (iii) as a "public utility" or "public
service<br />
corporation" or the equivalent under the applicable Law of any
Governmental<br />
Authority, except with respect to the exercise of foreclosure
rights with<br />
respect to the stock of NEG, Inc. or PGE Utility or the LLC
Interests, which<br />
may require filing with certain state regulatory agencies.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.22&nbsp;&nbsp; Security Documents.&nbsp; The provisions of the
Security<br />
Documents are effective to create, in favor of the Collateral
Agent, for the<br />
benefit of the Lenders, legal, valid and enforceable Liens on or in
all of<br />
the collateral intended to be covered thereby, and all necessary
recordings<br />
and filings have been made in all necessary public offices and all
other<br />
necessary and appropriate action has been taken so that the Liens
created by<br />
each Security Document constitute perfected Liens on or in the
collateral<br />
intended to be covered thereby, prior and superior to all other
Liens, and<br />
all necessary consents to the creation, effectiveness, priority
and<br />
perfection of each such Lien have been obtained.&nbsp; No mortgage
or financing<br />
statement or other instrument or recordation covering all or any
part of the<br />
collateral is on file in any recording office, except such as may
have been<br />
filed in favor of the Collateral Agent, for the benefit of the
Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.23&nbsp;&nbsp; [Reserved].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.24&nbsp;&nbsp; [Reserved].&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.25&nbsp;&nbsp; Intellectual Property.&nbsp; The Borrower owns or
has the right<br />
to use all patents, trademarks, permits, service marks, trade
names,<br />
copyrights, franchises, formulas, licenses and other rights with
respect<br />
thereto, and has obtained assignment of all licenses and other
rights of<br />
whatsoever nature necessary for the operation of its business as
currently<br />
contemplated without any conflict with the rights of others.&nbsp;
To the best<br />
knowledge of the Borrower, no product, process, method, substance,
part or<br />
other material sold or employed or presently contemplated to be
sold by or<br />
employed by the Borrower in connection with its business infringes
or will<br />
<br />
<br />
infringe any patent, trademark, permit, service mark, trade name,
copyright,<br />
franchise, formula, license or other intellectual property
right.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.26&nbsp;&nbsp; No Default.&nbsp; No Default or Event of Default
has occurred<br />
and is continuing.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.27&nbsp;&nbsp; Single-Purpose Entity.&nbsp; LLC has not engaged
in any<br />
business other than the ownership of 100% of the capital stock of
NEG, Inc.&nbsp;<br />
 LLC has established offices at 7500 Old Georgetown Road, Bethesda,
MD 20814-<br />
6161, and does not have a place of business at any other
location.&nbsp; LLC has<br />
no Indebtedness and no significant assets other than the common
stock of NEG,<br />
Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.28&nbsp;&nbsp; Trust Indenture Act.&nbsp; The offering, issuance,
sale and<br />
delivery of the Notes under the circumstances contemplated by this
Agreement<br />
and the other Financing Documents will not require this Agreement
to be<br />
qualified under the Trust Indenture Act of 1939, as amended.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.29&nbsp;&nbsp; Existing Indebtedness.&nbsp; Part A of the
Disclosure Letter<br />
sets forth a true and complete list of all agreements with respect
to the<br />
Indebtedness of the Borrower and the amount thereof existing on the
Closing<br />
Date which, subject to Section 7.4, is to remain outstanding after
the<br />
Closing Date (the "Existing Indebtedness Agreements").&nbsp; Except
as set forth<br />
in Part A of the Disclosure Letter, none of the obligations of the
Borrower<br />
under the Existing Indebtedness Agreements are due and payable as
of the<br />
Closing Date, and there has been no demand on the Borrower, and the
Borrower<br />
is not currently liable, for any payment under such Existing
Indebtedness<br />
Agreements.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.30&nbsp;&nbsp; No Event of Default.&nbsp; No event or
circumstance has<br />
occurred and is continuing that would constitute an Event of
Default under<br />
this Agreement if this Agreement had been in effect since the
Initial Closing<br />
Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.31&nbsp;&nbsp; Certain Obligations.&nbsp; (a)&nbsp;&nbsp;Schedule
5.31(a) lists each<br />
item of Indebtedness or other obligation (whether direct or
contingent, or<br />
matured or unmatured), in an amount of $5,000,000 or greater, owing
by the<br />
Borrower to, or on account of, any of its Subsidiaries as of August
31, 2002.&nbsp;<br />
 The amount of such Indebtedness or other obligations not listed on
Schedule<br />
5.31(a) as of August 31, 2002 does not exceed $10,000,000 in the
aggregate.&nbsp;<br />
 Although the Borrower has not yet officially finalized its
accounting<br />
results, based on the Borrower's knowledge, as of the Effective
Date there<br />
has been no material change in the amount of Indebtedness or
other<br />
obligations owing by the Borrower to, or on account of, its
Subsidiaries.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Except for Indebtedness or other obligations
described in<br />
Section 5.31(c), Schedule 5.31(b) lists each item of Indebtedness
or other<br />
obligation (whether direct or indirect, or matured or unmatured),
in an<br />
amount of $5,000,000 or greater, owing to the Borrower by any
Subsidiary of<br />
the Borrower as of August 31, 2002; each such item of Indebtedness
or other<br />
obligation constitutes a legal, valid and binding claim of the
Borrower<br />
against the obligor thereof, enforceable in accordance with its
terms, except<br />
as the enforceability thereof may be limited by bankruptcy,
insolvency,<br />
fraudulent transfer, reorganization, moratorium and similar laws of
general<br />
application relating to or affecting creditors' rights generally
and to<br />
general principles of equity (regardless of whether such
enforceability is<br />
considered in a proceeding in equity or at law).&nbsp; The amount
of such<br />
Indebtedness or other obligations not listed on Schedule 5.31(b) as
of August<br />
31, 2002 does not exceed $10,000,000 in the aggregate.&nbsp;
Although the Borrower<br />
has not yet officially finalized its accounting results, based on
the<br />
Borrower's knowledge, as of the Effective Date there has been no
material<br />
change in the amount of Indebtedness or other obligations owing to
the<br />
Borrower by its Subsidiaries.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Borrower has filed one or more proofs of claim
in an<br />
aggregate amount of $175,605,965.02 in the PGE Utility Bankruptcy
Proceeding;<br />
such claims are general, unsecured, unsubordinated claims, and
neither PGE<br />
Utility nor any other Person having standing to object to such
claim has<br />
filed any objection thereto in the PGE Utility Bankruptcy
Proceeding; and the<br />
Borrower knows of no basis upon which such claims could be validly
objected<br />
to.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.32&nbsp;&nbsp; Solvency.&nbsp; After giving effect to the
borrowing of the New<br />
Tranche B Loan on the Closing Date, the Borrower will be
Solvent.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
6.&nbsp;&nbsp; AFFIRMATIVE COVENANTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Borrower
hereby covenants and agrees that on and after the<br />
Closing Date and until the Loans and the Notes together with
interest, fees<br />
and all other Obligations incurred hereunder and thereunder are
paid in full<br />
(other than any indemnity, not then due and payable, which by its
terms shall<br />
survive such termination and payment) (it being agreed that, to the
extent<br />
any of the covenants set forth in this Section 6 require the
Borrower to<br />
cause LLC or any of its Subsidiaries to take or refrain from taking
any<br />
action, such covenant shall cease to apply to any such Person when
such<br />
Person is no longer a Subsidiary of the Borrower (it being further
understood<br />
that this provision shall not in any way constitute a waiver of any
breach of<br />
this Agreement)):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.1&nbsp;&nbsp; Information Covenants.&nbsp; The Borrower will
furnish to the<br />
Administrative Agent:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;&nbsp; Quarterly Financial Statements.&nbsp; Within 60
days after the<br />
close of the first three quarterly accounting periods in each
fiscal year of<br />
the Borrower, the consolidated balance sheet of the Borrower and
its<br />
consolidated subsidiaries, as at the end of such quarterly
accounting period<br />
and the related consolidated statements of income and cash flows,
in each<br />
case for such quarterly accounting period and for the elapsed
portion of the<br />
fiscal year ended with the last day of such quarterly accounting
period, and<br />
in each case, setting forth comparative figures for the related
periods in<br />
the prior fiscal year, all of which shall be certified by the Chief
Financial<br />
Officer, Chief Accounting Officer or Treasurer of the Borrower,
subject to<br />
normal year-end audit adjustments.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Annual Financial Statements.&nbsp; Within 120 days
after the<br />
close of each fiscal year of the Borrower, the consolidated balance
sheets of<br />
the Borrower and its consolidated subsidiaries and the related
statements of<br />
income and retained earnings and of cash flows for such fiscal
year, setting<br />
forth comparative figures for the preceding fiscal year and in the
case of<br />
all such balance sheets certified by Deloitte &amp; Touche LLP, or
such other<br />
independent certified public accountants of recognized national
standing<br />
reasonably acceptable to the Lenders, together with a report of
such<br />
accounting firm stating that in the course of its regular audit of
the<br />
financial statements of the Borrower and its consolidated
subsidiaries, which<br />
audit was conducted in accordance with generally accepted auditing
standards,<br />
such accounting firm obtained no knowledge of any Default or Event
of Default<br />
which has occurred and is continuing or, if in the opinion of such
accounting<br />
firm such a Default or Event of Default has occurred and is
continuing, a<br />
statement as to the nature thereof, and (iii) management's
discussion and<br />
analysis of the Borrower of the important operational and
financial<br />
developments during such fiscal year.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Management Letters.&nbsp; Promptly after the
receipt thereof by<br />
the Borrower, a copy of any "management letter" received by the
Borrower from<br />
its certified public accountants and the management's responses
thereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; Officer's Certificates.&nbsp; At the time of the
delivery of the<br />
financial statements provided for in Sections 6.1(a) and (b), a
certificate<br />
of the Chairman of the Board, the President or Chief Financial
Officer or<br />
Treasurer of the Borrower to the effect that, to the best of such
officer's<br />
knowledge, no Default or Event of Default has occurred and is
continuing or,<br />
if any Default or Event of Default has occurred and is continuing,
specifying<br />
the nature and extent thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; Reports and Other Information from NEG, Inc.&nbsp;
Promptly<br />
after delivery thereof to any of the lenders under any material
credit<br />
facility to which NEG, Inc. is a party, copies of any financial
statements,<br />
reports or other information delivered by NEG, Inc. to such
lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; Notice of Default or Litigation, etc.&nbsp;
Promptly, and in any<br />
event within three (3) Business Days after an officer of the
Borrower obtains<br />
knowledge thereof, notice of (i) the occurrence of any event
which<br />
constitutes a Default or Event of Default or a "Default" or "Event
of<br />
Default" under the Convertible Notes Indenture, (ii) any litigation
or<br />
governmental investigation or proceeding pending or threatened (x)
against<br />
the Borrower or any of its Subsidiaries which would reasonably be
expected to<br />
have a Material Adverse Effect, (y) with respect to any
Indebtedness in<br />
excess of $10,000,000 of the Borrower or in excess of $50,000,000
of any of<br />
its Subsidiaries or (z) with respect to any Financing Document and
(iii)<br />
demand for satisfaction of any guaranty or other Contingent
Obligations of<br />
the Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;&nbsp; Other Reports and Filings.&nbsp; Promptly, copies
of all<br />
financial information, proxy materials and other material
information and<br />
material reports, if any, which the Borrower or any of its
Subsidiaries shall<br />
receive from FERC, CPUC or SEC or file with FERC, CPUC or SEC, or
deliver to<br />
holders of its material Indebtedness pursuant to the terms of
the<br />
documentation governing such Indebtedness (or any trustee, agent or
other<br />
representative therefor) and holders of their Capital Stock in
their capacity<br />
as such.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;&nbsp; Environmental Matters.&nbsp; Promptly upon, and in
any event<br />
within thirty (30) days after, an officer of the Borrower obtains
knowledge<br />
thereof, notice of one or more of the following environmental
matters which<br />
occurs after the Closing Date, unless such environmental matters
would not,<br />
individually or when aggregated with all other such environmental
matters, be<br />
reasonably expected to have a Material Adverse Effect:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; any Environmental Claim pending or threatened in
writing<br />
&nbsp;&nbsp;&nbsp;&nbsp; against the Borrower or any of its
Subsidiaries or any Real Estate<br />
&nbsp;&nbsp;&nbsp;&nbsp; owned or operated or occupied by the
Borrower or any of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; Subsidiaries;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; any condition or occurrence on or arising from any
Real<br />
&nbsp;&nbsp;&nbsp;&nbsp; Estate owned or operated or occupied by
the Borrower or any of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; Subsidiaries that (a) results in
noncompliance by the Borrower or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; of its Subsidiaries with any applicable
Environmental Law or (b) would<br />
&nbsp;&nbsp;&nbsp;&nbsp; reasonably be expected to form the basis
of an Environmental Claim<br />
&nbsp;&nbsp;&nbsp;&nbsp; against the Borrower or any of its
Subsidiaries or any such Real<br />
&nbsp;&nbsp;&nbsp;&nbsp; Estate;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; any condition or occurrence on any Real Estate
owned or<br />
&nbsp;&nbsp;&nbsp;&nbsp; operated or occupied by the Borrower or
any of its Subsidiaries that<br />
&nbsp;&nbsp;&nbsp;&nbsp; would reasonably be expected to cause such
Real Estate to be subject to<br />
&nbsp;&nbsp;&nbsp;&nbsp; any restrictions on the ownership,
occupancy, use or transferability by<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Borrower or any of its Subsidiaries of
such Real Estate under any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Environmental Law; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; the taking of any removal or remedial action in
response<br />
&nbsp;&nbsp;&nbsp;&nbsp; to the actual or alleged presence of any
Hazardous Material on any Real<br />
&nbsp;&nbsp;&nbsp;&nbsp; Estate owned or operated or occupied by
the Borrower or any of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; Subsidiaries as required by any
Environmental Law or any governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; or other administrative agency; provided
that in any event the Borrower<br />
&nbsp;&nbsp;&nbsp;&nbsp; shall deliver to each Lender all material
notices received by it or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; of its Subsidiaries from any government or
governmental agency under,<br />
&nbsp;&nbsp;&nbsp;&nbsp; or pursuant to, CERCLA.<br />
<br />
All such notices shall describe in reasonable detail the nature of
the claim,<br />
investigation, condition, occurrence or removal or remedial action
and the<br />
Borrower's or such Subsidiary's response thereto.&nbsp; In
addition, the Borrower<br />
will provide each Lender, from time to time, with copies of all
material<br />
communications with any government or governmental agency and all
material<br />
communications with any Person relating to any Environmental Claim
as to<br />
which notice is required to be given pursuant to this Section
6.1(h), and<br />
such detailed reports of any such Environmental Claim as to which
notice is<br />
required, as may reasonably be requested by any Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;
(i)&nbsp;&nbsp; [OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;&nbsp; Intercompany Transaction.&nbsp; From time to time,
such<br />
information or document with respect to any commitment, memorandum
of<br />
understanding or agreement, whether in writing or not, with respect
to<br />
material transactions between (i) any of the Borrower and any
member of the<br />
NEG Group or (ii) between or among any of the Borrower and any
member of the<br />
NEG Group, on one hand and PGE Utility and any of its Subsidiaries,
on the<br />
other hand.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;&nbsp; [OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;&nbsp; Quarterly Meetings with Lender.&nbsp; At the
request of the<br />
Administrative Agent, within 50 days after the close of each fiscal
quarter<br />
the Borrower shall hold a meeting at a reasonable time and place
selected by<br />
the Borrower and acceptable to each Lender at which meeting shall
be reviewed<br />
the financial results of the previous fiscal quarter and the
financial<br />
condition of the Borrower and its Subsidiaries and the budgets
presented for<br />
the current fiscal quarter of the Borrower and its
Subsidiaries.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;&nbsp; Remaining Obligations.&nbsp; At the time of the
delivery of the<br />
financial statements provided for in Sections 6.1(a) and (b), a
certificate<br />
of the Chief Financial Officer or Treasurer of the Borrower
describing in<br />
reasonable detail the nature and amount of any Remaining
Obligations incurred<br />
by the Borrower during the previous fiscal quarter and setting
forth the<br />
amount of any payments made with respect thereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(n)&nbsp;&nbsp; Other Information.&nbsp; From time to time, such
other<br />
information or documents (financial or otherwise) with respect to
the<br />
Borrower or its Subsidiaries as the Administrative Agent or any
Lender may<br />
reasonably request in writing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.2&nbsp;&nbsp; Books, Records and Inspections.&nbsp; The Borrower
will, and<br />
will cause LLC and PGE Utility (together with the Borrower, the
"Covenant<br />
Parties") to, keep proper books of record and account in which are
made full,<br />
true and correct entries in conformity with generally accepted
accounting<br />
principles and all requirements of law.&nbsp; The Borrower will,
and will cause<br />
LLC to, permit officers and designated representatives of any
Lender to visit<br />
and inspect, during regular business hours and under guidance of
officers of<br />
the Borrower, any of the properties of the Borrower and LLC in
whomsoever's<br />
possession, and to examine the books of account of the Borrower and
LLC and<br />
discuss the affairs (including environmental matters), finances and
accounts<br />
of the Borrower and LLC with, and be advised as to the same by, its
and their<br />
officers and independent accountants, all upon reasonable advance
notice and<br />
at such reasonable times and intervals and to such reasonable
extent as such<br />
Lender may request, provided, that so long as no Default or Event
of Default<br />
has occurred and is continuing, the Borrower shall have the right
to<br />
participate in any discussions of the Lender with any independent
accountants<br />
of the Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.3&nbsp;&nbsp; Maintenance of Property; Insurance.&nbsp; The
Borrower will (a)<br />
keep all material properties and equipment used in its business in
good<br />
working order and condition (ordinary wear and tear and loss or
damage by<br />
casualty or condemnation excepted), (b) maintain in full force and
effect&nbsp;<br />
 insurance with reputable and solvent insurance carriers on all its
property<br />
in at least such amounts, against at least such risks and with
such<br />
deductibles or self-insured retentions as is consistent and in
accordance<br />
with industry practice and (c) furnish to each Lender, upon written
request,<br />
full information as to the insurance carried.&nbsp; In addition to
the<br />
requirements to the immediately preceding sentence, the Borrower
will at all<br />
time cause insurance of the types described in Schedule 5.9 to be
maintained<br />
with no less scope of coverage or greater deductibles as are
described in<br />
Schedule 5.9 unless Borrower can show that such insurance is no
longer<br />
available to the Borrower at a commercially reasonable cost.&nbsp;
Such insurance<br />
shall include physical damage insurance on all real and personal
property<br />
(whether now or hereafter acquired) on an all risk basis and
business<br />
interruption insurance.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.4&nbsp;&nbsp; Corporate Franchises.&nbsp; The Borrower will, and
will cause<br />
all Covenant Parties to, do or cause to be done, all things
necessary to<br />
preserve and keep in full force and effect its existence and its
material<br />
rights, franchises, licenses and patents used in its business
(which business<br />
<br />
shall be the business of PGE Utility as modified by any plan
of<br />
reorganization that is consummated in accordance with this
Agreement).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.5&nbsp;&nbsp; Compliance with Statutes, etc.&nbsp; The Borrower
will, and will<br />
cause all Covenant Parties to, comply, with all applicable Law, in
respect of<br />
the conduct of its business and the ownership of its Property,
except such<br />
noncompliances as could not, individually or in the aggregate,
reasonably be<br />
expected to have a Material Adverse Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.6&nbsp;&nbsp; Compliance with Environmental Laws.&nbsp;
(a)&nbsp;&nbsp;The Borrower will<br />
comply, and will cause all Covenant Parties to comply, in all
material<br />
respects with all Environmental Laws applicable to the operation of
its<br />
business or to the ownership or use of Real Estate now or hereafter
owned or<br />
operated by the Borrower and the other Covenant Parties, will
within a<br />
reasonable time period pay or cause to be paid all costs and
expenses<br />
incurred in connection with such compliance (except to the extent
being<br />
contested in good faith), and will undertake all reasonable efforts
to keep<br />
or cause to be kept all such Real Estate free and clear of any
Liens imposed<br />
pursuant to such Environmental Laws, except such noncompliances as
could not,<br />
individually or in the aggregate, reasonably be expected to have a
Material<br />
Adverse Effect.&nbsp; The Borrower will not, and will cause the
other Covenant<br />
Parties not to, generate, use, treat, store, release or dispose of,
or permit<br />
the generation, use, treatment, storage, release or disposal of
Hazardous<br />
Materials on any Real Estate now or hereafter owned or operated or
occupied<br />
by the Borrower or any of the other Covenant Parties, or transport
or permit<br />
the transportation of Hazardous Materials to or from any such Real
Estate<br />
except in compliance with all applicable Environmental Laws (except
such<br />
noncompliances as could not, individually or in the aggregate,
reasonably be<br />
expected to have a Material Adverse Effect) and reasonably required
in<br />
connection with the operation, use and maintenance of any such Real
Estate or<br />
otherwise in connection with their businesses.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; At the written request of any Lender upon a
reasonable<br />
belief by such Lender that the Borrower or any of its Subsidiaries
has<br />
breached any representation or covenant contained herein relating
to<br />
environmental matters, which request shall specify in reasonable
detail the<br />
basis therefor, the Borrower will provide, at the Borrower's sole
cost and<br />
expense, an environmental audit, reasonable in scope, concerning
the subject<br />
matter of such representation or covenant and any Real Estate now
or<br />
hereafter owned, operated or occupied by the Borrower or any of
its<br />
Subsidiaries, prepared by an environmental consulting firm
reasonably<br />
acceptable to such Lender, indicating (if relevant to such breach)
the<br />
presence or absence of Hazardous Materials and the potential cost
of any<br />
removal or remedial action in connection with any Hazardous
Materials on such<br />
Real Estate; provided, that such request may be made only if (i)
there has<br />
occurred and is continuing a Default, (ii) such Lender reasonably
believes<br />
that the Borrower or any such Real Estate is not in compliance
with<br />
Environmental Law and such circumstances would reasonably be
expected to have<br />
a Material Adverse Effect or (iii) circumstances exist that
reasonably could<br />
be expected to form the basis of a material Environmental Claim
against the<br />
Borrower or any of its Subsidiaries or any such Real Estate.&nbsp;
If the Borrower<br />
fails to provide the same within a reasonable period, not to exceed
90 days,<br />
after such request was made, a Lender may order the same, and the
Borrower<br />
shall grant and hereby grants to such Lender and its agents access
to such<br />
Real Estate and specifically grants such Lender an irrevocable
non-exclusive<br />
license, subject to the rights of tenants, to undertake such an
assessment,<br />
all at the Borrower's expense.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.7&nbsp;&nbsp; ERISA.&nbsp; As soon as possible and, in any event,
within ten<br />
(10) days after the Borrower, any Subsidiary of the Borrower or any
ERISA<br />
Affiliate knows or has reason to know of the occurrence of any of
the<br />
following, the Borrower will deliver to the Administrative Agent
a<br />
certificate of the Chief Financial Officer or Treasurer of the
Borrower<br />
setting forth the full details as to such occurrence and the
action, if any,<br />
that the Borrower, such Subsidiary or such ERISA Affiliate is
required or<br />
proposes to take, together with any notices required or proposed to
be given<br />
or filed by such Borrower, such Subsidiary, the Plan administrator
or such<br />
ERISA Affiliate to or with the PBGC or any other government agency,
or a Plan<br />
participant and any notices received by such Borrower, such
Subsidiary or<br />
ERISA Affiliate from the PBGC or any other government agency, or a
Plan<br />
participant with respect thereto: that a Reportable Event has
occurred<br />
(except to the extent that the Borrower has previously delivered to
the<br />
Administrative Agent a certificate and notices (if any) concerning
such event<br />
pursuant to the next clause hereof); that a contributing sponsor
(as defined<br />
in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of
ERISA is<br />
subject to the advance reporting requirement of PBGC Regulation
Section<br />
4043.61 (without regard to subparagraph (b)(1) thereof), and an
event<br />
described in subsection .62, .63, .64, .65, .66, .67 or .68 of
PBGC<br />
Regulation Section 4043 is reasonably expected to occur with
respect to such<br />
Plan within the following 30 days; that an accumulated funding
deficiency,<br />
within the meaning of Section 412 of the Code or Section 302 of
ERISA, has<br />
been incurred or an application may be or has been made for a
waiver or<br />
modification of the minimum funding standard (including any
required<br />
installment payments) or an extension of any amortization period
under<br />
Section 412 of the Code or Section 303 or 304 of ERISA with respect
to a<br />
Plan; that any contribution required to be made with respect to a
Plan or<br />
Foreign Pension Plan has not been timely made; that a Plan has been
or may be<br />
terminated, reorganized, partitioned or declared insolvent under
Title IV of<br />
ERISA; that a Plan has an Unfunded Current Liability; that
proceedings may be<br />
or have been instituted to terminate or appoint a trustee to
administer a<br />
Plan which is subject to Title IV of ERISA; that a proceeding has
been<br />
instituted pursuant to Section 515 of ERISA to collect a
delinquent<br />
contribution to a Plan; that the Borrower, any Subsidiary of the
Borrower or<br />
any ERISA Affiliate will or may incur any liability (including any
indirect,<br />
contingent, or secondary liability) to or on account of the
termination of or<br />
withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201,
4204 or<br />
4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975<br />
or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or
with respect<br />
to a group health plan (as defined in Section 607(1) of ERISA or
Section<br />
4980B(g)(2) of the Code) under Section 4980B of the Code; or that
the<br />
Borrower or any Subsidiary of the Borrower may incur any material
liability<br />
pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of<br />
ERISA) that provides benefits to retired employees or other former
employees<br />
(other than as required by Section 601 of ERISA) or any Plan or any
Foreign<br />
Pension Plan.&nbsp; The Borrower will deliver to the Administrative
Agent copies<br />
of any records, documents or other information that must be
furnished to the<br />
PBGC with respect to any Plan pursuant to Section 4010 of
ERISA.&nbsp; Upon the<br />
reasonable request of the Required Waiver Lenders, the Borrower
will also<br />
deliver to the Administrative Agent a complete copy of the annual
report (on<br />
Internal Revenue Service Form 5500-series) of each Plan (including,
to the<br />
extent required, the related financial and actuarial statements and
opinions<br />
and other supporting statements, certifications, schedules and
information)<br />
required to be filed with the Internal Revenue Service.&nbsp; In
addition to any<br />
certificates or notices delivered to the Administrative Agent
pursuant to the<br />
first sentence hereof, copies of annual reports and any records,
documents or<br />
other information required to be furnished to the PBGC or any
other<br />
government agency, and any material notices received by the
Borrower, any<br />
Subsidiary of the Borrower or any ERISA Affiliate with respect to
any Plan or<br />
Foreign Pension Plan shall be delivered to the Administrative Agent
no later<br />
than ten (10) days after the date such annual report has been filed
with the<br />
Internal Revenue Service or such records, documents and/or
information has<br />
been furnished to the PBGC or any other government agency or such
notice has<br />
been received by the Borrower, the Subsidiary or the ERISA
Affiliate, as<br />
applicable.&nbsp; The Borrower and each of its applicable
Subsidiaries shall<br />
ensure that all Foreign Pension Plans administered by it or into
which it<br />
makes payments obtains or retains (as applicable) registered status
under and<br />
as required by applicable law and is administered in a timely
manner in all<br />
respects in compliance with all applicable laws except where the
failure to<br />
do any of the foregoing would not be reasonably likely to result in
a<br />
Material Adverse Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.8&nbsp;&nbsp; End of Fiscal Years; Fiscal Quarters.&nbsp; The
Borrower shall<br />
cause (i) each of its, and each of the other Covenant Parties',
fiscal years<br />
to end on December 31 and (ii) its fiscal quarters to end on March
31, June<br />
30, September 30 and December 31.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.9&nbsp;&nbsp; Payment of Taxes.&nbsp; The Borrower (a) will pay
and discharge,<br />
and will cause each of its Subsidiaries to pay and discharge, all
material<br />
federal and state income and franchise taxes imposed upon it or
upon its<br />
income or profits, or upon any properties belonging to it, prior to
the date<br />
on which penalties attach thereto, and all lawful claims for sums
related<br />
thereto that have become due and payable which, if unpaid, might
become a<br />
Lien not otherwise permitted hereunder, and (b) will pay and
discharge, and<br />
will cause each Subsidiary to pay and discharge, all other material
taxes,<br />
assessments and governmental charges or levies imposed upon it or
upon its<br />
income or profits, or upon any properties belonging to it, prior to
the date<br />
on which penalties attach thereto, and all lawful claims for sums
that have<br />
become due and payable which, if unpaid, might become a Lien not
otherwise<br />
permitted hereunder, provided that neither the Borrower nor any of
its<br />
Subsidiaries shall be required to pay any such tax, assessment,
charge, levy<br />
or claim which is being contested in good faith and by proper
proceedings if<br />
it has maintained adequate reserves with respect thereto in
accordance with<br />
U.S. GAAP, and provided, further, that this Section 6.9 shall not
apply with<br />
respect to any taxes of PGE Utility or any Subsidiary of PGE
Utility for<br />
which Borrower has no liability under applicable law.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.10&nbsp;&nbsp; [OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.11&nbsp;&nbsp; Performance of Obligations.&nbsp; The Borrower
will perform all<br />
of its obligations under the terms of each mortgage, indenture,
security<br />
agreement, loan agreement or credit agreement and each other
material<br />
agreement, contract or instrument by which it is bound, except such
non-<br />
performances as could not, either individually or in the
aggregate,<br />
reasonably be expected to have a Material Adverse Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.12&nbsp;&nbsp; Use of Proceeds.&nbsp; The Borrower will use the
proceeds of<br />
the Loans only as provided in Section 5.18.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.13&nbsp;&nbsp; Regulatory Compliance.&nbsp; The Borrower will
take all actions<br />
and cause its Subsidiaries to take all actions reasonably required
to comply<br />
in all material respects with applicable Utility Regulations and
each order<br />
issued pursuant thereto; provided that, the foregoing shall not
prevent<br />
Borrower or a Subsidiary from challenging the validity or effect of
any<br />
Utility Regulation or order in any proceeding provided the manner
of such<br />
challenge could not reasonably be expected to cause a Material
Adverse<br />
Effect.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.14&nbsp;&nbsp; Form 8-K.&nbsp; The Borrower will, as promptly as
practicable<br />
after the Closing Date, file a Form 8-K with the SEC disclosing the
material<br />
terms and conditions of the material Financing Documents and
attaching<br />
thereto a copy of this Agreement and the Utility Pledge
Agreements.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.15&nbsp;&nbsp; Charter Documents.&nbsp; The Borrower will, and
will cause LLC<br />
and NEG, Inc. to, comply with their respective Charter Documents in
all<br />
material respects.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.16&nbsp;&nbsp; Further Assurances; etc.&nbsp; The Borrower will
at the expense<br />
of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to<br />
each Lender from time to time such confirmatory assignments,
conveyances,<br />
financing&nbsp; statements,&nbsp; transfer&nbsp;
endorsements,&nbsp; powers&nbsp; of&nbsp; attorney,<br />
certificates, reports, and other assurances or instruments and take
such<br />
further steps as are necessary or desirable in order to carry out
the intent,<br />
purpose, provisions of this Agreement and the other Financing
Document,<br />
including any assignment or syndication by any Lender of its
Loan.&nbsp;<br />
 Furthermore, the Borrower will deliver to each Lender such
opinions of<br />
counsel and other related documents as may be reasonably requested
by any<br />
Lender to assure itself that this Section 6.16 has been complied
with.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.17&nbsp;&nbsp; Regarding LLC.&nbsp; Subject to Compliance by LLC
with the<br />
applicable provisions of requirements for Distribution under
Section 13 of<br />
the LLC Agreement, the Borrower will cause LLC to deliver to the
Borrower,<br />
immediately after receipt thereof, (a) any Net Sale Proceeds of any
Asset<br />
Sale or any Qualified NEG Sale and (b) any cash or Property
received by LLC,<br />
by dividend or otherwise, from NEG, Inc. or any of its
Subsidiaries.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.18&nbsp;&nbsp; Warrants.&nbsp; No later than the tenth Trading
Day following<br />
the Closing Date, the Borrower will issue the New Warrants pursuant
to the<br />
New Warrant Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
7.&nbsp;&nbsp; NEGATIVE COVENANTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Borrower
covenants and agrees that on and after the Closing<br />
Date and until the Loans and the Notes, together with interest,
fees and all<br />
other obligations incurred hereunder and thereunder, are paid in
full (other<br />
than any indemnity, not then due and payable, which by its terms
shall<br />
survive such termination and payment) (it being agreed that, to the
extent<br />
any of the covenants set forth in this Section 7 require the
Borrower to<br />
cause LLC or any of&nbsp; its Subsidiaries to take or refrain from
taking any<br />
action, such covenant shall cease to apply to any such Person when
such<br />
Person is no longer a Subsidiary of the Borrower (it being further
understood<br />
that this provision shall not in any way constitute a waiver of any
breach of<br />
this Agreement)):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.1&nbsp;&nbsp; Liens.&nbsp; (a)&nbsp;&nbsp;The Borrower will not,
and will not permit LLC<br />
to, create, incur, assume or suffer to exist any Lien upon or with
respect to<br />
any Property or assets (real or personal, tangible or intangible)
of the<br />
Borrower or LLC, whether now owned or hereafter acquired, or sell
any such<br />
Property or assets subject to an understanding or agreement,
contingent or<br />
otherwise, to repurchase such Property or assets (including sales
of accounts<br />
receivable with recourse to the Borrower), or assign any right to
receive<br />
income or permit the filing of any financing statement under the
UCC or any<br />
other similar notice of Lien under any similar recording or notice
statute;<br />
provided that the provisions of this Section 7.1 shall not prevent
the<br />
creation, incurrence, assumption or existence of the following
(Liens<br />
described below are herein referred to as "Permitted Liens"):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; inchoate Liens for taxes, assessments or
governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; charges or levies not yet due and payable
or Liens for taxes,<br />
&nbsp;&nbsp;&nbsp;&nbsp; assessments or governmental charges or
levies being contested in good<br />
&nbsp;&nbsp;&nbsp;&nbsp; faith and by appropriate proceedings for
which adequate reserves have<br />
&nbsp;&nbsp;&nbsp;&nbsp; been established in accordance with
generally accepted accounting<br />
&nbsp;&nbsp;&nbsp;&nbsp; principles in the United States;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; Liens imposed by law, which arise or were incurred
in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; ordinary course of business and do not
secure Indebtedness for borrowed<br />
&nbsp;&nbsp;&nbsp;&nbsp; money, such as carriers', workmen's,
repairmen's, warehousemen's,<br />
&nbsp;&nbsp;&nbsp;&nbsp; materialmen's and mechanics' liens,
collecting bank's liens, charge<br />
&nbsp;&nbsp;&nbsp;&nbsp; back rights of depository banks for
uncollected items and other similar<br />
&nbsp;&nbsp;&nbsp;&nbsp; Liens arising or incurred in the ordinary
course of business, and<br />
&nbsp;&nbsp;&nbsp;&nbsp; (x) which do not in the aggregate
materially detract from the value of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the property or assets of the Borrower and
do not materially impair the<br />
&nbsp;&nbsp;&nbsp;&nbsp; use thereof in the operation of the
business of the Borrower or<br />
&nbsp;&nbsp;&nbsp;&nbsp; (y) which are being contested in good
faith by appropriate proceedings,<br />
&nbsp;&nbsp;&nbsp;&nbsp; which proceedings&nbsp; (or orders entered
in connection with such<br />
&nbsp;&nbsp;&nbsp;&nbsp; proceedings) have the effect of preventing
the forfeiture or sale of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the property or assets subject to any such
Lien;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; subject to Section 7.4(ii), Liens in existence on
March<br />
&nbsp;&nbsp;&nbsp;&nbsp; 1, 2001 which are listed, and the Property
subject thereto described,<br />
&nbsp;&nbsp;&nbsp;&nbsp; in Schedule 7.1;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; Liens created pursuant to this Agreement and the
Security<br />
&nbsp;&nbsp;&nbsp;&nbsp; Documents;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; licenses, leases or subleases granted to other
Persons in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the ordinary course of business not
materially interfering with the<br />
&nbsp;&nbsp;&nbsp;&nbsp; conduct of the business of the
Borrower;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi)&nbsp;&nbsp; easements, rights-of-way, restrictions (including
zoning<br />
&nbsp;&nbsp;&nbsp;&nbsp; restrictions), covenants, encroachments,
protrusions and other similar<br />
&nbsp;&nbsp;&nbsp;&nbsp; charges or encumbrances, and minor title
deficiencies, in each case<br />
&nbsp;&nbsp;&nbsp;&nbsp; whether now or hereafter in existence, not
securing Indebtedness and<br />
&nbsp;&nbsp;&nbsp;&nbsp; not materially interfering with the
conduct of the business of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)&nbsp;&nbsp; statutory, contractual and common law landlords'
liens<br />
&nbsp;&nbsp;&nbsp;&nbsp; under leases or subleases permitted by
this Agreement;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(viii)&nbsp;&nbsp; Liens (other than any Lien imposed by ERISA)
(x)<br />
&nbsp;&nbsp;&nbsp;&nbsp; incurred or deposits made in the ordinary
course of business in<br />
&nbsp;&nbsp;&nbsp;&nbsp; connection with workers' compensation,
unemployment insurance and other<br />
&nbsp;&nbsp;&nbsp;&nbsp; types of social security, (y) to secure
the performance of tenders,<br />
&nbsp;&nbsp;&nbsp;&nbsp; statutory obligations (other than excise
taxes), surety, stay, customs<br />
&nbsp;&nbsp;&nbsp;&nbsp; and appeal bonds, statutory bonds, bids,
leases, government contracts,<br />
&nbsp;&nbsp;&nbsp;&nbsp; trade contracts, performance and return of
money bonds and other<br />
&nbsp;&nbsp;&nbsp;&nbsp; similar obligations (exclusive of
obligations for the payment of<br />
&nbsp;&nbsp;&nbsp;&nbsp; borrowed money) or (z) arising by virtue
of deposits made in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; ordinary course of business to secure
liability for premiums to<br />
&nbsp;&nbsp;&nbsp;&nbsp; insurance carriers, provided that the
aggregate amount of deposits at<br />
&nbsp;&nbsp;&nbsp;&nbsp; any time pursuant to sub-clauses (y) and
(z) and other Indebtedness<br />
&nbsp;&nbsp;&nbsp;&nbsp; permitted under Section 7.4(ix) shall not
exceed $15,000,000 in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; aggregate;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ix)&nbsp;&nbsp; any interest or title of a lessor, sublessor,
licensee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; licensor under any lease or license
agreement permitted by this<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(x)&nbsp;&nbsp; any attachment or judgment Liens which do not
result in an<br />
&nbsp;&nbsp;&nbsp;&nbsp; Event of Default under Section 8.1(h),
provided that such Liens are<br />
&nbsp;&nbsp;&nbsp;&nbsp; junior in priority to the Liens created
pursuant to this Agreement and<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Security Documents;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(xi)&nbsp;&nbsp; Liens securing Indebtedness of the Borrower
incurred<br />
&nbsp;&nbsp;&nbsp;&nbsp; pursuant to Section 7.4(vii) to finance
the acquisition of fixed or<br />
&nbsp;&nbsp;&nbsp;&nbsp; capital assets by the Borrower in the
ordinary course of its business,<br />
&nbsp;&nbsp;&nbsp;&nbsp; provided&nbsp; that&nbsp; (i)&nbsp;
such&nbsp; Liens&nbsp; shall&nbsp; be&nbsp; created&nbsp;
substantially<br />
&nbsp;&nbsp;&nbsp;&nbsp; simultaneously with the acquisition of
such fixed or capital assets,<br />
&nbsp;&nbsp;&nbsp;&nbsp; (ii) such Liens do not at any time
encumber any property other than the<br />
&nbsp;&nbsp;&nbsp;&nbsp; property financed by such Indebtedness and
(iii) the amount of<br />
&nbsp;&nbsp;&nbsp;&nbsp; Indebtedness secured thereby is not
increased;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(xii)&nbsp;&nbsp; Liens arising from precautionary Uniform
Commercial Code<br />
&nbsp;&nbsp;&nbsp;&nbsp; financing statement filings with respect
to operating leases or<br />
&nbsp;&nbsp;&nbsp;&nbsp; consignment arrangements entered into by
the Borrower in the ordinary<br />
&nbsp;&nbsp;&nbsp;&nbsp; course of business; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(xiii)&nbsp;&nbsp; Liens on assets of the Borrower to secure
Hedging<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreements entered into in the ordinary
course of business by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower hedging the interest rate
fluctuations in respect of interest<br />
&nbsp;&nbsp;&nbsp;&nbsp; payable on the Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Without limiting the generality of the foregoing
paragraph<br />
(a), the Borrower will not and will not permit any Subsidiary to,
create,<br />
incur, assume or suffer to exist any lien upon the Capital Stock of
PGE<br />
Utility owned by the Borrower or of any Reorganization Subsidiary
(other than<br />
the Liens created by the Security Documents).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.2&nbsp;&nbsp; Consolidation, Merger, Purchase or Sale of Assets,
etc.&nbsp;<br />
 The Borrower will not, and will not permit any member of the NEG
Group to,<br />
wind up, liquidate or dissolve its affairs or enter into any
transaction of<br />
merger or consolidation, or convey, sell, lease, spin-off or
otherwise<br />
dispose of (including, without limitation, cancellation of
indebtedness owing<br />
to the Borrower by any Affiliate) (or agree to do any of the
foregoing at any<br />
future time) all or any part of its Property or assets (including,
without<br />
limitation, the Capital Stock of PGE Utility or any member of the
NEG Group),<br />
or enter into any sale-leaseback transactions (any of the
foregoing, a<br />
"Disposition"), or purchase or otherwise acquire (in one or a
series of<br />
related transactions) any part of the Property or assets (other
than<br />
purchases or other acquisitions of inventory in the ordinary course
of<br />
business) of any Person (or agree to do any of the foregoing at any
future<br />
time), except that:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; any NEG Subsidiary may in the ordinary course of
business,<br />
&nbsp;&nbsp;&nbsp;&nbsp; sell, lease or otherwise dispose of any
assets which, in the reasonable<br />
&nbsp;&nbsp;&nbsp;&nbsp; judgment of such Person, are obsolete,
worn out or otherwise no longer<br />
&nbsp;&nbsp;&nbsp;&nbsp; useful in the conduct of such Person's
business;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; each of the Borrower and any member of the NEG
Group may<br />
&nbsp;&nbsp;&nbsp;&nbsp; lease (as lessee) real or personal
property in the ordinary course of<br />
&nbsp;&nbsp;&nbsp;&nbsp; business (so long as any such lease does
not create a Capital Lease<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligation (other than Capital Lease
Obligations permitted under<br />
&nbsp;&nbsp;&nbsp;&nbsp; Section 7.4));<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; any NEG Subsidiary may make sales or transfers
of<br />
&nbsp;&nbsp;&nbsp;&nbsp; inventory, energy and related products in
the ordinary course of<br />
&nbsp;&nbsp;&nbsp;&nbsp; business and consistent with past
practices;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; any NEG Subsidiary may sell or discount, in each
case<br />
&nbsp;&nbsp;&nbsp;&nbsp; without recourse and in the ordinary
course of business, overdue<br />
&nbsp;&nbsp;&nbsp;&nbsp; accounts receivable arising in the
ordinary course of business, but<br />
&nbsp;&nbsp;&nbsp;&nbsp; only in connection with the compromise or
collection thereof consistent<br />
&nbsp;&nbsp;&nbsp;&nbsp; with customary industry practice (and not
as part of any bulk sale);<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; each of the Borrower and any member of the NEG
Group may<br />
&nbsp;&nbsp;&nbsp;&nbsp; license or sublicense software, trademarks
and other intellectual<br />
&nbsp;&nbsp;&nbsp;&nbsp; property in the ordinary course of
business which do not materially<br />
&nbsp;&nbsp;&nbsp;&nbsp; interfere with the business of the
Borrower and its Subsidiaries, taken<br />
&nbsp;&nbsp;&nbsp;&nbsp; as a whole;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi)&nbsp;&nbsp; each of LLC, NEG, Inc. or any NEG Subsidiary may
transfer<br />
&nbsp;&nbsp;&nbsp;&nbsp; assets or lease to or acquire or lease
assets from LLC, NEG, Inc. or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any other NEG Subsidiary and LLC, NEG,
Inc. or any NEG Subsidiary may<br />
&nbsp;&nbsp;&nbsp;&nbsp; be merged into LLC, NEG, Inc. or any other
NEG Subsidiary;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)&nbsp;&nbsp; [OMITTED];<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(viii)&nbsp;&nbsp; subject to Section 3.2(f), each of the Borrower
and any<br />
&nbsp;&nbsp;&nbsp;&nbsp; member of the NEG Group may make transfers
of any proceeds of insurance<br />
&nbsp;&nbsp;&nbsp;&nbsp; resulting from any casualty or
condemnation of property or assets;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ix)&nbsp;&nbsp; the Borrower may sell or otherwise dispose of any
assets<br />
&nbsp;&nbsp;&nbsp;&nbsp; other than (A) except as permitted by
Section 7.2(x), assets owned by,<br />
&nbsp;&nbsp;&nbsp;&nbsp; or the Capital Stock of, any member of the
NEG Group and (B) the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Capital Stock of PGE Utility or the
Capital Stock of, or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; substantial part of the assets of, any
Reorganization Subsidiary;<br />
&nbsp;&nbsp;&nbsp;&nbsp; provided that the proceeds of such sale or
disposition are applied<br />
&nbsp;&nbsp;&nbsp;&nbsp; toward the prepayment of the Tranche B
Loan, to the extent required by<br />
&nbsp;&nbsp;&nbsp;&nbsp; Section 3.2(e);<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(x)&nbsp;&nbsp; subject to Section 7.16, the Borrower or any member
of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; NEG Group may consummate a Disposition of
any NEG Property; provided,<br />
&nbsp;&nbsp;&nbsp;&nbsp; that (A) such Disposition is a Qualified
NEG Sale, a Qualified<br />
&nbsp;&nbsp;&nbsp;&nbsp; Abandonment, a Qualified Asset Sale or a
Qualified Bankruptcy Sale and<br />
&nbsp;&nbsp;&nbsp;&nbsp; (B) the proceeds of such Disposition are
applied toward the prepayment<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Tranche B Loan, to the extent
required by Section 3.2(e) or<br />
&nbsp;&nbsp;&nbsp;&nbsp; 3.2(g), as applicable; and<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(xi)&nbsp;&nbsp; the Borrower may sell up to 15% of the common
stock of PGE<br />
&nbsp;&nbsp;&nbsp;&nbsp; Utility in a public offering; provided
that the Net Sale Proceeds of<br />
&nbsp;&nbsp;&nbsp;&nbsp; such sale are applied toward the
prepayment of the Tranche B Loan, to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the extent required by Section
3.2(e).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For
avoidance of doubt, nothing in this Section shall prohibit<br />
the Borrower from consummating a Spin-Off or any plan of
reorganization<br />
permitted by Section 7.15 (so long as the Borrower complies with
the<br />
requirements of Section 3.8).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.3&nbsp;&nbsp; Dividends.&nbsp; The Borrower will not, and will
not permit any<br />
of its Subsidiaries to, authorize, declare or pay any Dividends,
except that<br />
any Subsidiary of the Borrower may pay Dividends (in cash or
Capital Stock)<br />
to the Borrower or to the immediate owner or owners of such
Subsidiary<br />
(subject to compliance with provisions of the Security
Documents).&nbsp; The<br />
Borrower will not, directly or indirectly, spin-off or transfer to
its<br />
shareholders, or to the shareholders of any parent of the Borrower,
the<br />
Capital Stock of any Reorganization Subsidiary, the Capital Stock
of any<br />
member of the NEG Group, or any Material Reorganization
Asset.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nothing in
this Section shall prohibit (i) the Borrower or LLC<br />
from performing in full its obligations under Article VI of the
Option<br />
Agreement or (ii) the Borrower from consummating a Spin-Off or any
plan of<br />
reorganization permitted by Section 7.15 (so long as the Borrower
complies<br />
with the requirements of Section 3.8).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.4&nbsp;&nbsp; Indebtedness.&nbsp; The Borrower will not, and will
not permit<br />
LLC to, contract, create, incur, assume or suffer to exist any
Indebtedness,<br />
except:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; Indebtedness incurred pursuant to this Agreement
and the<br />
&nbsp;&nbsp; &nbsp;&nbsp; other Financing Documents;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; existing Indebtedness outstanding on March 1, 2001
and<br />
&nbsp;&nbsp;&nbsp;&nbsp; listed on Part A of the Disclosure Letter,
without giving effect to any<br />
&nbsp;&nbsp;&nbsp;&nbsp; subsequent extension, renewal or
refinancing thereof;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; Indebtedness resulting from the endorsement of
negotiable<br />
&nbsp;&nbsp;&nbsp;&nbsp; instruments in the ordinary course of
business;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; Indebtedness of the Borrower to any Subsidiary
(other than<br />
&nbsp;&nbsp;&nbsp;&nbsp; NEG, Inc. or any of its Subsidiaries) from
intercompany transfers of<br />
&nbsp;&nbsp;&nbsp;&nbsp; assets made in the ordinary course of
business or to the extent<br />
&nbsp;&nbsp;&nbsp;&nbsp; permitted under Sections 7.2 and
7.5;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; Indebtedness of the Borrower constituting a
Permitted NEG<br />
&nbsp;&nbsp;&nbsp;&nbsp; Reinvestment permitted by Section
7.5(viii);<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi)&nbsp;&nbsp; Remaining&nbsp; Obligations&nbsp; permitted&nbsp;
to&nbsp; be&nbsp; incurred&nbsp; in<br />
&nbsp;&nbsp;&nbsp;&nbsp; connection with any Qualified NEG Sale or
Qualified Asset Sale;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)&nbsp;&nbsp; Indebtedness (including, without limitation,
Capital<br />
&nbsp;&nbsp;&nbsp;&nbsp; Lease Obligations) secured by Liens
permitted by Section 7.1(a)(xi) in<br />
&nbsp;&nbsp;&nbsp;&nbsp; an aggregate principal amount not to
exceed $10,000,000 at any one time<br />
&nbsp;&nbsp;&nbsp;&nbsp; outstanding;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(viii)&nbsp;&nbsp; Hedging Agreements entered into in the ordinary
course<br />
&nbsp;&nbsp;&nbsp;&nbsp; of business by the Borrower hedging the
interest rate fluctuations in<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect of interest payable on the
Loan;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ix)&nbsp;&nbsp; other Indebtedness of the Borrower, provided that
the<br />
&nbsp;&nbsp;&nbsp;&nbsp; aggregate amount of such other
Indebtedness together with deposits<br />
&nbsp;&nbsp;&nbsp;&nbsp; permitted under sub-clauses (y) and (z) of
Section 7.1(viii) shall not<br />
&nbsp;&nbsp;&nbsp;&nbsp; exceed the amount set forth in Section
7.1(viii); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(x)&nbsp;&nbsp; Indebtedness of the Borrower in respect of the
Convertible<br />
&nbsp;&nbsp;&nbsp;&nbsp; Notes in an aggregate principal amount not
to exceed $280,000,000 (plus<br />
&nbsp;&nbsp;&nbsp;&nbsp; the amount of any capitalized interest
accrued in accordance with the<br />
&nbsp;&nbsp;&nbsp;&nbsp; terms thereof).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.5&nbsp;&nbsp; Advances, Investments and Loans.&nbsp; The Borrower
will not,<br />
directly or indirectly, lend money or credit or make advances to
any other<br />
Person, or purchase or acquire any stock, obligations or securities
of, or<br />
any other interest in, or make any capital contribution (including,
without<br />
limitation, a capital contribution in the form of a note or other
evidence of<br />
Indebtedness of the Borrower) to, any other Person, or make or
agree to make<br />
any payments in respect of any Indebtedness or other obligations of
any Other<br />
Person, or purchase or own a futures contract or otherwise become
liable for<br />
the purchase or sale of currency or other commodities at a future
date in the<br />
nature of a futures contract, or hold any cash or Cash Equivalents
(each of<br />
the foregoing an "Investment" and, collectively, "Investments"),
except that<br />
the following shall be permitted; provided that, other than in the
case of<br />
clauses (v) and (vi) below, no Default or Event of Default shall
have<br />
occurred and be continuing or would result therefrom:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; [OMITTED];<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; the Borrower may&nbsp; acquire and hold cash and
Cash<br />
&nbsp;&nbsp;&nbsp;&nbsp; Equivalents;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; the Borrower may acquire and own investments
(including<br />
&nbsp;&nbsp;&nbsp;&nbsp; debt obligations) received in connection
with the bankruptcy or<br />
&nbsp;&nbsp;&nbsp;&nbsp; reorganization of suppliers and customers
and in good faith settlement<br />
&nbsp;&nbsp;&nbsp;&nbsp; of delinquent obligations of, and other
disputes with, customers and<br />
&nbsp;&nbsp;&nbsp;&nbsp; suppliers arising in the ordinary course
of business;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; the Borrower may (i) contribute Indebtedness,
claims and<br />
&nbsp;&nbsp;&nbsp;&nbsp; other obligations owned by any member of
the NEG Group or (ii) become<br />
&nbsp;&nbsp;&nbsp;&nbsp; liable with respect to Remaining
Obligations, in each case to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; extent permitted in connection with a
Qualified NEG Sale or a Qualified<br />
&nbsp;&nbsp;&nbsp;&nbsp; Asset Sale;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; any Investment by the Borrower in PGE Utility if
the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower reasonably determines that such
Investment is required by<br />
&nbsp;&nbsp;&nbsp;&nbsp; applicable Law;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi)&nbsp;&nbsp; any Investment by the Borrower in PGE Utility if
the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower reasonably determines that such
Investment is required by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Holding Company Conditions;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)&nbsp;&nbsp; loans and advances by the Borrower or PGE Utility
to<br />
&nbsp;&nbsp;&nbsp;&nbsp; their respective directors, officers and
employees in a principal<br />
&nbsp;&nbsp;&nbsp;&nbsp; amount not exceeding the amount of
$100,000, on an individual basis,<br />
&nbsp;&nbsp;&nbsp;&nbsp; and $1,000,000, on an aggregate basis, at
any one time outstanding;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(viii)&nbsp;&nbsp; the Borrower may make Permitted NEG
Reinvestments in an<br />
&nbsp;&nbsp;&nbsp;&nbsp; aggregate amount not greater than the
difference of (a) 75% of<br />
&nbsp;&nbsp;&nbsp;&nbsp; Attributable Tax Benefits received on or
prior to the date of such<br />
&nbsp;&nbsp;&nbsp;&nbsp; Investment, minus (b) the sum of (i) the
aggregate amount of other<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted NEG Reinvestments (including,
without limitation, the<br />
&nbsp;&nbsp;&nbsp;&nbsp; aggregate amount of Permitted NEG
Reinvestments made from Operating<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loss Contributions) made on or prior to
the date of such Investment,<br />
&nbsp;&nbsp;&nbsp;&nbsp; (ii) the aggregate amount of outstanding
Remaining Obligations (whether<br />
&nbsp;&nbsp;&nbsp;&nbsp; or not then due and payable) incurred by
the Borrower on or prior to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the date of such Investment (except to the
extent that any such<br />
&nbsp;&nbsp;&nbsp;&nbsp; outstanding Remaining Obligations were
incurred based upon the<br />
&nbsp;&nbsp;&nbsp;&nbsp; provisions of the definition of "Remaining
Obligations" in Appendix A<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereto permitting such obligations in an
amount equal to the cash<br />
&nbsp;&nbsp;&nbsp;&nbsp; purchase price actually received by the
Borrower in connection with any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Qualified NEG Sale or any Qualified Asset
Sale), (iii) the aggregate<br />
&nbsp;&nbsp;&nbsp;&nbsp; amount of Transaction Costs incurred by
the Borrower on or prior to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; date of such Investment, and (iv) the
aggregate amount of payments made<br />
&nbsp;&nbsp;&nbsp;&nbsp; by the Borrower in respect of obligations
of NEG, Inc. and/or any of<br />
&nbsp;&nbsp;&nbsp;&nbsp; its Subsidiaries (including, without
limitation, any payments in<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect of any guaranty by the Borrower
of, or surety obligation of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower in respect of, the obligations of
any such entity and any<br />
&nbsp;&nbsp;&nbsp;&nbsp; payments in respect of any Remaining
Obligations) on or prior to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; date of such Investment (such sum of the
amounts in clauses (i), (ii),<br />
&nbsp;&nbsp;&nbsp;&nbsp; (iii) and (iv) the "Invested Tax Benefit
Amount"); provided, that the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower may not make any Permitted NEG
Reinvestment pursuant to this<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph, whether or not previously
committed to, (1) prior to<br />
&nbsp;&nbsp;&nbsp;&nbsp; delivering to the Administrative Agent
(for the benefit of the Lenders)<br />
&nbsp;&nbsp;&nbsp;&nbsp; a certificate (with supporting detail) of
the Chief Financial Officer<br />
&nbsp;&nbsp;&nbsp;&nbsp; or Treasurer of the Borrower setting forth
(and confirming the accuracy<br />
&nbsp;&nbsp;&nbsp;&nbsp; of) calculations demonstrating that such
Investment is permitted by<br />
&nbsp;&nbsp;&nbsp;&nbsp; this paragraph (viii), (2) if LLC and/or
NEG, Inc. is in bankruptcy, or<br />
&nbsp;&nbsp;&nbsp;&nbsp; (3) if a Default or Event of Default has
occurred and is continuing;&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ix)
&nbsp;&nbsp; the Borrower may make Investments constituting
Permitted<br />
&nbsp;&nbsp;&nbsp;&nbsp; NEG Reinvestments in an aggregate amount
not to exceed 75% of the cash<br />
&nbsp;&nbsp;&nbsp;&nbsp; tax savings actually received by the
Borrower after the Closing Date as<br />
&nbsp;&nbsp;&nbsp;&nbsp; a result of net operating losses of NEG,
Inc. and its Subsidiaries<br />
&nbsp;&nbsp;&nbsp;&nbsp; ("Operating Loss Contributions"),
provided, that the Borrower may not<br />
&nbsp;&nbsp;&nbsp;&nbsp; make any such Investments from Operating
Loss Contributions in an<br />
&nbsp;&nbsp;&nbsp;&nbsp; amount in excess of the difference of (a)
75% of the amount of cash tax<br />
&nbsp;&nbsp;&nbsp;&nbsp; savings that the Borrower in good faith
projects that it will receive<br />
&nbsp;&nbsp;&nbsp;&nbsp; as a result of any Qualified Asset Sale,
any Qualified NEG Sale or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Qualified Restructuring that has been
consummated, minus (b) the<br />
&nbsp;&nbsp;&nbsp;&nbsp; aggregate Invested Tax Benefit Amount;
provided, that the Borrower may<br />
&nbsp;&nbsp;&nbsp;&nbsp; not make any Permitted NEG Reinvestment
pursuant to this paragraph,<br />
&nbsp;&nbsp;&nbsp;&nbsp; whether or not previously committed to,
(i) prior to delivering to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Administrative Agent (for the benefit of
the Lenders) a certificate<br />
&nbsp;&nbsp;&nbsp;&nbsp; (with supporting detail) of the Chief
Financial Officer or Treasurer of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the&nbsp; Borrower&nbsp; setting&nbsp;
forth&nbsp; (and&nbsp; confirming&nbsp; the&nbsp; accuracy&nbsp;
of)<br />
&nbsp;&nbsp;&nbsp;&nbsp; calculations demonstrating that such
Investment is permitted by this<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph (ix), (ii) if LLC and/or NEG,
Inc. is in bankruptcy, or (iii)<br />
&nbsp;&nbsp;&nbsp;&nbsp; if a Default or Event of Default has
occurred and is continuing;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(x)&nbsp;&nbsp; the Borrower may invest in NEG, Inc. or its
Subsidiaries<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including, without limitation, incurring
obligations as guarantor or<br />
&nbsp;&nbsp;&nbsp;&nbsp; surety in respect of obligations of NEG,
Inc. and its Subsidiaries) in<br />
&nbsp;&nbsp;&nbsp;&nbsp; an aggregate amount not exceeding
$15,000,000 from and after June 25,<br />
&nbsp;&nbsp;&nbsp;&nbsp; 2002, provided, that the Borrower shall
not make any such Investment if<br />
&nbsp;&nbsp;&nbsp;&nbsp; (i) LLC and or NEG, Inc is in bankruptcy
or (ii) a Default or Event of<br />
&nbsp;&nbsp;&nbsp;&nbsp; Default has occurred and is
continuing;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(xi)&nbsp;&nbsp; in addition to the Investments permitted by
clauses (i)-<br />
&nbsp;&nbsp;&nbsp;&nbsp; (x) above, the Borrower may make other
Investments for operations of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Borrower or its Subsidiaries (other
than NEG, Inc., PGE Utility or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any of their Subsidiaries) in an amount
not to exceed (i) $12,000,000<br />
&nbsp;&nbsp;&nbsp;&nbsp; in the aggregate for fiscal year 2002 and
fiscal year 2003 and (ii)<br />
&nbsp;&nbsp;&nbsp;&nbsp; $10,000,000 in the aggregate for any
fiscal year thereafter provided<br />
&nbsp;&nbsp;&nbsp;&nbsp; that no more than $5,000,000 of such
amount in any fiscal year may be<br />
&nbsp;&nbsp;&nbsp;&nbsp; used to make Investments (other than
advances for operating expenses<br />
&nbsp; &nbsp;&nbsp;&nbsp; payable by Subsidiaries); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(xii)&nbsp;&nbsp; any Investment in a Hedging Agreement entered
into by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Borrower hedging the interest rate
fluctuations in respect of interest<br />
&nbsp;&nbsp;&nbsp;&nbsp; payable on the Loan.<br />
<br />
Notwithstanding anything provided herein to the contrary, (A) no
investment<br />
may be made by the Borrower in the nuclear generation business and
(B) the<br />
Borrower may consummate a Spin-Off (so long as the Borrower
complies with the<br />
requirements of Section 3.8).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.6&nbsp;&nbsp; Transactions with Affiliates.&nbsp; Except as
disclosed on<br />
Schedule 5.17, the Borrower will not enter into any transaction or
series of<br />
related transactions with any Affiliate of the Borrower or any of
its<br />
Subsidiaries, other than (a) in the ordinary course of business and
on terms<br />
and conditions substantially as favorable to the Borrower as would
reasonably<br />
be obtained by the Borrower at that time in a comparable
arm's-length<br />
transaction with a Person other than an Affiliate, (b) as
reasonably<br />
determined by the Borrower that such transaction is required by
applicable<br />
Law or the Holding Company Conditions, (c) any other transactions
with<br />
Affiliates provided at cost where the difference between the
arms-length<br />
price and cost is less than $5,000,000 in the aggregate, (d) the
payment of<br />
reasonable and customary fees and reimbursements of expenses
payable to<br />
directors of the Borrower, (e) the employment arrangements with
respect to<br />
the procurement of services of directors, officers and employees of
the<br />
Borrower in the ordinary course of business and payment of
reasonable and<br />
customary fees in connection therewith, (f) the consummation of a
Spin-Off,<br />
or (g) transactions expressly permitted under Section 7.3 or
Section 7.5.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.7&nbsp;
&nbsp; Capital Expenditures.&nbsp; The Borrower will not make
any<br />
Capital Expenditures, except to the extent (a) the Borrower
reasonably<br />
determines that such Capital Expenditures by the Borrower in PGE
Utility is<br />
required by applicable Law, (b) the Borrower reasonably determines
that such<br />
Capital Expenditures by the Borrower in PGE Utility is required by
the<br />
Holding Company Conditions or (c) provided in the cash-flow
forecast of the<br />
Borrower attached to the solvency certificate of the Borrower
delivered on<br />
the Closing Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.8&nbsp;&nbsp; Limitations on Liens on Collateral; Modifications
of<br />
Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws<br />
and Certain Other Agreements, etc.&nbsp; The Borrower will not, and
will not<br />
permit LLC to:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; create or suffer to exist any Lien on any of
the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; amend or modify, or permit the amendment or
modification<br />
&nbsp;&nbsp;&nbsp;&nbsp; of, any provision of any Existing
Indebtedness Agreements which could<br />
&nbsp;&nbsp; &nbsp;&nbsp; reasonably be expected to have a Material
Adverse Effect;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp; (w) except to the extent it would not cause an
adverse<br />
&nbsp;&nbsp;&nbsp;&nbsp; effect on any Lender, amend, modify or
change any material provision of<br />
&nbsp;&nbsp;&nbsp;&nbsp; its certificate or articles of
incorporation (including, without<br />
&nbsp;&nbsp;&nbsp;&nbsp; limitation, by the filing or modification
of any certificate or<br />
&nbsp;&nbsp;&nbsp;&nbsp; articles of designation), certificate of
formation, limited liability<br />
&nbsp;&nbsp;&nbsp;&nbsp; company agreement or by-laws (or the
equivalent organizational<br />
&nbsp;&nbsp;&nbsp; &nbsp; documents), as applicable, or (x) amend,
modify or change any agreement<br />
&nbsp;&nbsp;&nbsp;&nbsp; entered into by it with respect to its
capital stock or other equity<br />
&nbsp;&nbsp;&nbsp;&nbsp; interests (including any shareholders'
agreement), or (y) enter into<br />
&nbsp;&nbsp;&nbsp;&nbsp; any new agreement with respect to its
capital stock or other equity<br />
&nbsp;&nbsp;&nbsp;&nbsp; interests;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv)&nbsp;&nbsp; terminate, cancel or suspend any license, contract
or<br />
&nbsp;&nbsp;&nbsp;&nbsp; material franchise agreements which would
result in a Material Adverse<br />
&nbsp;&nbsp;&nbsp;&nbsp; Effect; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp;&nbsp; create any Subsidiary of the Borrower which will be
a<br />
&nbsp;&nbsp;&nbsp;&nbsp; direct or indirect parent of LLC or PGE
Utility or create any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Subsidiary of LLC which will be a direct
or indirect parent of NEG,<br />
&nbsp;&nbsp;&nbsp;&nbsp; Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nothing in
clause (ii), (iii) or (v) of this Section shall<br />
prohibit the consummation of a Spin-Off or any plan of
reorganization<br />
permitted by Section 7.15 (so long as the Borrower complies with
the<br />
requirements of Section 3.8) or any Qualified Restructuring.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.9&nbsp;&nbsp; Limitation on Issuance of Capital Stock.&nbsp;
(a)&nbsp;&nbsp;Except as<br />
otherwise permitted by Sections 7.3 and 7.5, the Borrower will not,
and will<br />
not permit LLC or NEG, Inc. to, issue (i) any participating
preferred stock<br />
or other participating preferred equity interests or preferred
stock or other<br />
preferred equity interests convertible to common stock or common
equity<br />
interest or (ii) any redeemable stock or other redeemable equity
interest<br />
other than common stock or other redeemable common equity interest
that is<br />
redeemable at the sole option of the Borrower, LLC or NEG, Inc., as
the case<br />
may be.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Except as otherwise permitted by Sections 7.3 and
7.5, the<br />
Borrower will not permit LLC or NEG, Inc. to issue any capital
stock or other<br />
equity interests (including by way of sales of treasury stock) or
any options<br />
(other than the Option) or warrants to purchase, or securities
convertible<br />
into, capital stock or other equity interests, except (other than
LLC) (i)<br />
for transfers and replacements of then outstanding shares of
capital stock or<br />
other equity interests, (ii) for stock splits, stock dividends and
issuances<br />
which do not decrease the percentage ownership of any of the
Covered Parties<br />
in any class of the capital stock or other equity interests of such
other<br />
Covered Parties, (iii) pursuant to employee stock option plans, or
(iv) to<br />
the extent the Borrower reasonably determines that such issuance is
required<br />
by applicable Law.&nbsp; Notwithstanding the foregoing, the
Borrower will not<br />
permit any Subsidiary whose Capital Stock is pledged pursuant
hereto to issue<br />
any additional Capital Stock of any type (other than (1) Capital
Stock issued<br />
by PGE Utility and (2) the portion of the Capital Stock issued by
a<br />
Subsidiary to an entity other than the Borrower or LLC as a pro
rata<br />
distribution to all of the shareholders of such Subsidiary)
unless,<br />
simultaneously therewith, the Collateral Agent receives a
perfected, first<br />
priority security interest therein.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.10&nbsp;
&nbsp; Business.&nbsp; The Borrower will not engage in any
business<br />
other than the current businesses engaged in by the Borrower as of
the date<br />
hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.11&nbsp;&nbsp; Regulatory Compliance.&nbsp; The Borrower will not
take any<br />
actions or allow any of its Subsidiaries to take any action which
would<br />
materially violate any applicable Utility Regulations or order
issued<br />
pursuant thereto; provided that, the foregoing shall not prevent
the Borrower<br />
or a Subsidiary from challenging the validity or effect of any
Utility<br />
Regulation or order in any proceeding provided the manner of such
challenge<br />
could not reasonably be expected to cause a Material Adverse
Effect.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.12&nbsp;&nbsp; [OMITTED].&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.13&nbsp;&nbsp; Limitation on Optional Payments and Modifications
of<br />
Convertible Notes.&nbsp; The Borrower will not (a) make or offer to
make any<br />
optional or voluntary payment, prepayment, repurchase or redemption
of, or<br />
otherwise voluntarily or optionally defease, the Convertible Notes,
or<br />
segregate funds for any such payment, prepayment, repurchase,
redemption or<br />
defeasance, (b) amend, modify or otherwise change, or consent or
agree to any<br />
amendment, modification, waiver or other change to, any of the
terms of the<br />
Convertible Notes or the Convertible Notes Indenture (other than
any such<br />
amendment, modification, waiver or other change which (i) would
extend the<br />
maturity or reduce the amount of any payment of principal thereof,
reduce the<br />
rate or extend the date for payment of interest thereon or relax
any covenant<br />
or other restriction applicable to the Borrower or any of its
Subsidiaries<br />
and (ii) does not involve the payment of a consent fee), (c)
designate any<br />
Indebtedness (other than the Obligations) as "Designated Senior
Debt" for the<br />
purposes of the Convertible Notes Indenture or (d) make any cash
payment in<br />
respect of interest on the Convertible Notes during any Convertible
Notes<br />
Blockage Period.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.14&nbsp;&nbsp; Interest Reserve Amounts.&nbsp;
(a)&nbsp;&nbsp;Until the Consolidation<br />
Date, the Borrower will not permit (a) the aggregate amount of cash
and Cash<br />
Equivalents held in the Tranche B Interest Reserve Account
(Continued Tranche<br />
B Loan) to be less than (i) on any date prior to September 2,
2005,<br />
$75,833,333.33 and (ii) on any Interest Payment Date thereafter
(after giving<br />
effect to the payment of interest made on such Interest Payment
Date), the<br />
lesser of (x) $75,833,333.33 and (y) the aggregate amount of
interest that<br />
will accrue on the Continued Tranche B Loan from such Interest
Payment Date<br />
through the Tranche B Maturity Date (such interest amount to be
calculated on<br />
any Interest Payment Date at the Eurodollar Rate for an Interest
Period<br />
approximately equal to remaining time to the Tranche B Maturity
Date (or, if<br />
shorter, one year) plus the Applicable Margin) or (b) the aggregate
amount of<br />
cash and Cash Equivalents held in the Tranche B Interest Reserve
Account (New<br />
Tranche B Loan) to be less than (i) on any date on or after the
Escrow<br />
<br />
Release Date and prior to September 2, 2005, $54,166,666.67 and
(ii) on any<br />
Interest Payment Date thereafter (after giving effect to the
payment of<br />
interest made on&nbsp; such Interest&nbsp; Payment Date), the
lesser of (x)<br />
$54,166,666.67 and (y) the aggregate amount of interest that will
accrue on<br />
the New Tranche B Loan from such Interest Payment Date through the
Tranche B<br />
Maturity Date (such interest amount to be calculated on any
Interest Payment<br />
Date at the Eurodollar Rate for an Interest Period approximately
equal to<br />
remaining time to the Tranche B Maturity Date (or, if shorter, one
year) plus<br />
the Applicable Margin).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; On or after the Consolidation Date, the Borrower
will not<br />
permit (a) the aggregate amount of cash and Cash Equivalents held
in the<br />
Tranche B Interest Reserve Account (Combined Tranche B Loan) to be
less than<br />
(i) on any date prior to September 2, 2005, $130,000,000 and (ii)
on any<br />
Interest Payment Date thereafter (after giving effect to the
payment of<br />
interest made on such Interest Payment Date), the lesser of (x)
$130,000,000<br />
and (y) the aggregate amount of interest that will accrue on the
Tranche B<br />
Loan from such Interest Payment Date through the Tranche B Maturity
Date<br />
(such interest amount to be calculated on any Interest Payment Date
at the<br />
Eurodollar Rate for an Interest Period approximately equal to
remaining time<br />
to the Tranche B Maturity Date (or, if shorter, one year) plus the
Applicable<br />
Margin).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.15&nbsp;&nbsp; Plan of Reorganization.&nbsp; The Borrower will
not propose or<br />
consent to a plan of reorganization in respect of PGE Utility that
provides<br />
for a spin-off or any distribution, transfer or disposal of assets
other than<br />
a Spin-Off (in connection with which the requirements of Section
3.8(b) are<br />
complied with); provided, that this Section 7.15 shall not prohibit
the<br />
Borrower from proposing or consenting to any plan of reorganization
in<br />
respect of PGE Utility that does not involve a spin-off by, or
any<br />
distribution, transfer or disposal of assets of, the Borrower or
any of its<br />
Subsidiaries (other than any spin-off or distribution, transfer or
disposal<br />
of assets by PGE Utility or any of its Subsidiaries that receives
fair value<br />
for the assets so disposed), so long as the requirements of Section
3.8(c) in<br />
connection therewith are satisfied; and provided, further, that,
immediately<br />
prior to, and upon consummation of, any transaction pursuant to any
such plan<br />
of reorganization, no Default or Event of Default shall have
occurred or be<br />
continuing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.16&nbsp;&nbsp; Certain Transactions.&nbsp; (a)&nbsp;&nbsp;The
Borrower will not Dispose<br />
of the Capital Stock of LLC; provided that the Borrower may Dispose
of the<br />
Capital Stock of LLC in a Qualified NEG Sale if (i) no Default or
Event of<br />
Default shall be continuing and (ii) no bankruptcy proceeding shall
be<br />
continuing in respect of LLC or NEG, Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; The Borrower will not permit LLC to Dispose of the
Capital<br />
Stock of NEG, Inc.; provided, that LLC may Dispose of the Capital
Stock of<br />
NEG, Inc. in a Qualified NEG Sale if (i) no Default or Event of
Default shall<br />
be continuing and (ii) no bankruptcy proceeding shall be continuing
in<br />
respect of LLC or NEG, Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Borrower will not permit NEG, Inc. or any of
its<br />
Subsidiaries to Dispose of any Property; provided, that (i) NEG,
Inc. or any<br />
of its Subsidiaries may consummate a Qualified Asset Sale if (x) no
Default<br />
or Event of Default shall be continuing and (y) no bankruptcy
proceeding<br />
shall be continuing in respect of LLC or NEG, Inc., (ii) NEG, Inc.
or any of<br />
<br />
its Subsidiaries may consummate a Qualified Bankruptcy Sale if no
Event of<br />
Default shall be continuing, and (iii) NEG, Inc. or any of its
Subsidiaries<br />
may consummate any Disposition permitted by Section 7.2.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; The Borrower will not permit NEG, Inc. or any of
its<br />
Subsidiaries to abandon any Property; provided, that NEG, Inc. or
any of its<br />
Subsidiaries may consummate a Qualified Abandonment if no Default
or Event of<br />
Default shall be continuing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; The Borrower will not permit NEG, Inc. or any of
its<br />
Subsidiaries to consummate any restructuring of Indebtedness or
other<br />
obligations of NEG, Inc. or any of its Subsidiaries; provided, that
NEG, Inc.<br />
or any of its Subsidiaries may consummate a Qualified Restructuring
if no<br />
Default or Event of Default shall be continuing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
8.&nbsp;&nbsp; EVENTS OF DEFAULT AND REMEDIES.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.1&nbsp;&nbsp; Events of Default.&nbsp; The occurrence of any of
the following<br />
events or circumstances shall constitute an "Event of Default"
hereunder:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;&nbsp; The Borrower shall (i) default in the payment when
due of<br />
any principal of any Tranche B Loan or any related Note or (ii)
default, and<br />
such default shall continue unremedied for three or more Business
Days, in<br />
the payment when due of any interest on any Loan or Note or any
fees or any<br />
other amounts owing hereunder or under any other Financing
Document; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Any representation, warranty or statement made or
deemed<br />
made by the Borrower herein or in any other Financing Document or
in the<br />
Disclosure Letter or in any certificate delivered to the
Administrative Agent<br />
or any Lender pursuant hereto or thereto shall prove to be untrue
in any<br />
material respect on the date as of which made or deemed made;
or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Borrower shall (i) default in the due
performance or<br />
observance by it of any term, covenant or agreement contained in
Section 6<br />
(other than Sections 6.1 and 6.2) or Section 7 or (ii) except as
set forth in<br />
clause (iii) and Section 8.1(g), default in the due performance or
observance<br />
by it of any other term, covenant or agreement contained in this
Agreement or<br />
in any other Financing Document (other than those set forth in
clauses (a)<br />
and (b) of this Section 8.1) and such default shall continue
unremedied for a<br />
period of 30 days after written notice thereof to the defaulting
party by any<br />
Lender or (iii) default in the due performance or observance by it
of any<br />
term, covenant or agreement contained in the Option Agreement;
or&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; (i)&nbsp; The Borrower shall default in any payment
of any<br />
Indebtedness when due, or (ii) the Borrower shall default in the
observance<br />
or performance of any agreement or condition relating to any
Indebtedness or<br />
any other event or condition shall occur or exist, the effect of
which event<br />
or condition is to cause, or permit the holder or holders of
such<br />
Indebtedness to cause any such Indebtedness to become due prior to
its stated<br />
maturity, or (iii) any Indebtedness of the Borrower shall be
declared to be<br />
(or shall become) due and payable, or required to be prepaid other
than by<br />
regularly scheduled prepayment, prior to the stated maturity
thereof,<br />
provided it shall not be a Default or an Event of Default under
this clause<br />
(d) unless the aggregate principal amount of all Indebtedness as
described in<br />
preceding subclauses (i), (ii) and (iii) is at least $100,000,000;
or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; The Borrower shall commence a voluntary case
concerning<br />
itself under Title 11 of the United States Code entitled
"Bankruptcy," as now<br />
or hereafter in effect, or any successor thereto (the "Bankruptcy
Code"); or<br />
an involuntary case is commenced against the Borrower, and the
petition is<br />
not controverted within 10 days, or is not dismissed within 45
days, after<br />
commencement of the case; or a custodian (as defined in the
Bankruptcy Code)<br />
is appointed for, or takes charge of, all or substantially all of
the<br />
property of the Borrower; or the Borrower commences any other
proceeding<br />
under any reorganization, arrangement, adjustment of debt, relief
of debtors,<br />
dissolution, insolvency or liquidation or similar law of any
jurisdiction<br />
whether now or hereafter in effect relating to the Borrower; or
there is<br />
commenced against the Borrower any such proceeding which remains
undismissed<br />
for a period of 60 days; or the Borrower is adjudicated insolvent
or<br />
bankrupt; or any order of relief or other order approving any such
case or<br />
proceeding is entered; or the Borrower suffers any appointment of
any<br />
custodian or the like for it or any substantial part of its
property to<br />
continue undischarged or unstayed for a period of 45 days; or the
Borrower<br />
makes a general assignment for the benefit of creditors; or any
corporate,<br />
limited liability company or similar action is taken by the
Borrower for the<br />
purpose of effecting any of the foregoing; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; (i) Any Plan shall fail to satisfy the minimum
funding<br />
standard required for any plan year or part thereof under Section
412 of the<br />
Code or Section 302 of ERISA or a waiver of such standard or
extension of any<br />
amortization period is sought or granted under Section 412 of the
Code or<br />
Section 303 or 304 of ERISA, a Reportable Event shall have
occurred, a<br />
contributing sponsor (as defined in Section 4001(a)(13) of ERISA)
of a Plan<br />
subject to Title IV of ERISA shall be subject to the advance
reporting<br />
requirement&nbsp; of&nbsp; PBGC&nbsp; Regulation&nbsp;
Section&nbsp; 4043.61&nbsp; (without&nbsp; regard&nbsp; to<br />
subparagraph (b)(1) thereof) and an event described in subsection
..62, .63,<br />
..64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be
reasonably<br />
expected to occur with respect to such Plan within the following 30
days, any<br />
Plan which is subject to Title IV of ERISA shall have had or is
likely to<br />
have a trustee appointed to administer such Plan, any Plan which is
subject<br />
to Title IV of ERISA is, shall have been or is likely to be
terminated or to<br />
be the subject of termination proceedings under ERISA, any Plan
shall have an<br />
Unfunded Current Liability, a contribution required to be made with
respect<br />
to a Plan or a Foreign Pension Plan has not been timely made, the
Borrower or<br />
any Subsidiary of the Borrower or any ERISA Affiliate has incurred
or is<br />
likely to incur any liability to or on account of a Plan under
Section 409,<br />
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or<br />
Section 401(a)(29), 4971 or 4975 of the Code or on account of a
group health<br />
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2)
of the<br />
Code) under Section 4980B of the Code, or the Borrower or any
Subsidiary of<br />
the Borrower has incurred or is likely to incur liabilities
pursuant to one<br />
or more employee welfare benefit plans (as defined in Section 3(1)
of ERISA)<br />
that provide benefits to retired employees or other former
employees (other<br />
than as required by Section 601 of ERISA) or Plans or Foreign
Pension Plans,<br />
a "default" within the meaning of Section 4219(c)(5) of ERISA shall
occur<br />
with respect to any Plan, any applicable law, rule or regulation is
adopted,<br />
changed or interpreted, or the interpretation or administration
thereof is<br />
changed, in each case after the date hereof, by any governmental
authority or<br />
agency or by any court (a "Change in Law"), or, as a result of a
Change in<br />
Law, an event occurs following a Change in Law, with respect to or
otherwise<br />
affecting any Plan; (ii) there shall result from any such event or
events the<br />
imposition of a lien, the granting of a security interest, or a
liability or<br />
a material risk of incurring a liability; and (iii) such lien,
security<br />
interest or liability, either individually and/or in the aggregate,
has had,<br />
or could reasonably be expected to have, a Material Adverse Effect;
or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;&nbsp; Any of the Security Documents shall cease to be in
full<br />
force and effect, or shall cease to give the Collateral Agent and
each Lender<br />
the Liens, rights, powers and privileges purported to be created
thereby<br />
(including, without limitation, a perfected security interest in,
and Lien<br />
on, all of the Collateral, in favor of the Collateral Agent and
each Lender,<br />
superior to and prior to the rights of all third Persons and
subject to no<br />
other Liens); any Covered Party shall default in the due
performance or<br />
observance of any term, covenant or agreement on its part to be
performed or<br />
observed pursuant to any Security Document and such default shall
continue<br />
beyond the period of grace, if any, specifically applicable thereto
pursuant<br />
to the terms of such Security Document; or the Borrower or any
grantor party<br />
to any Security Document shall assert in writing that (i) any
Security<br />
Document is not in full force and effect or does not create the
security<br />
interest purported to be created thereby, (ii) any security
interest<br />
purported to be created by any Security Document is not a perfected
first<br />
priority security interest or (iii) a Governmental Approval or a
consent or<br />
approval of any Person was required in connection with any Security
Document<br />
but was not obtained or is not effective; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;&nbsp; One or more judgments, decrees or attachments shall
be<br />
entered against the Borrower involving in the aggregate for the
Borrower a<br />
liability (not paid or fully covered by a reputable and solvent
insurance<br />
company) of $100,000,000 or more and such judgments, decrees and
attachments<br />
either shall be final and non-appealable or shall not be vacated,
discharged<br />
or stayed or bonded pending appeal for any period of 60 consecutive
days; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp; Any final and non-appealable order shall be issued
by FERC,<br />
CPUC or other Governmental Authority that could reasonably be
expected to<br />
have a Material Adverse Effect; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;&nbsp; The Option Agreement shall cease to be in full
force and<br />
effect or shall cease to give the Holders the rights, powers and
privileges<br />
purported to be created thereby; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;&nbsp; The Convertible Notes shall cease, for any reason,
to be<br />
validly subordinated to the Obligations as provided in the
Convertible Notes<br />
Indenture, or the Borrower, any of its Subsidiaries, the trustee
under the<br />
Convertible Notes Indenture or any holder or holders of $70,000,000
or more<br />
of the Convertible Notes shall so assert in writing and such
assertion shall<br />
not have been withdrawn, rescinded or otherwise retracted in
writing within<br />
15 days thereof;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;&nbsp; PGE Utility or any of its Subsidiaries shall
convey, sell,<br />
lease, spin-off, transfer or otherwise dispose of any Material
Reorganization<br />
Asset (other than in connection with a Spin-Off, provided that the
Borrower<br />
complies with the requirements of Section 3.8); or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;&nbsp; A case under Chapter 7 of the Bankruptcy Code shall
be<br />
commenced by or against PGE Utility.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.2&nbsp;&nbsp; Acceleration.&nbsp; (a)&nbsp;&nbsp;If an Event of
Default specified in<br />
Section 8.1(e) shall occur, automatically the Tranche B Loan (with
accrued<br />
<br />
interest thereon) and all other amounts owing under the Financing
Documents<br />
shall immediately become due and payable.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; If any Event of Default (other than an Event of
Default<br />
referred to in Section 8.1(e)) shall occur, then the Administrative
Agent<br />
may, and shall upon the instructions of the Required Waiver
Lenders, by<br />
notice to the Borrower declare the Tranche B Loan, all accrued and
unpaid<br />
interest thereon and all other amounts owing to the Tranche B
Lenders under<br />
the Financing Documents to be due and payable, whereupon the same
shall<br />
become immediately due and payable.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Except as expressly provided above in this Section
8.2,<br />
presentment, demand, protest and all other notices and other
formalities of<br />
any kind are hereby expressly waived by the Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.3&nbsp;&nbsp; Other Remedies.&nbsp; Upon the occurrence and
during the<br />
continuation of an Event of Default, the Administrative Agent may,
and shall<br />
upon the instructions of the Required Waiver Lenders, exercise any
or all<br />
rights and remedies at law or in equity (in any combination or
order that the<br />
Administrative Agent (acting upon the instructions of the Required
Waiver<br />
Lenders) may elect), including without limitation or prejudice to
any Tranche<br />
B Lender's other rights and remedies, any and all rights and
remedies<br />
available under any of the Financing Documents; provided that any
Tranche B<br />
Lender may exercise any or all rights and remedies at law or in
equity as<br />
provided hereunder upon the occurrence and during the continuation
of an<br />
Event of Default described in Section 8.1(a) or 8.1(e) above.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
9.&nbsp;&nbsp; MISCELLANEOUS.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.1&nbsp;&nbsp; Costs and Expenses.&nbsp; The Borrower shall,
whether or not the<br />
transactions contemplated hereby are consummated and whether or not
any of<br />
the following are incurred before or after the Closing Date, pay,
within five<br />
(5) Business Days after demand, all reasonable costs and expenses
(including<br />
reasonable fees and expenses of counsel and consultants) of (a)
the<br />
Administrative Agent (in its capacity as such and in its capacity
as a<br />
Lender), the Syndication Agent, the Lead Arranger, the Bookrunner,
each<br />
Continuing Tranche B Lender, the Collateral Agent and each Holder
in<br />
connection with the preparation, issuance, delivery, filing,
recording and<br />
administration of this Agreement, the other Financing Documents,
and any<br />
other documents which may be delivered in connection herewith or
therewith<br />
and (b) the Administrative Agent (in its capacity as such and in
its capacity<br />
as a Lender), the Syndication Agent, the Lead Arranger, the
Bookrunner, each<br />
Lender, the Collateral Agent and each Holder in connection with (i)
any and<br />
all amounts which the Administrative Agent, each Lender, the
Collateral Agent<br />
and each Holder has paid relative to curing any Event of Default
resulting<br />
from the acts or omissions of the Borrower under this Agreement or
any other<br />
Financing Document, (ii) the exercise, enforcement or attempted
exercise,<br />
enforcement of, or the investigation or preservation of any rights
or<br />
remedies under, this Agreement or any other Financing Document, or
(iii) any<br />
amendment, waiver or consent with respect to any provision
contained in this<br />
Agreement or any other Financing Document.&nbsp; In addition, the
Borrower shall<br />
pay any and all stamp and other taxes and fees payable or
determined to be<br />
payable in connection with the execution, delivery, filing and
recording of<br />
this Agreement or any other Financing Document, or any other
document which<br />
may be delivered in connection with this Agreement, and agrees to
save the<br />
Administrative Agent, the Syndication Agent, the Lead Arranger,
the<br />
<br />
Bookrunner, each Lender, the Collateral Agent and each Holder
harmless from<br />
and against any and all liabilities with respect to or resulting
from any<br />
delay in paying or omission to pay such taxes and fees.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.2&nbsp;&nbsp; Indemnity.&nbsp; Whether or not the transactions
contemplated<br />
hereby are consummated:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;&nbsp; The Borrower shall pay, indemnify, and hold each of
the<br />
Administrative Agent, the Syndication Agent, the Lead Arranger,
the<br />
Bookrunner, each Lender, the Collateral Agent and each Holder and
each of<br />
their respective officers, directors, employees, counsel, agents
and<br />
attorneys-in-fact and Affiliates (each, an "Indemnified Person")
harmless<br />
from and against any and all liabilities, obligations, losses,
damages,<br />
penalties, claims, actions, judgments, suits, costs, charges,
expenses or<br />
disbursements (including reasonable legal fees and expenses and
reasonable<br />
fees and expenses of consultants) of any kind or nature whatsoever
which may<br />
at any time (including at any time following repayment of the Loan
or the<br />
termination, resignation or replacement of any Administrative
Agent, the<br />
Syndication Agent, Lead Arranger, Bookrunner, Lender, Collateral
Agent or<br />
Holder) be imposed on, incurred by or asserted against any such
Person in any<br />
way relating to or arising out of this Agreement or any other
Financing<br />
Document, including the Security Documents and any other document
or<br />
instrument contemplated by or referred to herein or therein, or
the<br />
transactions contemplated hereby and thereby (including, without
limitation,<br />
any losses incurred by any Lender as a result of any
misrepresentation by the<br />
Borrower or any of its Subsidiaries hereunder or under any other
Financing<br />
Document or any failure by any Covered Party to perform any of
its<br />
obligations hereunder or under any other Financing Document), or
any action<br />
taken or omitted by any such Person under or in connection with any
of the<br />
foregoing, including with respect to the exercise by the
Administrative<br />
Agent, the Syndication Agent, the Lead Arranger, the Bookrunner,
any Lender,<br />
the Collateral Agent and any Holder of any of its respective rights
or<br />
remedies under any of the Financing Documents, and any
investigation,<br />
litigation&nbsp; or&nbsp; proceeding&nbsp; (including&nbsp;
any&nbsp; bankruptcy,&nbsp; insolvency,<br />
reorganization or other similar proceeding or appellate proceeding)
related<br />
to this Agreement or any other Financing Document or the Loan, or
the use of<br />
the proceeds thereof, whether or not any Indemnified Person is a
party<br />
thereto (all the foregoing, collectively, the "Indemnified
Liabilities");<br />
provided, that the Borrower shall have no obligation hereunder to
any<br />
Indemnified Person with respect to Indemnified Liabilities arising
from the<br />
gross negligence or willful misconduct of such Indemnified Person
as<br />
determined by a final judgment of a court of competent
jurisdiction.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Environmental Indemnity.&nbsp;
(i)&nbsp;&nbsp;Without in any way limiting<br />
the generality of the other provisions contained in this Section
9.2, the<br />
Borrower agrees to defend, protect, indemnify, save and hold
harmless each<br />
Indemnified Person, whether as beneficiary of any of the Security
Documents,<br />
as a mortgagee in possession, or as successor-in-interest to the
Borrower by<br />
foreclosure deed or deed in lieu of foreclosure, or otherwise, from
and<br />
against any and all liabilities, obligations, losses, damages
(including<br />
foreseeable and unforeseeable consequential damages and punitive
claims),<br />
penalties, fees, claims, actions, judgments, suits, costs,
disbursements<br />
(including, without limitation, reasonable legal fees and expenses
and<br />
consultants' fees and disbursements) and expenses (collectively,
"Losses") of<br />
any kind or nature whatsoever that may at any time be incurred by,
imposed<br />
on, asserted or awarded against any such Indemnified Person
directly or<br />
indirectly based on, or arising out of or resulting from, (A) the
actual or<br />
alleged presence of Hazardous Materials on, in, under or affecting
all or any<br />
portion of any Property of the Borrower, PGE Utility or any member
of the NEG<br />
Group whether or not the same originates or emanates from any such
Property<br />
or any property adjoining or adjacent to any such Property or from
properties<br />
at which any Hazardous Materials generated, stored or handled by
the Borrower<br />
were Released or disposed of, (B) any Environmental Claim relating
to any<br />
such Property or (C) the exercise of any Secured Party's rights
under any of<br />
the provisions of the Security Documents (the "Indemnified
Matters"), whether<br />
any of the Indemnified Matters arise before or after foreclosure of
any of<br />
the security interests or other taking of title to all or any
portion of the<br />
Collateral by the Collateral Agent or any Lender, including,
without<br />
limitation, (x) the costs of removal of any and all Hazardous
Materials from<br />
all or any portion of any such Property or any property adjoining
or adjacent<br />
to any such Property, (y) additional costs required to take
reasonable<br />
precautions to protect against the Release of Hazardous Materials
on, in,<br />
under or affecting any such Property into the air, any body of
water, any<br />
other public domain or any surrounding areas, and (z) costs
incurred to<br />
comply, in connection with all or any portion of any such Property
or any<br />
surrounding areas, with all applicable Environmental Laws with
respect to<br />
Hazardous Materials, except to the extent that any such Indemnified
Matter<br />
arises from the gross negligence or willful misconduct of such
Indemnified<br />
Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii)&nbsp;&nbsp; In no event shall any site visit, observation, or
testing<br />
&nbsp;&nbsp;&nbsp;&nbsp; by any Indemnified Person (or any
representative of any such Person) be<br />
&nbsp;&nbsp;&nbsp;&nbsp; deemed to be a representation or warranty
that Hazardous Materials are<br />
&nbsp;&nbsp;&nbsp;&nbsp; or are not present in, on, or under, any
Property of the Borrower or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any member of the NEG Group, or that there
has been or shall be<br />
&nbsp;&nbsp;&nbsp;&nbsp; compliance with any Environmental
Law.&nbsp; Neither the Borrower nor any<br />
&nbsp;&nbsp;&nbsp;&nbsp; other Person is entitled to rely on any
site visit, observation, or<br />
&nbsp;&nbsp;&nbsp;&nbsp; testing by any Indemnified Person.&nbsp;
No Indemnified Person owes any duty<br />
&nbsp;&nbsp;&nbsp;&nbsp; of care to protect the Borrower or any
other Person against, or to<br />
&nbsp;&nbsp;&nbsp;&nbsp; inform the Borrower or any other Person
of, any Hazardous Materials or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any other adverse condition affecting any
such Property.&nbsp; No<br />
&nbsp;&nbsp;&nbsp;&nbsp; Indemnified Person shall be obligated to
disclose to the Borrower or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any other Person any report or findings
made as a result of, or in<br />
&nbsp;&nbsp;&nbsp;&nbsp; connection with, any site visit,
observation, or testing by any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Indemnified Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; Survival; Defense.&nbsp; The obligations in this
Section 9.2<br />
shall survive payment of the Loans and all other obligations
hereunder.&nbsp; At<br />
the election of any Indemnified Person, the Borrower's
indemnification<br />
obligations under this Section 9.2 shall include the obligation to
defend<br />
such Indemnified Person using legal counsel satisfactory to such
Indemnified<br />
Person, at the sole cost and expense of the Borrower.&nbsp; All
amounts owing<br />
under this Section 9.2 shall be paid within 30 days after
demand.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; Contribution.&nbsp; To the extent that any
undertaking in the<br />
preceding paragraphs of this Section 9.2 may be unenforceable
because it is<br />
violative of any law or public policy, the Borrower will contribute
the<br />
maximum portion that it is permitted to pay and satisfy under
applicable Law<br />
to the payment and satisfaction of such undertaking.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; Settlement.&nbsp; So long as the Borrower is in
compliance with<br />
its obligations under this Section 9.2, the Borrower shall not be
liable to<br />
<br />
<br />
any Indemnified Person under this Section 9.2 for any settlement
made by such<br />
Indemnified Person without the Borrower's consent.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; No&nbsp; Indemnity&nbsp; for&nbsp;
Intercreditor&nbsp; Agreement&nbsp; Disputes.&nbsp;<br />
 Notwithstanding anything to the contrary in this Agreement, the
Borrower<br />
shall not be required under any circumstances to indemnify any
Lender or<br />
agent, or otherwise be required to reimburse any Lender or agent,
for any<br />
Losses resulting solely from disputes between or among Lenders with
respect<br />
to the Intercreditor Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.3&nbsp;&nbsp; Notices.&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;All&nbsp;
notices,&nbsp; requests&nbsp; and&nbsp; other<br />
communications provided for hereunder shall be in writing
(including, unless<br />
the context expressly otherwise provides, by facsimile
transmission, provided<br />
that any matter transmitted by the Borrower by facsimile (i) shall
be<br />
immediately confirmed by a telephone call to the recipient at the
number<br />
specified on Schedule 9.3 (or, with respect to any Lender, on the
Lender<br />
Addendum for such Lender or as on file with the Administrative
Agent), and<br />
(ii) shall be followed promptly by a hard copy original thereof by
express<br />
courier) and faxed or delivered, to the address or facsimile number
specified<br />
for notices on Schedule 9.3 (or, with respect to any Lender, on the
Lender<br />
Addendum for such Lender or as on file with the Administrative
Agent) or to<br />
such other address as shall be designated by such party in a
written notice<br />
to the other parties hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; All such notices, requests and communications (i)
sent by<br />
express courier will be effective upon delivery to or refusal to
accept<br />
delivery by the addressee, and (ii) transmitted by facsimile will
be<br />
effective when sent and facsimile confirmation received; except
that all<br />
notices and other communications to the Administrative Agent or any
Lender<br />
shall not be effective until actually received.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Borrower acknowledges and agrees that any
agreement of<br />
the Administrative Agent or any Lender to receive certain notices
by<br />
telephone and facsimile is solely for the convenience and at the
request of<br />
the Borrower.&nbsp; The Administrative Agent and each Lender shall
be entitled to<br />
rely on the authority of any Person purporting to be a Person
authorized by<br />
the Borrower to give such notice and the Administrative Agent and
each Lender<br />
shall not have any liability to the Borrower or other Person on
account of<br />
any action taken or not taken by any of the Administrative Agent or
such<br />
Lender in reliance upon such telephonic or facsimile notice.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.4&nbsp;&nbsp; Benefit of Agreement.&nbsp; This Agreement shall be
binding upon<br />
and inure to the benefit of and be enforceable by the respective
successors<br />
and permitted assigns of the parties hereto.&nbsp; The Borrower may
not assign or<br />
otherwise transfer any of its rights under this Agreement or any of
the other<br />
Financing Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.5&nbsp;&nbsp; No Waiver; Remedies Cumulative.&nbsp; No failure or
delay on the<br />
part of the Administrative Agent or any Lender or the holder of any
Note in<br />
exercising any right, power or privilege hereunder or under any
other<br />
Financing Document and no course of dealing between the Borrower
and the<br />
Administrative Agent or any Lender or the holder of any Note shall
operate as<br />
a waiver thereof, nor shall any single or partial exercise of any
right,<br />
power or privilege hereunder or under any other Financing Document
preclude<br />
any other or further exercise thereof or the exercise of any other
right,<br />
power or privilege hereunder or thereunder.&nbsp; No notice to or
demand on the<br />
Borrower in any case shall entitle the Borrower to any other or
further<br />
notice or demand in similar or other circumstances or constitute a
waiver of<br />
the rights of the Administrative Agent or any Lender or the holder
of any<br />
Note to take any other or further action in any circumstances
without notice<br />
or demand.&nbsp; All remedies, either under this Agreement or any
other Financing<br />
Document or pursuant to any applicable Law or otherwise afforded to
the<br />
Administrative Agent or any Lender shall be cumulative and not
alternative.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.6&nbsp;&nbsp; No Third Party Beneficiaries.&nbsp; This Agreement
and the other<br />
Financing Documents are solely for the benefit of the Lenders, the
Borrower<br />
and the other parties hereto and thereto, and no other Person shall
have any<br />
rights hereunder or thereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.7&nbsp;&nbsp; Reinstatement.&nbsp; To the extent that the
Administrative Agent<br />
or any Lender receives any payment by or on behalf of the Borrower,
which<br />
payment or any part thereof is subsequently invalidated, declared
to be<br />
fraudulent or preferential, set aside or required to be repaid to
the<br />
Borrower or to its estate, trustee, receiver, custodian or any
other party<br />
under any Bankruptcy Law or otherwise, then to the extent of the
amount so<br />
required to be repaid, the obligation or part thereof which has
been paid,<br />
reduced or satisfied by the amount so repaid shall be reinstated by
the<br />
amount so repaid and shall be included within the Obligations as of
the date<br />
such initial payment, reduction or satisfaction occurred.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.8&nbsp;&nbsp; No Immunity.&nbsp; To the extent that the Borrower
may be<br />
entitled, in any jurisdiction in which judicial proceedings may at
any time<br />
be commenced with respect to this Agreement or any other Financing
Document,<br />
to claim for itself or its revenues, assets or Properties any
immunity from<br />
suit, the jurisdiction of any court, attachment prior to judgment,
attachment<br />
in aid of execution of judgment, set-off, execution of a judgment
or any<br />
other legal process, and to the extent that in any such
jurisdiction there<br />
may be attributed to such Person such an immunity (whether or not
claimed),<br />
the Borrower hereby irrevocably agrees not to claim and hereby
irrevocably<br />
waives such immunity to the fullest extent permitted by the Law of
the<br />
applicable jurisdiction.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.9&nbsp;&nbsp; Counterparts.&nbsp; This Agreement may be executed
in any number<br />
of counterparts and by the different parties hereto on separate
counterparts,<br />
each of which when so executed and delivered by facsimile or
otherwise shall<br />
be an original, but all of which shall together constitute one and
the same<br />
instrument.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.10&nbsp;&nbsp; Amendment or Waiver.&nbsp; (a)&nbsp;&nbsp;No
provision of this Agreement<br />
or any other Financing Document may be amended, supplemented,
modified or<br />
waived, except by a written instrument signed by each of the
Required Waiver<br />
Lenders and the Borrower and each of LLC and NEG, Inc., to the
extent that it<br />
is a party thereto, and, to the extent that its rights or
obligations may be<br />
affected thereby, the Administrative Agent or the Collateral
Agent.&nbsp;<br />
 Notwithstanding the foregoing provisions, no such waiver and no
such<br />
amendment, supplement or modification shall (i) increase or extend
the New<br />
Tranche B Commitment of any Lender (it being understood that
waivers or<br />
modifications after the Closing Date of covenants, Defaults or
Events of<br />
Default shall not constitute an increase or extension of any New
Tranche B<br />
Commitment of any Lender), without the prior written consent of
such Lender,<br />
(ii) postpone or delay any date fixed by this Agreement or any
other<br />
Financing Document for any payment of principal, interest, fees or
other<br />
<br />
amounts due to any Lender hereunder or under any other Financing
Document (it<br />
being understood that waivers or modifications after the Closing
Date of<br />
covenants, Defaults or Events of Default shall not constitute a
postponement<br />
or delay in any date fixed by this Agreement or any other Financing
Document<br />
for any payment of principal, interest, fees or other amounts due
to any<br />
Lender hereunder or under any other Financing Document), without
the prior<br />
written consent of such Lender, (iii) reduce the principal of, or
the rate of<br />
interest specified in any Financing Document on, any Loan of any
Lender or<br />
reduce the amount of fees payable to any Lender, without the prior
written<br />
consent of such Lender, (iv) release all or any substantial part of
the<br />
Collateral except as shall be otherwise provided in any Security
Document or<br />
other Financing Document or consent to the assignment or transfer
by the<br />
Borrower of any of its respective obligations under this Agreement
or any<br />
other Financing Document, without the prior written consent of each
Lender,<br />
(v) amend, modify or waive any provision of Section 3.7, without
the prior<br />
written consent of each Lender affected thereby, (vi) amend, modify
or waive<br />
any provision of Section 7.1, 7.3, 7.4 or 7.5, without the prior
written<br />
consent of the Supermajority Lenders, (vii) amend, modify or waive
any<br />
provision of this Section 9.10 or Section 9.1 or 9.2, without the
prior<br />
written consent of each Lender, (viii) reduce the percentage
specified in or<br />
otherwise amend the definition of Required Waiver Lenders or
Supermajority<br />
Lenders, without the prior written consent of each Lender, (ix)
amend, modify<br />
or waive any provision of Section 10, without the prior written
consent of<br />
the Administrative Agent, or (x) amend, modify or waive any
provision of<br />
Section 11, without the prior written consent of the Collateral
Agent.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Any waiver and any amendment, supplement or
modification<br />
made or entered into in accordance with Section 9.10(a) shall be
binding upon<br />
the Borrower, the Administrative Agent, the Lenders and their
successors and<br />
assigns.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.11&nbsp;&nbsp; Assignments, Participations, etc.&nbsp;
(a)&nbsp;&nbsp;Each Lender may,<br />
without the consent of the Borrower, but with prior notice to
the<br />
Administrative Agent, sell or assign any part of the Loan of such
Lender and<br />
the other rights and obligations of such Lender to any Person or
any assignee<br />
thereof (an "Assignee") unless the sale or assignment of the Loan
and such<br />
other rights and obligations of such Lender would reasonably put
the business<br />
of the Borrower at a competitive disadvantage, then such sale or
assignment<br />
shall require the consent of the Borrower.&nbsp; The assigning
Lender and the<br />
Assignee shall enter into an assignment agreement, in form and
substance<br />
satisfactory to the Administrative Agent (an "Assignment and
Acceptance"),<br />
with respect to the sale or assignment of the Loan to be assigned
and,<br />
subject to paragraphs (e) and (f) of this Section 9.11, upon
execution and<br />
delivery of such Assignment and Acceptance, (i) the Assignee
thereunder shall<br />
be a party hereto and, to the extent that rights and obligations
hereunder<br />
have been assigned to it pursuant to such Assignment and
Acceptance, shall<br />
have the rights and obligations of a Lender hereunder and under the
other<br />
Financing Documents, and this Agreement shall be deemed to be
amended to the<br />
extent, but only to the extent, necessary to effect the addition of
the<br />
Assignee, and any reference to the assigning Lender hereunder or
under the<br />
other Financing Documents shall thereafter refer to such Lender and
to the<br />
Assignee to the extent of their respective interests, and (ii) the
assigning<br />
Lender shall, to the extent that rights and obligations hereunder
and under<br />
the other Financing Documents have been assigned by it pursuant to
such<br />
assignment agreement, relinquish its rights and be released from
its<br />
obligations under the Financing Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Each Lender may sell participations to one or more
banks or<br />
other entities (other than the Borrower or any of its Affiliates)
in or to<br />
all or a portion of its rights and obligations under this Agreement
and such<br />
Lender's Note; provided, however, that (i) such Lender's
obligations under<br />
this Agreement shall remain unchanged, (ii) such Lender shall
remain solely<br />
responsible to the other parties hereto for the performance of
such<br />
obligations, (iii) such Lender shall remain the holder of any such
Note for<br />
all purposes of this Agreement, (iv) the Borrower and the other
Lenders shall<br />
continue to deal solely and directly with such Lender in connection
with such<br />
Lender's rights and obligations under this Agreement and (v) no
participant<br />
under any such participation in an amount less than $50,000,000
shall have<br />
any right to approve any amendment or waiver of any provision of
this<br />
Agreement or any Note, or any consent to any departure by the
Borrower<br />
therefrom, except to the extent that such amendment, waiver or
consent would<br />
reduce the principal of, or interest on, the Note or any fees or
other<br />
amounts payable hereunder, or release of all or substantially all
of the<br />
Collateral, in each case to the extent subject to such
participation, or<br />
postpone any date fixed for any payment of principal of, or
interest on, the<br />
Notes or any fees or other amounts payable hereunder, in each case
to the<br />
extent subject to such participation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; A Lender may, in connection with any assignment
or<br />
participation or proposed assignment or participation pursuant to
this<br />
Section 9.11, disclose to the assignee or participant or proposed
assignee or<br />
participant, any information relating to the Borrower furnished to
such<br />
Lender by or on behalf of the Borrower; provided, that prior to any
such<br />
disclosure, the assignee or participant or proposed assignee or
participant<br />
shall agree to preserve the confidentiality of any confidential
information<br />
relating to the Borrower received by it from such Lender.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; Notwithstanding any other provision contained in
this<br />
Agreement or any other Financing Document to the contrary, any
Lender may<br />
assign all or any portion of the Loan held by it as collateral
security,<br />
provided that any payment in respect of such assigned Loan or Note
made by<br />
the Borrower to or for the account of the assigning or pledging
Lender in<br />
accordance with the terms of this Agreement shall satisfy the
Borrower's<br />
obligations hereunder in respect to such assigned Loan or Note to
the extent<br />
of such payment.&nbsp; No such assignment shall release the
assigning Lender from<br />
its obligations hereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; The Borrower hereby designates the Administrative
Agent to<br />
serve as the Borrower's agent, solely for purposes of this Section
9.11, to<br />
maintain a register (the "Register") on which it will record the
Loans made<br />
by each of the Lenders and each repayment in respect of the
principal amount<br />
of the Loans of each Lender.&nbsp; Failure to make any such
recordation, or any<br />
error in such recordation shall not affect the Borrower's
obligations in<br />
respect of such Loans.&nbsp; With respect to any Lender, the
transfer of the<br />
rights to the principal of, and interest on, any Loan shall not be
effective<br />
until such transfer is recorded on the Register maintained by
the<br />
Administrative Agent with respect to ownership of such Loans and
prior to<br />
such recordation all amounts owing to the transferor with respect
to such<br />
Loans shall remain owing to the transferor.&nbsp; The registration
of assignment<br />
or transfer of all or part of any Loans shall be recorded by
the<br />
Administrative Agent on the Register only upon the acceptance by
the<br />
Administrative Agent of a properly executed and delivered
Assignment and<br />
Acceptance pursuant to Section 9.11(a).&nbsp; The Borrower agrees
to indemnify the<br />
Administrative Agent from and against any and all losses, claims,
damages and<br />
liabilities of whatsoever nature which may be imposed on, asserted
against or<br />
incurred by the Administrative Agent in performing its duties under
this<br />
Section 9.11(e).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;&nbsp; Upon its receipt of an Assignment and Acceptance
executed<br />
by an assigning Lender and an Assignee (and, in any case where the
consent of<br />
the Borrower is required by this Section, by the Borrower) together
with<br />
payment to the Administrative Agent of a registration and
processing fee of<br />
$3,500, the Administrative Agent shall (i) promptly accept such
Assignment<br />
and Acceptance and (ii) on the effective date determined pursuant
thereto<br />
record the information contained therein in the Register and give
notice of<br />
such acceptance and recordation to the Borrower.&nbsp; On or prior
to such<br />
effective date, the Borrower, at its own expense, upon request,
shall execute<br />
and deliver to the Administrative Agent (in exchange for the Note
of the<br />
assigning Lender) a new Note to the order of such Assignee in an
amount equal<br />
to the Loan acquired by it pursuant to such Assignment and
Acceptance and, if<br />
such assigning Lender has retained a Loan, a new Note to the order
of such<br />
assigning Lender in an amount equal to the Loan retained by it
hereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.12&nbsp;&nbsp; Survival.&nbsp;&nbsp;&nbsp;
(a)&nbsp;&nbsp;All&nbsp; indemnities&nbsp; set&nbsp; forth&nbsp;
herein,<br />
including, without limitation, Section 9.2, shall survive the
execution and<br />
delivery of this Agreement and the Notes and the making and
repayment of the<br />
Loans.&nbsp; In addition, each representation and warranty made or
deemed to be<br />
made pursuant hereto shall survive the making of such
representation and<br />
warranty, and no Lender shall be deemed to have waived, by reason
of making<br />
any extension of credit, any Default or Event of Default which may
arise by<br />
reason of such representation or warranty proving to have been
false or<br />
misleading, notwithstanding that such Lender may have had notice or
knowledge<br />
or reason to believe that such representation or warranty was false
or<br />
misleading at the time such extension of credit was made.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Notwithstanding&nbsp; the&nbsp; execution&nbsp;
and&nbsp; delivery&nbsp; of&nbsp; this<br />
Agreement, all representations and warranties of the Borrower under
the<br />
Existing Credit Agreement and the other Financing Documents (as
defined in<br />
the Existing Credit Agreement) and all obligations of the Borrower
under<br />
Sections 9.1 and 9.2 of the Existing Credit Agreement and other
payment<br />
obligations of the Borrower under Sections 2.5, 2.7, 2.8, 3.2 and
3.4 of the<br />
Existing Credit Agreement accrued as of the Closing Date shall not
terminate<br />
and shall survive the execution and delivery of this Agreement and
the other<br />
Financing Documents (as defined herein).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.13&nbsp;&nbsp; WAIVER OF JURY TRIAL.&nbsp; EACH OF THE PARTIES
HERETO HEREBY<br />
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF
THEM MAY<br />
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT<br />
OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY
OTHER<br />
FINANCING DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS<br />
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING HERETO
OR<br />
THERETO.&nbsp; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDERS TO ENTER<br />
INTO THIS AGREEMENT.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.14&nbsp;&nbsp; Right of Set-off.&nbsp; In addition to any rights
now or<br />
hereafter granted under applicable Law or otherwise, and not by way
of<br />
limitation of any such rights, upon the occurrence of an Event of
Default,<br />
each Lender is hereby authorized at any time or from time to time,
without<br />
presentment, demand, protest or other notice of any kind to the
Borrower or<br />
to any other Person, any such notice being hereby expressly waived,
to set<br />
<br />
off and to appropriate and apply any and all deposits (general or
special)<br />
and any other Indebtedness at any time held or owing by such
Lender<br />
(including without limitation by branches and agencies of such
Lender<br />
wherever located), to or for the credit or the account of the
Borrower<br />
against and on account of the Obligations or liabilities of the
Borrower to<br />
such Lender under this Agreement or any of the other Financing
Documents,<br />
including all claims of any nature or description arising out of or
connected<br />
with this Agreement or any other Financing Document, irrespective
of whether<br />
such Lender shall have made any demand hereunder and although
said<br />
Obligations, liabilities or claims, or any of them, shall be
contingent or<br />
unmatured.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.15&nbsp;&nbsp; Severability.&nbsp; Any provision hereof which is
prohibited or<br />
unenforceable in any jurisdiction shall, as to such jurisdiction,
be<br />
ineffective to the extent of such prohibition or unenforceability
without<br />
invalidating the remaining provisions hereof and without affecting
the<br />
validity or enforceability of any provision in any other
jurisdiction.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.16&nbsp;&nbsp; Governing Law; Submission to Jurisdiction.&nbsp;
(a)&nbsp;&nbsp;THIS<br />
AGREEMENT AND EACH OF THE OTHER FINANCING DOCUMENTS (UNLESS SUCH
DOCUMENT<br />
EXPRESSLY STATES OTHERWISE THEREIN) SHALL BE GOVERNED BY, AND
CONSTRUED IN<br />
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE<br />
CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW
YORK<br />
GENERAL OBLIGATIONS LAW).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; The&nbsp; Borrower&nbsp; hereby&nbsp; submits&nbsp;
to&nbsp; the&nbsp; nonexclusive<br />
jurisdiction of the United States District Court for the Southern
District of<br />
New York and of any New York State court sitting in New York City
for the<br />
purposes of all legal proceedings arising out of or relating to
this<br />
Agreement, any other Financing Document or the transactions
contemplated<br />
hereby or thereby.&nbsp; The Borrower hereby irrevocably waives, to
the fullest<br />
extent permitted by applicable Law, any objection which it may now
or<br />
hereafter have to the laying of the venue of any such proceeding
brought in<br />
such a court and any claim that any such proceeding brought in such
a court<br />
has been brought in an inconvenient forum.&nbsp; The Borrower
hereby irrevocably<br />
appoints Corporation Service Company (the "Process Agent"), with an
office on</font></p>

<p><font size="2" face=
"Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
th</font></p>

<p><font size="2" face=
"Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the date hereof at 1177 Avenue of the Americas, 17&nbsp; Floor, New
York, New York<br />
10036-2721, as its agent to receive on its behalf and on behalf of
its<br />
Property, service of copies of the summons and complaint and any
other<br />
process that may be served in any such action or proceeding.&nbsp;
Service upon<br />
the Process Agent shall be deemed to be personal service on the
Borrower and<br />
shall be legal and binding upon the Borrower for all purposes
notwithstanding<br />
any failure to mail copies of such legal process to the Borrower,
or any<br />
failure on the part of the Borrower to receive the same.&nbsp;
Nothing herein<br />
shall affect the right to serve process in any other manner
permitted by<br />
applicable Law or any right to bring legal action or proceedings in
any other<br />
competent jurisdiction, including judicial or non-judicial
foreclosure of<br />
real property interests which are part of the Collateral.&nbsp; The
Borrower<br />
further agrees that the aforesaid courts of the State of New York
and of the<br />
United States of America for the Southern District of New York
shall have<br />
exclusive jurisdiction with respect to any claim or counterclaim of
the<br />
Borrower based upon the assertion that the rate of interest charged
by or<br />
under this Agreement or under the other Financing Documents is
usurious.&nbsp; To<br />
the extent permitted by applicable Law, the Borrower further
irrevocably<br />
agrees to the service of process of any of the aforementioned
courts in any<br />
suit, action or proceeding by the mailing of copies thereof by
certified<br />
mail, postage prepaid, return receipt requested, to the Borrower at
the<br />
address referenced in Section 9.3, such service to be effective
upon the date<br />
indicated on the postal receipt returned from the Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;&nbsp; The Borrower agrees that it will at all times
continuously<br />
maintain an agent to receive service of process in the State of New
York on<br />
behalf of itself and its Properties, and, in the event that for any
reason<br />
the agent mentioned above shall not serve as agent for the Borrower
to<br />
receive service of process in the State of New York on its behalf,
the<br />
Borrower&nbsp; shall&nbsp; promptly&nbsp; appoint&nbsp; a&nbsp;
successor&nbsp; satisfactory&nbsp; to&nbsp; the<br />
Administrative Agent so to serve, advise the Administrative Agent
thereof, and<br />
deliver to the Administrative Agent evidence in writing of the
successor<br />
agent's acceptance of such appointment.&nbsp; The foregoing
provisions constitute,<br />
among other things, a special arrangement for service among the
parties to<br />
this Agreement for the purposes of 28 U.S.C. &sect; 1608.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.17&nbsp;&nbsp; Waiver by Borrower.&nbsp; The Borrower waives any
claim it may<br />
now or hereafter have against the Administrative Agent, the
Collateral Agent,<br />
any Lender and any Holder for any consequential, exemplary or
punitive damage<br />
under or in connection with or relating to this Agreement or any of
the<br />
Financing Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.18&nbsp;&nbsp; Recourse.&nbsp; This Agreement is made with full
recourse to<br />
the Borrower and pursuant to and upon all the representations,
warranties,<br />
covenants and agreements on the part of the Borrower contained
herein and in<br />
the other Financing Documents to which the Borrower is a party and
otherwise<br />
in writing in connection herewith and therewith.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.19&nbsp;&nbsp; Complete Agreement.&nbsp;&nbsp; THIS AGREEMENT AND
THE OTHER<br />
FINANCING DOCUMENTS REPRESENT THE FINAL AND COMPLETE AGREEMENT OF
THE PARTIES<br />
HERETO AND THERETO WITH RESPECT TO THE LOANS, AND ALL PRIOR
NEGOTIATIONS,<br />
REPRESENTATIONS, UNDERSTANDINGS, WRITINGS AND STATEMENTS OF ANY
NATURE WITH<br />
RESPECT TO THE LOANS ARE HEREBY SUPERSEDED IN THEIR ENTIRETY BY THE
TERMS OF<br />
THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.20&nbsp;&nbsp; Publicity.&nbsp; Except as otherwise required by
law, none of<br />
the parties hereto shall issue any press release relating to,
connected with<br />
or arising out of this Agreement and the other Financing Documents
or the<br />
matters contained herein or therein, without obtaining the prior
approval of<br />
each other party hereto to the contents and the manner of
presentation and<br />
publication thereof.&nbsp; No references to any party hereto shall
be made by any<br />
party hereto in any public statement without its consent except as
otherwise<br />
required by Law.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.21&nbsp;&nbsp; Effectiveness.&nbsp; This Agreement and the other
Financing<br />
Documents shall be effective as of the Effective Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.22&nbsp;&nbsp; Certain Representations and Warranties.&nbsp; Each
Tranche B<br />
Lender by reason of its business or financial experience, has the
capacity to<br />
protect its own interests (within the meaning of Section
25102(f)(2) of the<br />
California&nbsp; Corporations&nbsp; Code)&nbsp; in&nbsp;
connection&nbsp; with&nbsp; the&nbsp; transactions<br />
contemplated by the Financing Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.23&nbsp;&nbsp; Confidentiality.&nbsp; Each Lender agrees to keep
confidential<br />
in accordance with such Lender's customary practices (and in any
event in<br />
compliance with applicable law respecting material non-public
information)<br />
all information obtained by it pursuant hereto and the other
Financing<br />
Documents identified as confidential in writing at the time of
delivery and<br />
agrees that it will only use such information in connection with
the<br />
transactions contemplated by this Agreement and the other Financing
Documents<br />
and not disclose any of such information other than (a) to such
Lender's<br />
employees,&nbsp; representatives,&nbsp; directors,&nbsp;
attorneys,&nbsp; auditors,&nbsp; agents,<br />
professional advisors, trustees or indirect contractual
counterparty in swap<br />
agreements or such contractual counterparty's professional advisor
(so long<br />
as such contractual counterparty or professional advisor to such
contractual<br />
counterparty agrees to be bound by the provision of this Section
9.23 or is<br />
bound by a confidentiality agreement containing substantially
equivalent<br />
provisions), (b) to the extent such information presently is or
hereafter<br />
becomes available to such Lender on a non-confidential basis from
any source<br />
or such information that is in the public domain at the time of
disclosure,<br />
(c) to the extent disclosure is required by&nbsp; law (including
applicable<br />
securities laws), regulations, subpoena or judicial order or
process<br />
(provided that notice of such requirement or order shall be
promptly<br />
furnished to the Borrower unless such&nbsp; notice is legally
prohibited) or<br />
requested or required by bank, securities, insurance or investment
company<br />
regulations or auditors or any administrative body or commission
(including<br />
the Securities Valuation Office of the National Association of
Insurance<br />
Commissioners) to whose jurisdiction such Lender may be subject,
(d) to any<br />
rating agency to the extent required in connection with any rating
to be<br />
assigned to such Lender, (e) to Assignees or prospective Assignees
or<br />
participants or prospective participants who agree to be bound by
the<br />
provisions of this Section 9.23 or who are subject to
confidentiality<br />
agreements containing substantially equivalent provisions, (f) to
the extent<br />
required in connection with any litigation between any party hereto
or<br />
thereto and any Lender with respect to the Loans or this Agreement
and the<br />
other Financing Documents or (g) with the Borrower's prior written
consent.&nbsp;<br />
 The agreements in this Section 9.23 shall survive repayment of the
Loans and<br />
all other amounts payable hereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.24&nbsp;&nbsp; Release of Liens.&nbsp;
(a)&nbsp;&nbsp;Concurrently with the consummation<br />
of a Qualified NEG Sale, the Lenders agree to cause the Collateral
Agent (at<br />
the expense of the Borrower) to release the security interest held
by the<br />
Collateral Agent, pursuant to the Stock Pledge Agreement or the LLC
Pledge<br />
Agreement, as the case may be, in the Capital Stock being sold in
such<br />
Qualified NEG Sale (so long as the Borrower complies with the
requirements of<br />
Section 3.2(g)).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; Concurrently with the consummation of a Spin-Off or
a<br />
public offering of the common stock of PGE Utility in accordance
with Section<br />
7.2(xi), the Lenders agree to cause the Collateral Agent (at the
expense of<br />
the Borrower) to release the security interest held by the
Collateral Agent,<br />
pursuant to the Utility Pledge Agreements, in the Capital Stock of
PGE<br />
Utility being disposed of in such Spin-Off or public offering (so
long as the<br />
Borrower complies with the requirements of Section 3.8 or 3.2(d),
as<br />
applicable).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.25&nbsp;&nbsp; Delivery of Lender Addendum.&nbsp; Each Tranche B
Lender<br />
becoming a party hereto on the Closing Date shall become a party
hereto by<br />
delivery to the Administrative Agent a Lender Addendum duly
executed by such<br />
Tranche B Lender, the Borrower and the Administrative Agent.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.26&nbsp;&nbsp; Special Exculpation.&nbsp; NO CLAIM MAY BE MADE BY
THE BORROWER<br />
OR ANY OTHER PERSON AGAINST THE COLLATERAL AGENT OR ANY LENDER OR
THE<br />
<br />
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF
ANY OF<br />
THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN RESPECT<br />
OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF
LIABILITY ARISING<br />
OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE
TRANSACTIONS<br />
CONTEMPLATED THEREBY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION<br />
THEREWITH AND THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT
TO SUE UPON<br />
ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER
OR NOT<br />
KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.27&nbsp;&nbsp; Intercreditor Agreement.&nbsp; The parties hereto
acknowledge<br />
that this Agreement and the other Financing Documents are not
intended to<br />
amend the Intercreditor Agreement or to affect any or the rights or
remedies<br />
pursuant to the Intercreditor Agreement of the parties
thereto.&nbsp; To the<br />
extent that provisions of the Intercreditor Agreement affects the
rights and<br />
remedies of the holders of the Existing Tranche B Loan, nothing
herein or in<br />
any other Financing Document shall be deemed to modify such
provisions, nor<br />
shall anything herein or in any other Financing Document subject
the New<br />
Tranche B Loan, or the holders thereof, or any security interest
created<br />
pursuant to the Security Agreements, the Utility Pledge Agreements
or the<br />
Tranche B Interest Reserve Account Control Agreement (New Tranche B
Loan), to<br />
the provisions of the Intercreditor Agreement.&nbsp;<br />
<br />
 &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.28&nbsp;&nbsp; Amended and Restated Security Documents.&nbsp; If
no Default or<br />
Event of Default under Section 8.1(e) shall have occurred and be
continuing<br />
on the date which is 91 days after the Closing Date, the parties
hereto<br />
hereby authorize and direct the Borrower, the Collateral Agent and
the<br />
Administrative Agent as promptly as practicable thereafter to enter
into<br />
amendments and restatements of the Security Agreements, the Utility
Pledge<br />
Agreements and the Tranche B Reserve Account Control Agreements, in
such form<br />
as the Borrower, the Collateral Agent and the Administrative Agent
shall<br />
agree upon (but in all cases to be substantially similar to the
existing<br />
documents), in each case to cause the New Tranche B Loan and the
Continued<br />
Tranche B Loan to be equally and ratably secured by the Collateral
covered by<br />
such Security Documents, without any distinction between the New
Tranche B<br />
Loan and the Continued Tranche B Loan (the date upon which such
amended and<br />
restated Security Documents shall become effective, the
"Consolidation<br />
Date").&nbsp; In connection with such amendment and restatement,
the Borrower<br />
shall cause to be delivered to the Administrative Agent, for the
benefit of<br />
the Lenders, such legal opinions as the Administrative Agent shall
reasonably<br />
request in respect of such amended and restated Security
Documents.&nbsp; No<br />
further consent of the Lenders to any such amendments and
restatements shall<br />
be required.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.29&nbsp;&nbsp; Consent to Convertible Note Amendment.&nbsp; Each
Lender<br />
consents to the amendment to the Convertible Notes and the
Convertible Notes<br />
Indenture described in Section 4.1(v), a copy of which has been
provided to<br />
the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
10.&nbsp;&nbsp; THE ADMINISTRATIVE AGENT; THE SYNDICATION
AGENT,<br />
THE LEAD ARRANGER AND THE BOOKRUNNER.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.1&nbsp;&nbsp; Appointment.&nbsp; Lehman Commercial Paper Inc.
shall be the<br />
Administrative Agent and shall act as specified herein and in the
other<br />
Financing Documents.&nbsp; Each Lender hereby irrevocably
authorizes, and the<br />
holder of any Note by the acceptance of such Note shall be deemed
irrevocably<br />
to authorize, the Administrative Agent to take such action on its
behalf<br />
<br />
under the provisions of this Agreement, the other Financing
Documents and any<br />
other instruments and agreements referred to herein or therein and
to<br />
exercise such powers and to perform such duties hereunder and
thereunder as<br />
are specifically delegated to or required of the Administrative
Agent by the<br />
terms hereof and thereof and such other powers as are reasonably
incidental<br />
thereto.&nbsp; The Administrative Agent may perform any of its
duties hereunder by<br />
or through its officers, directors, agents or employees.&nbsp; Each
Lender hereby<br />
authorizes the Administrative Agent to execute, deliver and perform
each<br />
Security Document and such Lender agrees to be bound by all of the
agreements<br />
of the Administrative Agent contained in the Security
Documents.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.2&nbsp;&nbsp; Nature of Duties.&nbsp; The Administrative Agent
shall have no<br />
duties or responsibilities except those expressly set forth in this
Agreement<br />
and the Security Documents.&nbsp; Neither the Administrative Agent
nor any of its<br />
officers, directors, agents or employees shall be liable for any
action taken<br />
or omitted by it or them hereunder or under any other Financing
Document or<br />
in connection herewith or therewith, unless caused by its or their
gross<br />
negligence or willful misconduct.&nbsp; The duties of the
Administrative Agent<br />
shall be mechanical and administrative in nature; the
Administrative Agent<br />
shall not have by reason of this Agreement or any other Financing
Document,<br />
or by reason of the use of the term "agent" with reference to
the<br />
Administrative Agent, a fiduciary relationship in respect of any
Lender or<br />
the holder of any Note; and nothing in this Agreement or any other
Financing<br />
Document, expressed or implied, is intended to or shall be so
construed as to<br />
impose upon the Administrative Agent any obligations in respect of
this<br />
Agreement or any other Financing Document except as expressly set
forth<br />
herein.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.3&nbsp;&nbsp; Lack&nbsp; of&nbsp; Reliance&nbsp; on&nbsp;
the&nbsp; Administrative&nbsp; Agent.&nbsp;<br />
 Independently and without reliance upon the Administrative Agent
or any<br />
Lender, each Lender and each holder of any Note, to the extent it
deems<br />
appropriate, has made and shall continue to make (i) its own
independent<br />
investigation of the financial condition and affairs of the
Borrower in<br />
connection with the making and the continuance of the Loans and the
taking or<br />
not taking of any action in connection herewith and (ii) its own
appraisal of<br />
the creditworthiness of the Borrower, except as expressly provided
in this<br />
Agreement, neither the Administrative Agent nor any Lender shall
have no duty<br />
or responsibility, either initially or on a continuing basis, to
provide any<br />
Lender or the holder of any Note with any credit or other
information with<br />
respect thereto, whether coming into its possession before the
making of the<br />
Loans or at any time or times thereafter.&nbsp; Neither the
Administrative Agent<br />
nor any Lender shall not be responsible to any Lender or the holder
of any<br />
Note for any recitals, statements, information, representations or
warranties<br />
herein or in any document, certificate or other writing delivered
in<br />
connection herewith or for the execution, effectiveness,
genuineness,<br />
validity, enforceability, perfection, collectibility, priority or
sufficiency<br />
of this Agreement or any other Financing Document or the financial
condition<br />
of the Borrower or be required to make any inquiry concerning
either the<br />
performance or observance of any of the terms, provisions or
conditions of<br />
this Agreement or any other Financing Document, or the financial
condition of<br />
the Borrower or the existence or possible existence of any Default
or Event<br />
of Default.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.4&nbsp;&nbsp; Certain Rights of the Administrative Agent.&nbsp;
If the<br />
Administrative Agent shall request instructions from the Required
Waiver<br />
Lenders with respect to any act or action (including failure to
act) in<br />
connection with this Agreement or any other Financing Document,
the<br />
Administrative Agent shall be entitled to refrain from such act or
taking<br />
such action unless and until the Administrative Agent shall have
received<br />
instructions from the Required Waiver Lenders, and the
Administrative Agent<br />
shall not incur liability to any Person by reason of so refraining.
Without<br />
limiting the foregoing, no Lender or the holder of any Note shall
have any<br />
right of action whatsoever against the Administrative Agent as a
result of<br />
the Administrative Agent acting or refraining from acting hereunder
or under<br />
any other Financing Document in accordance with the instructions of
the<br />
Required Waiver Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.5&nbsp;&nbsp; Reliance.&nbsp; The Administrative Agent shall be
entitled to<br />
rely, and shall be fully protected in relying, upon any note,
writing,<br />
resolution, notice, statement, certificate, telex, teletype or
telecopier<br />
message, cablegram, radiogram, order or other document or telephone
message<br />
signed, sent or made by any Person that the Administrative Agent
believed to<br />
be the proper Person, and, with respect to all legal matters
pertaining to<br />
this Agreement and any other Financing Document its duties
hereunder and<br />
thereunder, upon advice of counsel selected by it.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.6&nbsp;&nbsp; Indemnification.&nbsp; To the extent the
Administrative Agent<br />
is not reimbursed and indemnified by the Borrower, each Lender will
reimburse<br />
and indemnify the Administrative Agent, in proportion to its
respective Loan,<br />
for and against any and all liabilities, obligations, losses,
damages,<br />
penalties,&nbsp; claims,&nbsp; actions,&nbsp; judgments,&nbsp;
suits,&nbsp; costs,&nbsp; expenses&nbsp; or<br />
disbursements of whatsoever kind or nature which may be imposed on,
asserted<br />
against or incurred by the Administrative Agent in performing its
duties<br />
hereunder or under any other Financing Document, or in any way
relating to or<br />
arising out of this Agreement or any other Financing Document;
provided,<br />
however, that no Lender shall be liable for any portion of such
liabilities,<br />
obligations, losses, damages, penalties, actions, judgments, suits,
costs,<br />
expenses or disbursements resulting from the Administrative Agent's
gross<br />
negligence or willful misconduct.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.7&nbsp;&nbsp; The Administrative Agent in its Individual
Capacity.&nbsp; With<br />
respect to its obligation to make Loans under this Agreement, and
with<br />
respect to any Loan held by it or made by it, the Administrative
Agent shall<br />
have the rights and powers specified herein for a "Lender" and may
exercise<br />
the same rights and powers as though it were not performing the
duties<br />
specified herein; and the term "Lender," "Required Waiver Lenders",
"holder<br />
of Note" or any similar terms shall, unless the context clearly
otherwise<br />
indicates, include the Administrative Agent in its individual
capacity. The<br />
Administrative Agent may accept deposits from, lend money to, and
generally<br />
engage in any kind of banking, trust or other business with the
Borrower or<br />
any Affiliate of the Borrower as if it were not performing the
duties<br />
specified herein, and may accept fees and other consideration from
the<br />
Borrower for services in connection with this Agreement and
otherwise without<br />
having to account for the same to the Lenders.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;
10.8&nbsp;&nbsp; Holders.&nbsp; The Administrative Agent may deem
and treat the<br />
payee of any Note as the owner thereof for all purposes hereof
unless and<br />
until a written notice of the assignment, transfer or endorsement
thereof, as<br />
the case may be, shall have been filed with the Administrative
Agent.&nbsp; Any<br />
request, authority or consent of any Person who, at the time of
making such<br />
request or giving such authority or consent, is the holder of any
Note shall<br />
be conclusive and binding on any subsequent holder, transferee,
assignee or<br />
<br />
<br />
indorsee, as the case may be, of such Note or of any Note or Notes
issued in<br />
exchange therefor.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.9&nbsp;&nbsp; Resignation or Replacement of the Administrative
Agent.&nbsp;<br />
 (a)&nbsp;&nbsp;The Administrative Agent may resign from the
performance of all its<br />
functions and duties hereunder and/or under the other Financing
Documents at<br />
any time by giving 15 Business Days' prior written notice to the
Borrower and<br />
each Lender.&nbsp; Such resignation shall take effect upon the
appointment of a<br />
successor Administrative Agent pursuant to clauses (c) and (d)
below or as<br />
otherwise provided below.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; The Administrative Agent may be replaced at the
written<br />
request of the Required Waiver Lenders at any time by such Lenders
giving 15<br />
Business Days' prior written notice to the Administrative
Agent.&nbsp; Such<br />
replacement shall take effect upon the appointment of a
successor<br />
Administrative Agent pursuant to clauses (c) and (d) below or as
otherwise<br />
provided below.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;
(c)&nbsp;&nbsp; Upon any such notice of resignation or replacement,
as the<br />
case may be, the Required Waiver Lenders shall appoint a
successor<br />
Administrative Agent hereunder or thereunder who shall be a
commercial bank,<br />
trust company or other financial institution which is a Lender and
which<br />
shall be subject to the reasonable approval of the Borrower (unless
an Event<br />
of Default shall be continuing).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; If a successor Administrative Agent shall not have
been so<br />
appointed within such 15 Business Day period, the Administrative
Agent, with<br />
the consent of the Borrower, may then appoint a successor
Administrative<br />
Agent who shall serve as Administrative Agent hereunder or
thereunder until<br />
such time, if any, as the Required Waiver Lenders appoint a
successor<br />
Administrative Agent as provided above.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;&nbsp; If no successor Administrative Agent has been
appointed<br />
pursuant to clause (c) or (d) above by the 20th Business Day after
the date<br />
such notice of resignation or replacement was given by the
Administrative<br />
Agent or the Required Waiver Lenders, as the case may be, the
Administrative<br />
Agent's resignation or replacement shall become effective and the
Required<br />
Waiver Lenders shall thereafter perform all the duties of the
Administrative<br />
Agent hereunder and/or under any other Financing Document until
such time, if<br />
any, as the Required Waiver Lenders appoint a successor
Administrative Agent<br />
as provided above.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.10&nbsp;&nbsp; The Syndication Agent, Lead Arranger and
Bookrunner.&nbsp;<br />
 None of the Syndication Agent, the Lead Arranger or the
Bookrunner, in such<br />
respective capacity, shall have any duties or responsibilities
under this<br />
Agreement or any other Financing Document, nor shall any of such
Persons, in<br />
such respective capacities, have any obligations or liabilities
hereunder or<br />
under any other Financing Document.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
10.11&nbsp;&nbsp; Direction to Administrative Agent and Collateral
Agent.&nbsp;<br />
 Each of the Lenders authorizes and directs the Administrative
Agent and the<br />
Collateral Agent to execute and deliver the Security Documents and
to perform<br />
their respective obligations thereunder.&nbsp; Each Lender agrees
that it is bound<br />
by the provisions in the Security Documents and the Intercreditor
Agreement<br />
relating to the Lenders to the same extent as if such Lender were a
party<br />
thereto, including, without limitation, any provisions of the
Security<br />
Documents requiring the Lenders to indemnify the Collateral
Agent.&nbsp; The<br />
Administrative Agent and the Collateral Agent are express
third-party<br />
beneficiaries of this Section.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION
11.&nbsp;&nbsp; COLLATERAL AGENT.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.1&nbsp;&nbsp; Appointment.&nbsp; Each Lender hereby appoints,
designates and<br />
authorizes the Collateral Agent to take such action on its behalf
under the<br />
provisions of the Security Documents and to exercise such powers
and perform<br />
such duties as are expressly delegated to it by the terms of any
Security<br />
Document, together with such powers as are reasonably incidental
thereto.&nbsp;<br />
 Each Lender authorizes the Collateral Agent to execute, deliver
and perform<br />
each of the Security Documents and such Lender agrees to be bound
by all of<br />
the agreements of the Collateral Agent contained in the Security
Documents.&nbsp;<br />
 Notwithstanding any provision to the contrary contained in the
Security<br />
Documents, the Collateral Agent shall not have any duties or
responsibilities<br />
except those expressly set forth in the Security Documents, and
the<br />
Collateral Agent does not have or shall not be deemed to have any
fiduciary<br />
relationship with&nbsp; any Lender, and no implied covenants,
functions,<br />
responsibilities, duties, obligations or liabilities shall be read
into the<br />
Security Documents or otherwise exist against the Collateral
Agent.&nbsp; Without<br />
limiting the generality of the foregoing sentence, the use of the
term<br />
"Collateral Agent," in this Agreement with reference to the
Collateral Agent<br />
is not intended to connote any fiduciary or other implied (or
express)<br />
obligations arising under agency doctrine of any applicable
Law.&nbsp; Instead,<br />
such term is used merely as a matter of market custom, and is
intended to<br />
create or reflect only a relationship between independent
contracting<br />
parties.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.2&nbsp;&nbsp; Exculpatory Provisions.&nbsp; Neither the
Collateral Agent nor<br />
any of its officers, directors, employees or agents shall (i) be
liable for<br />
any action taken or omitted to be taken by it under or in
connection with any<br />
Security Document or the transactions contemplated thereby (except
for its<br />
own gross negligence or willful misconduct), or (ii) be responsible
in any<br />
manner to any of the Lenders or any other Person for any recital,
statement,<br />
representation or warranty made by the Borrower or any Affiliate of
the<br />
Borrower, or any officer thereof, contained in any Security
Document, or in<br />
any certificate, report, statement or other document referred to or
provided<br />
for in, or received by the Collateral Agent under or in connection
with, any<br />
Security Document, or for the value of or title to any Collateral,
or the<br />
validity, effectiveness, genuineness, enforceability or sufficiency
of any<br />
Security Document, or for any failure of any Covered Party or any
other party<br />
to any Security Document to perform its obligations
thereunder.&nbsp; The<br />
Collateral Agent shall not be under any obligation to any Lender to
ascertain<br />
or to inquire as to the observance or performance of any of the
agreements<br />
contained in, or conditions of, any Security Document, or to
inspect the<br />
books or records of the Borrower or any Affiliate of the
Borrower.&nbsp; Anything<br />
in this Agreement or any Security Document to the contrary
notwithstanding,<br />
in no event shall the Collateral Agent be liable for special,
indirect or<br />
consequential loss or damage of any kind whatsoever (including but
not<br />
limited to loss of profits).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.3&nbsp;&nbsp; Reliance by Collateral Agent.&nbsp; The Collateral
Agent shall<br />
be entitled to rely conclusively, and shall be fully protected in
so relying,<br />
upon any writing, resolution, notice, consent, certificate,
affidavit,<br />
letter, telegram, facsimile, telex or telephone message, statement
or other<br />
<br />
document or conversation believed by it to be genuine and correct
and to have<br />
been signed, sent or made by the proper Person or Persons, and upon
advice<br />
and statements of legal counsel, independent accountants and other
experts<br />
selected by the Collateral Agent.&nbsp; The Collateral Agent shall
be fully<br />
justified in failing or refusing to take any action under any
Security<br />
Document (i) if such action would, in the opinion of the Collateral
Agent<br />
(upon consultation with counsel), be contrary to applicable Law or
the terms<br />
of any Security Document, (ii) if such action is not specifically
provided<br />
for in the Security Documents and it shall not have received such
written<br />
advice or concurrence of the Required Waiver Lenders, in each case
as the<br />
Collateral Agent deems appropriate, (iii) unless, if it so
requests, such<br />
Collateral Agent shall first be indemnified to its satisfaction by
the<br />
Lenders against any and all liability and expense which may be
incurred by it<br />
by reason of taking or continuing to take any such action.&nbsp;
The Collateral<br />
Agent shall in all cases be fully protected in acting, or in
refraining from<br />
acting, under the Security Documents in accordance with a written
request or<br />
written consent of the Required Waiver Lenders, and such request
and any<br />
action taken or failure to act pursuant thereto shall be binding
upon all of<br />
the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.4&nbsp;&nbsp; Notice of Default.&nbsp; The Collateral Agent
shall not be<br />
deemed to have knowledge or notice of the occurrence of any Default
or Event<br />
of Default unless the Collateral Agent shall have received written
notice<br />
from a Lender or the Borrower referring to the Credit Agreement,
describing<br />
such Default or Event of Default and stating that such notice is a
"Notice of<br />
Default".&nbsp; If the Collateral Agent receives any such notice of
the occurrence<br />
of a Default or an Event of Default, it shall give notice thereof
to the<br />
Administrative Agent and the Lenders.&nbsp; The Collateral Agent
shall take such<br />
action with respect to such Default or Event of Default as may be
requested<br />
in writing by the Required Waiver Lenders; provided, however, that
unless and<br />
until the Collateral Agent has received any such request, the
Collateral<br />
Agent may (but shall not be obligated to) take such action, or
refrain from<br />
taking such action, with respect to such Default or Event of
Default under<br />
the Security Documents as it shall deem advisable or in the best
interest of<br />
the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.5&nbsp;&nbsp; Indemnification.&nbsp;&nbsp;&nbsp; Whether&nbsp;
or&nbsp; not&nbsp; the&nbsp; transactions<br />
contemplated hereby are consummated, the Lenders shall indemnify
upon demand<br />
the Collateral Agent, its officers, directors, employees, counsel,
agents and<br />
attorneys in fact ("Agent Related Person") (to the extent not
reimbursed by<br />
or on behalf of the Borrower within 90 days of the Collateral
Agent's request<br />
to the Borrower for payment and without limiting the obligation of
the<br />
Borrower to do so), pro rata in accordance with the aggregate
principal<br />
amount of the Loans held by such Lenders (as determined by the
Administrative<br />
Agent), from and against any and all Indemnified Liabilities;
provided,<br />
however, that no Lender shall be liable for the payment to the
Collateral<br />
Agent or the Agent Related Persons of any portion of such
Indemnified<br />
Liabilities resulting solely from such Person's gross negligence or
willful<br />
misconduct.&nbsp; Without limitation of the foregoing, each Lender
shall reimburse<br />
the Collateral Agent upon demand as provided above of any costs or
out-of-<br />
pocket expenses incurred by such Collateral Agent or Agent Related
Person (to<br />
the extent not reimbursed by or on behalf of the Borrower within 90
days of<br />
the Collateral Agent's request to the Borrower for payment and
without<br />
limiting the obligation of the Borrower to do so) in connection
with the<br />
preparation, execution, delivery, administration, modification,
amendment or<br />
enforcement (whether through negotiations, legal proceedings or
otherwise)<br />
of, or legal advice in respect of rights or responsibilities under,
the<br />
Security Documents or any document contemplated by or referred to
therein,<br />
pro rata in accordance with the aggregate principal amount of the
Loans held<br />
by such Lenders (as determined by the Administrative Agent).&nbsp;
The provisions<br />
of this section shall survive termination of the Security Documents
or<br />
earlier resignation or removal of the Collateral Agent.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding anything herein to the contrary, the
Collateral<br />
Agent shall be entitled to set off from any Collateral or proceeds
thereof<br />
any amounts due and owing to it pursuant to this Section 11.5
solely to the<br />
extent such amounts are not paid by the Borrower or the Lenders as
provided<br />
in the Security Documents and such amounts remain unpaid by the
Lenders for a<br />
period of thirty days after demand therefor.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.6&nbsp;&nbsp; Successor Collateral Agent.&nbsp; Subject to the
appointment<br />
and acceptance of a successor as provided below, the Collateral
Agent may<br />
resign at any time by giving notice thereof to the Lenders and the
Borrower,<br />
and the Collateral Agent may be removed at any time with or without
cause by<br />
the Required Waiver Lenders upon thirty (30) days prior written
notice.&nbsp; Upon<br />
any such resignation or removal, the Required Waiver Lenders shall
have the<br />
right to appoint a successor to the Collateral Agent.&nbsp; If no
successor<br />
Collateral Agent shall have been appointed by the Required Waiver
Lenders,<br />
and shall have accepted such appointment within 30 days after the
resigning<br />
Collateral Agent's giving of notice of resignation or the giving of
any<br />
notice of removal of such Collateral Agent, then the resigning
Collateral<br />
Agent or Collateral Agent being removed, as the case may be, may at
the<br />
Borrower's expense, appoint a successor to such Collateral Agent or
petition<br />
a court of competent jurisdiction for a successor.&nbsp; If the
Collateral Agent<br />
shall resign or be removed pursuant to the foregoing provisions,
upon the<br />
acceptance of appointment by a successor Collateral Agent
hereunder, the<br />
former Collateral Agent shall deliver all Collateral then in its
possession<br />
to the successor Collateral Agent.&nbsp; Upon the acceptance of its
appointment as<br />
a successor Collateral Agent hereunder, such successor Collateral
Agent shall<br />
thereupon succeed to and become vested with all the rights,
powers,<br />
privileges and duties of such resigning or removed Collateral
Agent, and such<br />
resigning Collateral Agent or removed Collateral Agent shall be
discharged<br />
from its duties and obligations under the Security
Documents.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
11.7&nbsp;&nbsp; Miscellaneous.&nbsp; (a)&nbsp;&nbsp;&nbsp; None of
the provisions of the<br />
Security Documents shall require the Collateral Agent to expend or
risk its<br />
own funds or otherwise to incur any liability, financial or
otherwise, in the<br />
performance of any of its duties thereunder, or in the exercise of
any of its<br />
rights or powers if it shall have reasonable grounds for believing
that<br />
repayment of such funds or indemnity satisfactory to it against
such risk or<br />
liability is not assured to it.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;&nbsp; The Collateral Agent may execute any of the trusts
or<br />
powers or perform any duties under any Security Document either
directly or<br />
by or through agents, attorneys, custodians or nominees appointed
with due<br />
care, and shall not be responsible for any willful misconduct or
negligence<br />
on the part of any agent, attorney, custodian or nominee so
appointed.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
&nbsp; Any corporation into which the Collateral Agent may be<br />
merged or converted or with which it may be consolidated, or any
corporation<br />
resulting from any merger, conversion or consolidation to which
the<br />
Collateral Agent shall be a party, or any corporation succeeding to
the<br />
business of the Collateral Agent shall be the successor of the
Collateral<br />
<br />
Agent under the Security Documents without the execution or filing
of any<br />
paper with any party to the Security Documents or any further act
on the part<br />
of any of the parties to the Security Documents except where an
instrument of<br />
transfer or assignment is required by law to effect such
succession, anything<br />
herein to the contrary notwithstanding.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp; The Collateral Agent shall not take any
instructions with<br />
respect to the Security Documents from any entity that is not a
Lender<br />
hereunder.<br />
<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS
WHEREOF, the parties hereto have caused their duly<br />
authorized officers to execute and deliver this Agreement as of the
date<br />
first above written.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PETER A. DARBEE<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp;&nbsp;&nbsp;&nbsp; Peter A. Darbee<br />
&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp; Senior Vice President<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief
Financial Officer<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC., as<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
a Lender and as Syndication Agent and<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Administrative Agent<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JAMES P. SEERY, JR.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp;&nbsp; James P. Seery, Jr.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp; Authorized Signatory<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN BROTHERS INC., as Lead Arranger<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and Bookrunner<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JAMES P. SEERY, JR.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By:<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp;&nbsp; James P. Seery, Jr.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp; SVP<br />
<br />
<br />
<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Appendix A<br />
&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEFINED TERMS AND RULES OF INTERPRETATION<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;&nbsp; Defined Terms.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Administrative Agent" shall mean Lehman Commercial Paper
Inc.,<br />
acting in its capacity as agent for the Lenders pursuant to the
Credit<br />
Agreement, and any successor in such capacity.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Affiliate"
shall mean, with respect to any Person, (a) any other<br />
Person that is directly or indirectly Controlled by, under common
Control<br />
with or Controls such Person; (b) any other Person owning
beneficially or<br />
Controlling five percent or more of the Voting Stock of such
Person; or (c)<br />
any officer, director or partner of such Person, except with
respect to any<br />
officer or director of the Borrower.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Applicable
Margin" shall mean (a) as to the Base Rate Loan,<br />
9.00% per annum and (b) as to the Eurodollar Loan, 10.00% per
annum.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Asset Sale"
shall mean any sale, transfer or other disposition<br />
of any Property (other than any Qualified NEG Sale) of the Borrower
or any<br />
member of the NEG Group (including, without limitation, after
the<br />
consummation of a Spin-Off or a Non-Spin Plan of Reorganization,
the Capital<br />
Stock of, or any assets of, PGE Utility or any Reorganization
Subsidiary).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Assignee"
shall have the meaning provided in Section 9.11 of the<br />
Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Attributable Tax Benefits" shall mean the aggregate amount
of<br />
net cash tax savings actually received by the Borrower after
October 1, 2002<br />
as a result of any Qualified Asset Sale, any Qualified NEG Sale,
any<br />
Qualified Restructuring or any Qualified Abandonment.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Audited
Financial Statements" shall have the meaning provided in<br />
Section 5.11 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; "Authorized
Officer" shall mean (a) with respect to any Person<br />
that is a corporation or a limited liability company, the
Chairman,<br />
President, any Vice President, Treasurer or Secretary of such
Person and (b)<br />
with respect to any Person that is a partnership, the President,
any Vice<br />
President, Treasurer or Secretary (or Assistant Secretary) of a
general<br />
partner or managing partner of such Person and in each case whose
name<br />
appears on a certificate of incumbency of such Person delivered in
accordance<br />
with the Credit Agreement, as such certificate may be amended from
time to<br />
time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Bankruptcy&nbsp; Code"&nbsp; shall&nbsp; have&nbsp; the&nbsp;
meaning&nbsp; provided&nbsp; in<br />
Section 8.1(e) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Bankruptcy
Court" shall mean the Bankruptcy Court in which the<br />
PGE Utility Bankruptcy Proceeding is pending on the date
hereof.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Bankruptcy
Law" shall mean the Bankruptcy Code and any other Law<br />
of any jurisdiction relating to bankruptcy, insolvency,
liquidation,<br />
<br />
reorganization, moratorium, winding-up or composition or
readjustment of<br />
debts or any similar Law.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Bankruptcy
Termination Event" shall mean the occurrence and<br />
continuance of a Default or Event of Default under Section 8.1(e)
of the<br />
Credit Agreement at any time prior to the Escrow Release
Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Base Rate",
for any day, shall mean the rate per annum equal to<br />
the higher of (a) the Federal Funds Rate for such day plus one-half
of one<br />
percent (.5%) and (b) the Prime Rate for such day.&nbsp; Any
changes in the Base<br />
Rate due to a change in the Prime Rate or the Federal Funds Rate
shall be<br />
effective on the effective date of such change in the Prime Rate or
Federal<br />
Funds Rate.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Base Rate
Loans" shall mean the Loans or any portion thereof<br />
which bears interest based upon the Base Rate.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Bookrunner"
shall mean Lehman Brothers Inc., a Delaware<br />
corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Borrower"
shall mean PG&amp;E Corporation, a California corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Borrowing"
shall mean the borrowing of Loans of one Type from a<br />
Lender on a given date, provided that Base Rate Loans incurred
pursuant to<br />
Section 2.7(b) shall be considered part of the related Borrowing
of<br />
Eurodollar Loans.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Business
Day" shall mean (a) for all purposes other than as<br />
covered by clause (b) below, any day except Saturday, Sunday and
any day<br />
which shall be in New York City, a legal holiday or a day on which
banking<br />
institutions are authorized or required by law or other government
action to<br />
close in such city, and (b) with respect to all notices and
determinations in<br />
connection with, and payments of principal and interest on, any
Eurodollar<br />
Loan, any day which is a Business Day described in clause (a) above
and which<br />
is also a day for trading by and between banks in the London
interbank<br />
eurodollar market.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "CA Fee"
shall mean the fees and expenses of the Collateral Agent<br />
set forth in the Schedule of Fees with the Collateral Agent dated
March 1,<br />
2001.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Capital
Expenditure" shall mean, with respect to any Person, all<br />
expenditures by such Person which should be capitalized in
accordance with<br />
generally accepted accounting principles, including all such
expenditures<br />
with respect to fixed or capital assets (including, without
limitation,<br />
expenditures for maintenance and repairs which should be
capitalized in<br />
accordance with generally accepted accounting principles) and the
amount of<br />
Capital Lease Obligations incurred by such Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Capital
Lease Obligations" shall mean, for any Person, the<br />
obligations of such Person to pay rent or other amounts under a
lease of (or<br />
other agreement conveying the right to use) real or personal
Property which<br />
obligations are required to be classified and accounted for as a
capital<br />
lease on a balance sheet of such Person under U.S. GAAP (including
Statement<br />
of Financial Accounting Standards No. 13 of the Financial
Accounting<br />
Standards Board ("Statement No. 13")) and, for purposes of the
Credit<br />
Agreement, the amount of such obligations shall be the capitalized
amount<br />
thereof, determined in accordance with U.S. GAAP (including such
Statement<br />
No. 13).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Capital
Stock" shall mean, with respect to any Person, any and<br />
all shares, interests, participations and/or rights in or other
equivalents<br />
(however designated, whether voting or nonvoting, ordinary or
preferred) in<br />
the equity or capital of such Person, now or hereafter outstanding,
and any<br />
and all rights, warrants or options exchangeable for or convertible
into any<br />
thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Cash
Equivalents" shall mean, as to any Person, (a) securities<br />
issued or directly and fully guaranteed or insured by the United
States or<br />
any agency or instrumentality thereof (provided that the full faith
and<br />
credit of the United States is pledged in support thereof) having
maturities<br />
of not more than one year from the date of acquisition, (b) time
deposits,<br />
demand deposits, certificates of deposit and other deposits of any
commercial<br />
bank having, or which is the principal banking subsidiary of a bank
holding<br />
company organized under the laws of the United States, any State
thereof or<br />
the District of Columbia having capital, surplus and undivided
profits<br />
aggregating in excess of $200,000,000, with maturities of not more
than one<br />
year from the date of acquisition by such Person, (c) repurchase
obligations<br />
with a term of not more than 90 days for underlying securities of
the types<br />
described in clause (a) above entered into with any bank meeting
the<br />
qualifications specified in clause (b) above, (d) commercial paper
issued by<br />
any Person incorporated in the United States rated at least A-1 or
the<br />
equivalent thereof by Standard &amp; Poor's or at least P-1 or the
equivalent<br />
thereof by Moody's and in each case maturing not more than one year
after the<br />
date of acquisition by such Person, and (e) investments in money
market funds<br />
substantially all of whose assets are comprised of securities of
the types<br />
described in clauses (a) through (d) above.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "CERCLA"
shall mean the Comprehensive Environmental Response,<br />
Compensation, and Liability Act of 1980, as the same may be amended
from time<br />
to time, 42 U.S.C. &sect; 9601 et seq.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Change of
Control" shall mean any of the following: (a) any<br />
"person" or "group" (as such terms are used in Sections 13(d) and
14(d) of<br />
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall<br />
become, or obtain rights (whether by means or warrants, options or
otherwise)<br />
to become, the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5<br />
under the Exchange Act), directly or indirectly, of more than 25%
of the<br />
outstanding common stock of the Borrower; (b) the board of
directors of the<br />
Borrower shall cease to consist of a majority of Continuing
Directors; or (c)<br />
a Specified Change of Control shall occur.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Change of
Control Offer to Repay" shall have the meaning<br />
provided in Section 3.8(a) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Change of
Control Offer Settlement Date" shall have the meaning<br />
provided in Section 3.8(a) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Change of
Control Prepayment Fee" shall have the meaning<br />
provided in Section 3.8(a) of the Credit Agreement.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Charter
Documents" shall mean, with respect to any Person, (a)<br />
the articles of incorporation or other similar organizational
document of<br />
such Person, (b) the by-laws or other similar document of such
Person, (c)<br />
any certificate of designation or instrument relating to the rights
of<br />
preferred shareholders or other holders of Capital Stock of such
Person and<br />
(d) any shareholder rights agreement or other similar
agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Closing
Date" shall mean the date upon which the conditions<br />
precedent set forth in Section 4.1 of the Credit Agreement have
been<br />
satisfied (or waived by all the Lenders).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Code" shall
mean the Internal Revenue Code of 1986, as amended<br />
from time to time, and the regulations promulgated and rulings
issued<br />
thereunder.&nbsp; Section references to the Code are to the Code as
in effect at<br />
the date of the Credit Agreement and any subsequent provisions of
the Code,<br />
amendatory thereof, supplemental thereto or substituted
therefor.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Collateral"
shall mean all Property that, in accordance with the<br />
terms of the Security Documents, is intended to be subject to any
Lien in<br />
favor of the Collateral Agent, for the benefit of the
Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Collateral
Agent" shall mean Deutsche Bank Trust Company<br />
Americas, acting as collateral agent for the benefit of the
Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Compliance"
shall have the meaning provided in Section 13 of the<br />
LLC Agreement, attached hereto as Annex A.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Consolidation Date" shall have the meaning provided in
Section<br />
9.28 of the Credit Agreement.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Contingent
Obligation" shall mean, as to any Person, any<br />
obligation of such Person guaranteeing or intending to guarantee
any<br />
Indebtedness, leases, dividends or other obligations ("primary
obligations")<br />
of any other Person (the "primary obligor") in any manner, whether
directly<br />
or indirectly, including, without limitation, any obligation of
such Person,<br />
whether or not contingent, (a) to purchase any such primary
obligation or any<br />
property constituting direct or indirect security therefor, (b) to
advance or<br />
supply funds (i) for the purchase or payment of any such primary
obligation<br />
or (ii) to maintain working capital or equity capital of the
primary obligor<br />
or otherwise to maintain the net worth or solvency of the primary
obligor,<br />
(c) to purchase property, securities or services primarily for the
purpose of<br />
assuring the owner of any such primary obligation of the ability of
the<br />
primary obligor to make payment of such primary obligation or (d)
otherwise<br />
to assure or hold harmless the owner of such primary obligation
against loss<br />
in respect thereof.&nbsp; The amount of any Contingent Obligation
shall be deemed<br />
to be an amount equal to the aggregate current exposure pursuant to
each<br />
applicable agreement net of the fair market value of any posted
collateral<br />
thereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continued
Tranche B Lender" shall mean any holder of a Continued<br />
Tranche B Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continued
Tranche B Loan" shall have the meaning provided in<br />
Section 2.1(a) of the Credit Agreement.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continuing
Directors" shall mean the directors of the Borrower<br />
on the Closing Date and each other director, if, in each case, such
other<br />
director's nomination for election to the board of directors of the
Borrower<br />
is recommended by at least 66-2/3% of the then Continuing
Directors.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Control"
shall mean possession, directly or indirectly, of the<br />
power to direct or cause the direction of the management and
policies of a<br />
Person, whether through the ownership of partnership interests or
voting<br />
securities, by contract or otherwise.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Convertible
Notes" shall mean the 7.50% Convertible Subordinated<br />
Notes due 2007 of the Borrower in the aggregate principal amount
of<br />
$280,000,000 issued on June 25, 2002 pursuant to the Convertible
Notes<br />
Indenture.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Convertible
Notes Blockage Period" shall mean the period<br />
commencing the date the Administrative Agent has delivered a notice
to the<br />
trustee under the Convertible Notes Indenture stating that an Event
of<br />
Default exists hereunder, and terminating on the earlier of (A) the
date on<br />
which such Event of Default is cured or waived in accordance with
the Credit<br />
Agreement and (B) the date which is 240 days after the date of the
receipt by<br />
the trustee of the default notice with respect thereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Convertible
Notes Indenture" shall mean the Indenture, dated as<br />
of June 25, 2002, as amended on or prior to the Closing Date,
entered into by<br />
the Borrower in connection with the issuance of the Convertible
Notes,<br />
together with all instruments and other agreements entered into by
the<br />
Borrower in connection therewith.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Covenant
Parties" shall have the meaning provided in Section 6.2<br />
of the Credit Agreement.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Covered&nbsp; Contracts"&nbsp; shall&nbsp; have&nbsp; the&nbsp;
meaning&nbsp; provided&nbsp; in<br />
Section 5.7 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Covered
Parties" shall have the meaning provided in Section 5.1<br />
of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "CPUC" shall
mean the California Public Utilities Commission or<br />
its successor.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Credit
Agreement" shall mean the Second Amended and Restated<br />
Credit Agreement, dated as of October 18, 2002, among the Borrower,
the<br />
Lenders party thereto, Lehman Commercial Paper Inc., as Syndication
Agent and<br />
Administrative Agent and Lehman Brothers Inc., as Lead Arranger
and<br />
Bookrunner.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Default"
shall mean any event or circumstance which with notice<br />
or lapse of time or both would become an Event of Default.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Disclosure
Letter" shall mean the letter from the Borrower,<br />
addressed to the Administrative Agent and the Lenders, dated as of
October<br />
18, 2002, with respect to certain disclosure of the Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Disposition" shall have the meaning provided in Section 7.2
of<br />
the Credit Agreement.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Distribution" shall have the meaning provided in Section 13
of<br />
the LLC Agreement, attached hereto as Annex A.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Dividend"
shall mean, with respect to any Person, that such<br />
Person has declared or paid a dividend, distribution or returned
any equity<br />
capital to its stockholders, partners or members or authorized or
made any<br />
other distribution, payment or delivery of property (other than
common equity<br />
of such Person) or cash to its stockholders, partners or members as
such<br />
(including, without limitation, any "spin-off" of assets or Capital
Stock<br />
held by such Person to the shareholder or partners or members of
such Person<br />
or any parent of such Person), or redeemed, retired, purchased or
otherwise<br />
acquired, directly or indirectly, for a consideration any shares of
any class<br />
of its capital stock or any partnership or membership interests
outstanding<br />
on or after the Closing Date (or any options or warrants issued by
such<br />
Person with respect to its capital stock or other equity
interests), or set<br />
aside any funds for any of the foregoing purposes, or shall have
permitted<br />
any of its Subsidiaries to purchase or otherwise acquire for a
consideration<br />
any shares of any class of the capital stock or any partnership or
membership<br />
interests of such Person outstanding on or after the Closing Date
(or any<br />
options or warrants issued by such Person with respect to its
capital stock<br />
or other equity interests).&nbsp; Without limiting the foregoing,
"Dividends" with<br />
respect to any Person shall also include (a) all payments made or
required to<br />
be made by such Person (other than to employees of the Borrower or
any of its<br />
Subsidiaries) with respect to any stock appreciation rights, plans,
equity<br />
incentive or achievement plans or any similar plans or setting
aside of any<br />
funds for the foregoing purposes and (b) all "Pass-Through
Dividends" made<br />
pursuant to, and as defined in, the Convertibles Notes
Indenture.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Dollars"
and the sign "$" shall each mean freely transferable,<br />
lawful money of the United States.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Effective
Date" shall mean October 18, 2002.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Environmental Claim" shall mean, with respect to any Person,
(a)<br />
any notice, claim, administrative, regulatory or judicial or
equitable<br />
action, suit, Lien, judgment or demand by any other Person or (b)
any other<br />
written communication by any Governmental Authority, in either case
alleging<br />
or asserting such Person's liability for investigatory costs,
cleanup costs,<br />
consultants' fees, governmental response costs, damages to natural
resources<br />
(including, without limitation, wetlands, wildlife, aquatic and
terrestrial<br />
species and vegetation) or other Property, property damages,
personal<br />
injuries, fines or penalties arising out of, based on or resulting
from (i)<br />
the presence, or Release into the environment, of any Hazardous
Material at<br />
any location, whether or not owned by such Person or (ii)
circumstances<br />
forming the basis of any violation, or alleged violation, of
any<br />
Environmental Law or Governmental Approval issued under any
Environmental<br />
Law.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Environmental Laws" shall mean any and all Laws, now or<br />
hereafter in effect, and any judicial or administrative
interpretation<br />
thereof, including any judicial or administrative order, consent
decree or<br />
judgment, relating to the environment, human health or safety, or
to<br />
emissions, discharges, releases or threatened releases of
pollutants,<br />
contaminants, chemicals, or toxic or hazardous substances or wastes
into the<br />
environment including, without limitation, ambient air, surface
water,<br />
groundwater, or land, or otherwise relating to the manufacture,
processing,<br />
<br />
distribution, use, treatment, storage, disposal, transport, or
handling of<br />
pollutants, contaminants, chemicals, or toxic or hazardous
substances or<br />
wastes.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Equity
Interest" shall have the meaning provided in Section<br />
5.10(f) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "ERISA"
shall mean the Employee Retirement Income Security Act of<br />
1974, as amended from time to time, and the regulations promulgated
and<br />
rulings issued thereunder.&nbsp; Section references to ERISA are to
ERISA, as in<br />
effect at the date of the Credit Agreement and any subsequent
provisions of<br />
ERISA, amendatory thereof, supplemental thereto or substituted
therefor.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "ERISA
Affiliate" shall mean each person (as defined in Section<br />
3(9) of ERISA) which together with the Borrower or a Subsidiary of
the<br />
Borrower would be deemed to be a "single employer" (i) within the
meaning of<br />
Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of
the<br />
Borrower or a Subsidiary of the Borrower being or having been a
general<br />
partner of such person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Escrow
Release Date" shall mean the first Business Day to occur<br />
on or after the date which is 91 days after the Closing Date,
provided, that<br />
no Default or Event of Default under Section 8.1(e) shall have
occurred and<br />
be continuing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Eurodollar
Loan" shall mean any Loan or any portion thereof<br />
which bears interest based on the Eurodollar Rate.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Eurodollar
Rate" shall mean, with respect to each Interest<br />
Period in respect of a Eurodollar Loan, the rate per annum (rounded
upwards,<br />
if necessary, to the nearest 1/1000 of 1%) determined by the
Administrative<br />
Agent to be equal to the quotient obtained by dividing (a) the
Eurorate for<br />
such Eurodollar Loan for such Interest Period by (b) 1 minus the
Reserve<br />
Requirement for such Eurodollar Loan for such Interest
Period.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As used
herein, "Eurorate" shall mean, with respect to each<br />
Interest Period in respect of a Eurodollar Loan, as determined by
the<br />
Administrative Agent, the rate per annum (rounded upwards, if
necessary, to<br />
the nearest 1/1000 of 1%) appearing on Telerate Page 3750 (or any
successor<br />
page) as the London interbank offered rate for deposits in Dollars
at<br />
approximately 11:00 a.m. (London time) two Business Days prior to
the first<br />
day of such Interest Period for a term comparable to such Interest
Period.&nbsp;<br />
 If for any reason such rate is not available, the term "Eurorate"
shall mean,<br />
for any Eurodollar Loan for any Interest Period therefor, the rate
per annum<br />
(rounded upwards, if necessary, to the nearest 1/1000 of 1%)
appearing on<br />
Reuters Screen LIBO Page as the London interbank offered rate for
deposits in<br />
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to<br />
the first day of such Interest Period for a term comparable to such
Interest<br />
Period; provided, however, if more than one rate is specified on
Reuters<br />
Screen LIBO Page, the applicable rate shall be the arithmetic mean
of all<br />
such rates (rounded upwards, if necessary, to the nearest 1/1000 of
1%).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Event of
Default" shall have the meaning provided in Section 8.1<br />
of the Credit Agreement.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Credit Agreement" shall have the meaning provided in<br />
the recitals hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Financing Documents" shall mean the Financing Documents<br />
(as defined in the Existing Credit Agreement).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Indebtedness Agreements"&nbsp; shall have the&nbsp; meaning<br />
provided in Section 5.29 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Tranche A Loan" shall have the meaning provided in the<br />
recitals hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Tranche B Loan" shall have the meaning provided in the<br />
recitals hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Warrant" shall have the meaning provided in the<br />
Existing Warrant Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Warrant Agreement" shall mean the Warrant Agreement,<br />
dated as of June 25, 2002, among the Borrower and the holders party
thereto,<br />
together with all instruments and other agreements (including,
without<br />
limitation, the related Equity Registration Rights Agreement)
entered into by<br />
the Borrower in connection therewith.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Expense
Sharing Agreement" shall mean each of the agreements<br />
entitled "Continuing Services Agreement" listed and marked with "*"
on<br />
Schedule 5.17.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Federal
Funds Rate" shall mean, for any day, the rate per annum<br />
(rounded upwards, if necessary, to the nearest 1/1000 of 1%) equal
to the<br />
weighted average of the rates on overnight Federal funds
transactions with<br />
members of the Federal Reserve System arranged by Federal funds
brokers on<br />
such day, as published by the Federal Reserve Bank of New York on
the<br />
Business Day next succeeding such day; provided, that (i) if the
day for<br />
which such rate is to be determined is not a Business Day, the
Federal Funds<br />
Rate for such day shall be such rate on such transactions on the
next<br />
preceding Business Day as so published on the next succeeding
Business Day<br />
and (ii) if such rate is not so published for any day, the Federal
Funds Rate<br />
for such day shall be the average rate charged to the
Administrative Agent<br />
(in its individual capacity) on such day on such transactions as
determined<br />
by the Administrative Agent.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "FERC" shall
mean the Federal Energy Regulatory Commission or its<br />
successor.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Financing
Documents" shall mean, collectively, the Credit<br />
Agreement, the Notes, the Lehman Fee Letter, the Security
Documents, the<br />
Intercreditor Agreement, the Warrant Agreement, the Option
Agreement and the<br />
Tranche B Escrow Account Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Foreign
Pension Plan" shall mean any plan, fund (including,<br />
without limitation, any superannuation fund) or other similar
program<br />
established or maintained outside the United States of America by
the<br />
Borrower or any one or more of its Subsidiaries primarily for the
benefit of<br />
employees of the Borrower or such Subsidiaries residing outside the
United<br />
States of America, which plan, fund or other similar program
provides, or<br />
results in, retirement income, a deferral of income in
contemplation of<br />
retirement or payments to be made upon termination of employment,
and which<br />
plan is not subject to ERISA or the Code.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "FPA" shall
mean the Federal Power Act, as amended, and the rules<br />
and regulations promulgated thereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Governmental Approval" shall mean any authorization,
consent,<br />
approval, license, ruling, permit, tariff, rate, certification,
exemption,<br />
filing, variance, claim, order, judgment, decree, publication,
notice to,<br />
declaration of or with, or registration by or with, any
Governmental<br />
Authority.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Governmental Authority" shall mean any government,
governmental<br />
department,&nbsp; commission,&nbsp; board,&nbsp; bureau,&nbsp;
agency,&nbsp; regulatory&nbsp; authority,<br />
instrumentality, judicial or administrative body, domestic or
foreign,<br />
federal, state or local having jurisdiction over the matter or
matters in<br />
question.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Hazardous
Material" shall mean any substance that is regulated<br />
or could lead to liability under any Environmental Law, including,
but not<br />
limited to, any petroleum or petroleum product, asbestos in any
form that is<br />
or could become friable, transformers or other equipment that
contain<br />
dielectric fluid containing levels of polychlorinated biphenyls
(PCB's),<br />
hazardous waste, hazardous material, hazardous substance, toxic
substance,<br />
contaminant or pollutant, as defined or regulated as such under,
any<br />
applicable Environmental Law.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Hedging
Agreement" shall mean any agreement in respect of any<br />
interest rate swap transaction, basis swap, forward rate
transaction,<br />
commodity swap, commodity option, equity or equity index swap,
equity or<br />
equity index option, bond option, interest rate option, foreign
exchange<br />
transaction, cap transaction, floor transaction, collar
transaction, currency<br />
swap transaction, cross-currency rate swap transaction, currency
option or<br />
any other similar transaction (including any option with respect to
any of<br />
the foregoing transactions) or any combination of the foregoing
transactions<br />
entered into by the Borrower.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Holder"
shall have the meaning provided in the Option Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Holding
Company Conditions" shall mean the conditions set forth<br />
by the CPUC in Decision 96-11-017 or Decision 99-04-068 and any
decision of<br />
the CPUC which imposes a requirement or condition on the Borrower
affecting<br />
the Borrower's relationship with PGE Utility.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "HSR Act"
shall mean the Hart-Scott-Rodino Antitrust Improvements<br />
Act of 1976.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Indebtedness" of any Person shall mean (a) all indebtedness
of<br />
such Person for borrowed money, (b) the deferred purchase price of
assets or<br />
services which in accordance with U.S. GAAP would be shown on the
liability<br />
side of the balance sheet of such Person, (c) the face amount of
all letters<br />
of credit issued for the account of such Person and, without
duplication, all<br />
drafts drawn thereunder, (d) all Indebtedness of a second Person
secured by<br />
any Lien on any Property owned by such first Person, whether or not
such<br />
Indebtedness has been assumed, (e) all Capital Lease Obligations of
such<br />
Person, (f) all obligations of such Person to pay a specified
purchase price<br />
for goods or services whether or not delivered or accepted, i.e.,
take-or-pay<br />
and similar obligations, (g) all net obligations of such Person
under Hedging<br />
Agreements and (h) all Contingent Obligations of such Person;
provided that<br />
Indebtedness shall not include (i) trade payables arising in the
ordinary<br />
course of business so long as such trade payables are payable
within 90 days<br />
of the date the respective goods are delivered or the respective
services are<br />
rendered and are not overdue and (ii) obligations with respect to
the PG&amp;E<br />
Corporation Supplemental Retirement Savings Plan, the PG&amp;E
Corporation<br />
Management Retention Program, the PG&amp;E Corporation Senior
Management<br />
Incentive Program, the PG&amp;E Corporation Long-Term Incentive
Program, the PG&amp;E<br />
Corporation&nbsp; Short-Term&nbsp; Incentive&nbsp; Program,&nbsp;
the&nbsp; Supplemental&nbsp; Executive<br />
Retirement Plan, the Postretirement Medical Plan, the Post
Retirement Life<br />
Insurance Plan and the PG&amp;E Corporation Deferred Compensation
Plan for Non-<br />
Employee Directors, which obligations as of the Closing Date do not
exceed<br />
$90,000,000 in the aggregate, as such obligations may accrue in the
ordinary<br />
course of business pursuant to the terms of such Plans (as amended
in the<br />
ordinary course of business and consistent with past practice), as
may be<br />
adjusted in accordance with U.S. GAAP.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Indemnified
Liabilities" shall have the meaning provided in<br />
Section 9.2(a) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Indemnified
Matters" shall have the meaning provided in<br />
Section 9.2(b) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Indemnified&nbsp; Person"&nbsp; shall&nbsp; have&nbsp; the&nbsp;
meaning&nbsp; provided&nbsp; in<br />
Section 9.2(a) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Initial
Closing Date" shall mean June 25, 2002.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Insurance
Proceeds" shall mean all amounts payable to the<br />
Borrower or the Collateral Agent in respect of any insurance
required to be<br />
maintained (or caused to be maintained) by the Borrower pursuant to
Section<br />
5.9 of the Credit Agreement (other than general liability
insurance, delayed<br />
completion insurance and business interruption insurance),
regardless of<br />
whether such payments are received from any insurer or from either
EPC<br />
Contractor pursuant to the EPC Contracts or otherwise.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Intercreditor Agreement" shall mean the Intercreditor and<br />
Subordination Agreement, dated as of June 25, 2002, among the
Administrative<br />
Agent, the Collateral Agent, certain of the Lenders and the holders
of the<br />
Existing Warrants.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Interest
Determination Date" shall mean, with respect to any<br />
Eurodollar Loan, the second Business Day prior to the commencement
of any<br />
Interest Period relating to such Eurodollar Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Interest
Payment Date" shall have the meaning provided in<br />
Section 2.5(d) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Interest
Period" shall have the meaning provided in Section 2.6<br />
of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Investment"
in any Person shall mean, without duplication: (a)<br />
the acquisition (whether for cash, securities, other Property,
services or<br />
otherwise) or holding of capital stock, bonds, notes, debentures,
partnership<br />
or other ownership interests or other securities of such Person, or
any<br />
agreement to make any such acquisition or to make any capital
contribution to<br />
such Person; or (b) the making of any deposit with, or advance,
loan or other<br />
extension of credit to, such Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Investments" shall have the meaning provided in Section 7.5
of<br />
the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Law" shall
mean, with respect to any Person (a) any statute,<br />
law,&nbsp; regulation,&nbsp; ordinance,&nbsp; rule,&nbsp;
judgment,&nbsp; order,&nbsp; decree,&nbsp; permit,<br />
concession, grant, franchise, license, agreement or other
governmental<br />
restriction or any interpretation or administration of any of the
foregoing<br />
by any Governmental Authority (including, without limitation,
Governmental<br />
Approvals) applicable to such Person and (b) any directive,
guideline,<br />
policy, requirement or any similar form of decision of or
determination by<br />
any Governmental Authority which is binding on such Person, in each
case,<br />
whether now or hereafter in effect (including, without limitation,
in each<br />
case, any Environmental Law).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; "Lead
Arranger" shall mean Lehman Brothers Inc., a Delaware<br />
corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lehman Fee
Letter" shall mean the Fee Letter dated October 11,<br />
2002 among the Borrower, Lehman Brothers Inc. and Lehman Commercial
Paper<br />
Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lender"
shall mean, individually or collectively, as the context<br />
may require, a Tranche B Lender and any Assignee thereof pursuant
to<br />
Section 9.11 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lender
Addendum" shall mean, with respect to each Tranche B<br />
Lender becoming, or continuing as, a Tranche B Lender on the
Closing Date, a<br />
Lender Addendum, substantially in the form of Schedule A, to be
executed and<br />
delivered by such Lender pursuant to Section 9.25 of the Credit
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lien" shall
mean, with respect to any Property of any Person,<br />
any mortgage, lien, deed of trust, hypothecation, fiduciary
transfer of<br />
title, assignment by way of security, lien, pledge, charge, lease,
sale and<br />
lease-back arrangement, easement, servitude, trust arrangement, or
security<br />
interest or encumbrance of any kind in respect of such Property, or
any<br />
preferential arrangement having the practical effect of
constituting a<br />
security interest with respect to the payment of any obligation
with, or from<br />
the proceeds of, any Property of any kind (and a Person shall be
deemed to<br />
own subject to a Lien any Property that it has acquired or holds
subject to<br />
the interest of a vendor or lessor under any conditional sale
agreement,<br />
capital lease or other title retention agreement relating to such
Property).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Limited
Liability Company Interest" shall have the meaning<br />
provided in the LLC Pledge Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "LLC" shall
mean PG&amp;E National Energy Group, LLC, a Delaware<br />
limited liability company.<br />
<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "LLC
Agreement" shall mean the Amended and Restated Limited<br />
Liability Company Agreement dated as of March 1, 2001 of PG&amp;E
National Energy<br />
Group LLC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "LLC
Interests" shall mean, as to LLC, any and all shares of the<br />
profits and losses of such Person, any and all rights to
receive<br />
distributions of such Person's assets, and any and all rights,
benefits or<br />
privileges pertaining to any of the foregoing, including, without
limitation,<br />
voting rights and the right to participate in management.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "LLC Pledge
Agreement" shall mean the Amended and Restated LLC<br />
Pledge Agreement, dated as of June 25, 2002, among the Borrower, as
pledgor,<br />
LLC, as issuer, the Administrative Agent and Deutsche Bank Trust
Company<br />
Americas, as pledgee, as Collateral Agent for the benefit of the
Lenders, and<br />
the acknowledgment, dated as of the Closing Date, of LLC in respect
of the<br />
amendment and restatement of the Existing Credit Agreement in the
form of the<br />
Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Loan" shall
mean the Tranche B Loan, and shall also mean, where<br />
the context requires, any portion of any such loan held by a Lender
or<br />
subject to a particular Interest Period or interest rate
option.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Losses"
shall have the meaning provided in Section 9.2(b) of the<br />
Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Mandatory
Make-Whole Amount" shall mean, in respect of any<br />
repayment or prepayment on any Payment Date, pursuant to Section
3.2(a),<br />
3.2(b) or 3.2(c) of the Credit Agreement, of the Tranche B Loan on
or before<br />
October 1, 2003, an amount equal to the discounted present value on
such<br />
Payment Date of sum of (a) 3.50% of the principal amount of such
repayment or<br />
prepayment plus (b) the aggregate amount of interest that would
accrue on the<br />
principal amount of such repayment or prepayment from such Payment
Date to<br />
October 1, 2003 pursuant to Section 2.5 of the Credit Agreement
(including,<br />
without limitation, pay-in-kind interest accruing pursuant to
Section 2.5(g)<br />
of the Credit Agreement, calculated as if October 1, 2003 were an
Interest<br />
Payment Date in respect of the principal amount being repaid or
prepaid on<br />
such Payment Date), such discounted present value to be calculated
by the<br />
Administrative Agent at the rate per annum equal to the yield to
maturity (as<br />
reasonably determined by the Administrative Agent), on the Business
Day<br />
immediately preceding such Payment Date, of United States Treasury
securities<br />
having a maturity of approximately six months (or, if less, the
time<br />
remaining to the Tranche B Maturity Date), and assuming that the
sum<br />
described in the foregoing clauses (a) and (b) were paid on October
1, 2003.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Margin
Stock" shall mean margin stock within the meaning of<br />
Regulation U and Regulation X.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Material
Adverse Change" shall mean, with respect to any Person,<br />
a material adverse change in the condition (financial or
otherwise), results<br />
of operations, business, Properties, liabilities, management or
prospects of<br />
such Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Material
Adverse Effect" shall mean a material adverse effect on<br />
(a) the condition (financial or otherwise), results of operations,
business,<br />
Properties, liabilities, management or prospects of the Borrower,
(b) the<br />
ability of the Borrower or LLC to timely perform any of its
obligations under<br />
any of the Financing Documents to which it is a party, (c) the
legality,<br />
validity or enforceability of any material provision of any
Financing<br />
Document, (d) the rights and remedies of the Collateral Agent,
the<br />
Administrative Agent, any Holder or any Lender under any of the
Financing<br />
Documents or (e) the security interests provided under the Security
Documents<br />
or the value thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Material
Reorganization Assets" shall mean the material assets<br />
that are contemplated by the PGE Plan to be transferred to Newco or
any<br />
Reorganization Subsidiary or retained by PGE Utility.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Moody's"
shall mean Moody's Investors Service, Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "NAIC"&nbsp;
shall&nbsp; mean&nbsp; the&nbsp; National&nbsp; Association&nbsp;
of&nbsp; Insurance<br />
Commissioners.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "NEG Group"
shall mean LLC and each of its Subsidiaries and each<br />
corporation, company or partnership in which any of the foregoing
own a<br />
Controlling equity interest.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "NEG, Inc."
shall mean PG&amp;E National Energy Group, Inc., a<br />
Delaware corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "NEG
Property" shall mean any Capital Stock of, or any Property<br />
owned by, any member of the NEG Group.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "NEG
Subsidiary" shall mean, as the context may require, any or<br />
all Subsidiaries of NEG, Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Net Debt
Proceeds" shall mean, with respect to any incurrence of<br />
Indebtedness for borrowed money, the cash proceeds received by any
Person<br />
(net of any tax, underwriting discounts and commissions and
reasonable costs<br />
paid by such Person associated therewith) from the respective
incurrence of<br />
such Indebtedness for borrowed money.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Net Equity
Proceeds" shall mean, with respect to each issuance<br />
or sale of any equity by any Person or any capital contribution to
such<br />
Person, the cash proceeds received by any Person (net of any
tax,<br />
underwriting discounts and commissions and reasonable costs paid by
such<br />
Person associated therewith) from the respective sale or issuance
of its<br />
equity or from the respective capital contribution.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Net
Insurance Proceeds" shall mean, with respect to any Recovery<br />
Event, the cash proceeds received by any Person (net of reasonable
costs and<br />
taxes paid by such Person associated therewith) in connection with
such<br />
Recovery Event.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Net Sale
Proceeds" shall mean, for any Asset Sale or any<br />
Qualified NEG Sale, the gross cash proceeds (including any cash
received by<br />
way of deferred payment pursuant to a promissory note, receivable
or<br />
otherwise, but only as and when received) received by any Person
from such<br />
sale of assets (net of the fees and commissions and other
reasonable costs<br />
paid by such Person associated therewith) relating to the assets
sold.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Commitment" shall mean as to any New Tranche B<br />
Lender, the obligation of such Lender, if any, to make a Tranche B
Loan to<br />
the Borrower in a principal amount not to exceed the amount set
forth in the<br />
Lender Addendum executed and delivered by such New Tranche B Lender
pursuant<br />
to Section 9.25.&nbsp; The original aggregate amount of the New
Tranche B<br />
Commitments is $300,000,000.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Lender" shall mean any holder of a New Tranche B<br />
Commitment or a New Tranche B Loan (or, at any time prior to the
Escrow<br />
Release Date, any entity that has funded into the Tranche B Escrow
Account).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Loan" shall have the meaning provided in Section<br />
2.1(a) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New
Warrant" shall have the meaning provided in the New Warrant<br />
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Warrant
Agreement" shall mean the Warrant Agreement, dated<br />
as of October 18, 2002, among the Borrower and the holders party
thereto,<br />
together with all instruments and other agreements (including,
without<br />
limitation, the related Equity Registration Rights Agreement)
entered into by<br />
the Borrower in connection therewith.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco"
shall have the meaning provided in the definition of<br />
"Utility Spin-Off" in this Appendix A.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco Spin"
shall have the meaning provided in the definition of<br />
"Utility Spin-Off" in this Appendix A.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Non-Spin
Offer to Repay" shall have the meaning provided in<br />
Section 3.8(c) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Non-Spin
Offer Settlement Date" shall have the meaning provided<br />
in Section 3.8(c) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Non-Spin
Prepayment Fee" shall have the meaning provided in<br />
Section 3.8(c) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Non-Spin
Plan of Reorganization" shall mean any plan of<br />
reorganization of PGE Utility in the PGE Utility Bankruptcy
Proceeding that<br />
does not involve a Spin-Off.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Note" shall
have the meaning provided in Section 2.4 of the<br />
Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Notice of
Funding" shall have the meaning provided in Section<br />
2.2 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Obligations" shall mean, collectively, (a) all loans,
advances,<br />
debts, liabilities, and obligations, howsoever arising, owed by the
Borrower<br />
under a Financing Document to the Administrative Agent or any
Lender or its<br />
Affiliates of every kind and description (whether or not evidenced
by any<br />
note or instrument and whether or not for the payment of money),
direct or<br />
indirect, absolute or contingent, due or to become due, now
existing or<br />
hereafter&nbsp; arising,&nbsp; including&nbsp; all&nbsp;
interest,&nbsp; fees,&nbsp; charges,&nbsp; expenses,<br />
attorneys' fees and consultants' fees chargeable to the Borrower;
(b) any and<br />
all sums advanced by the Collateral Agent, the Administrative Agent
or any<br />
Lender in order to preserve the Collateral; and (c) the reasonable
expenses<br />
of retaking, holding, preparing for sale or lease, selling or
otherwise<br />
disposing of or realizing on the Collateral, or of any exercise by
the<br />
Collateral Agent, the Administrative Agent or any Lender of its
rights under<br />
the Security Documents, together with reasonable attorneys' fees
and court<br />
costs.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Offer to
Repay" shall have the meaning provided in Section 3.8<br />
of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Offer to
Repay Notice" shall mean a notice in the form of<br />
Exhibit E-1 to the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Officer's
Certificate" shall mean an officer's certificate<br />
signed by an Authorized Officer of the Borrower.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Option"
shall have the meaning provided in the Option Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Option
Agreement" shall mean the Amended and Restated Option<br />
Agreement, dated as of June 25, 2002, among the Borrower, LLC, NEG,
Inc.,<br />
GPSF-F Inc., a Delaware corporation, LB I Group Inc., a Delaware
corporation,<br />
and each other entity holding Options on the Initial Closing
Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Option
Shares" shall have the meaning provided in the Option<br />
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Payment
Date" shall mean the date of any repayment or prepayment<br />
of the Tranche B Loan pursuant to Section 3.1 or 3.2 of the Credit
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Payment
Office" shall mean the office specified from time to<br />
time by the Administrative Agent as its payment office by notices
to the<br />
Borrower and the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "PBGC" shall
mean the Pension Benefit Guaranty Corporation<br />
established pursuant to Section 4002 of ERISA, or any successor
thereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Permitted
Lien" shall have the meaning provided in Section 7.1<br />
of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Permitted
NEG Reinvestments" shall mean any Investment by the<br />
Borrower (a) in NEG, Inc. or any of its Subsidiaries or in any
other entity<br />
that, directly or indirectly, acquires assets of, or equity
interests in, LLC<br />
or NEG, Inc. or any of its Subsidiaries in a Qualified NEG Sale or
a<br />
Qualified Asset Sale, or (b) in NEG, Inc. or any of its
Subsidiaries in<br />
connection with a Qualified Restructuring, provided, that, in the
case of any<br />
Investment described in the foregoing clauses (a) or (b), such
Investment is<br />
made in connection with, and is a condition of,&nbsp; a Qualified
Asset Sale,<br />
Qualified NEG Sale or Qualified Restructuring.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Person"&nbsp; shall&nbsp; mean&nbsp; any&nbsp; individual,&nbsp;
corporation,&nbsp; limited<br />
liability company,&nbsp; company, voluntary association,
partnership, joint<br />
venture, trust, or other enterprises or unincorporated organization
or<br />
government (or any agency, instrumentality or political subdivision
thereof).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "PGE Plan"
shall have the meaning provided in the definition of<br />
"Utility Spin-Off" in this Appendix A.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "PGE Spin"
shall have the meaning provided in the definition of<br />
"Utility Spin-Off" in this Appendix A.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "PGE
Utility" shall mean Pacific Gas and Electric Company, a<br />
California corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "PGE Utility
Bankruptcy Proceeding" shall mean the reorganization<br />
case in the United States Bankruptcy Court for the Northern
District of<br />
California commenced by the filing on April 6, 2001 by PGE Utility
of a<br />
voluntary petition for relief under Chapter 11 of the U.S.
Bankruptcy Code.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Plan" shall
mean any pension plan as defined in Section 3(2) of<br />
ERISA, which is maintained or contributed to by (or to which there
is an<br />
obligation to contribute of) the Borrower or a Subsidiary of the
Borrower or<br />
an ERISA Affiliate, and each such plan for the five-year period
immediately<br />
following the latest date on which the Borrower, or a Subsidiary of
the<br />
Borrower or an Affiliate maintained, contributed to or had an
obligation to<br />
contribute to such plan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledged
Interest" shall mean the Limited Liability Company<br />
Interests pledged under the LLC Pledge Agreement.<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Post-Confirmation Market Value to Loan Ratio" shall mean,
with<br />
respect to any Test Date, the quotient of (i) the aggregate market
value of<br />
the common stock of the Borrower (based upon the volume weighted
average<br />
price for the common stock of the Borrower for the 30 Trading
Days<br />
immediately prior to such Test Date) divided by (ii) the
aggregate<br />
outstanding amount of the Tranche B Loan (including, without
limitation,<br />
accrued interest and fees) on such Test Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pre-Closing
Market Value to Loan Ratio" shall mean 5.0:1.0.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Preferential Rights" shall have the meaning provided in
Section<br />
5.4(b) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Prime Rate"
shall mean the per annum rate of interest<br />
established from time to time by Deutsche Bank Trust Company
Americas as its<br />
prime rate, which rate may not be the lowest rate of interest
charged by<br />
Deutsche Bank Trust Company Americas to its customers.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Process
Agent" shall have the meaning provided in Section<br />
9.16(b) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Property"
shall mean any property or asset of any kind<br />
whatsoever, whether real, personal or mixed and whether tangible
or<br />
intangible, and any right or interest therein.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "PUHCA"
shall mean the Public Utility Holding Company Act of<br />
1935, as amended, and rules and regulations promulgated
thereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Put
Prepayment Fee Percentage" shall mean, for any prepayment,<br />
(i) if such prepayment is made on or prior to October 1, 2003,
3.5%, (ii) if<br />
such prepayment is made after October 1, 2003 and on or prior to
October 1,<br />
2004, 2.5% and (iii) thereafter, 0.5%.<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "QF" shall
mean a "qualifying cogeneration facility" or a<br />
"qualifying small power production facility" as defined under the
Public<br />
Utility Regulatory Policies Act of 1978, as amended.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Qualified
Abandonment" shall mean any abandonment of any<br />
property of NEG, Inc. or any of its Subsidiaries in a transaction
which is an<br />
abandonment, which qualifies for such under the Code and which
satisfies the<br />
following: either (a) (i) NEG, Inc. and each of its Subsidiaries
releases the<br />
Borrower from any and all claims and obligations related to the
property that<br />
is being abandoned, and (ii) the Borrower shall have no obligation
or<br />
liability (whether fixed, contingent or otherwise) resulting from
such<br />
transaction that is not satisfied in full at the time of such
abandonment by<br />
NEG, Inc., including without limitation, any tax liabilities (it
being<br />
understood that any tax liabilities of NEG, Inc. arising from
such<br />
abandonment shall be paid to the Borrower at the time of such
abandonment,<br />
and the Borrower may pay such tax liabilities to the relevant
taxing<br />
authority in accordance with the usual payment schedule); or (b)
such<br />
abandonment is an abandonment of property that is immaterial to
NEG, Inc. or<br />
any of its Subsidiaries (which does not create any material
obligation or<br />
liability for the Borrower) and in connection with which the
Borrower shall<br />
not have affirmatively undertaken or consented to pay or incur any
obligation<br />
or liability (whether fixed, contingent or otherwise) resulting
from such<br />
abandonment that is not satisfied in full at the time of such
abandonment by<br />
NEG, Inc., including without limitation, any tax liabilities.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Qualified
Asset Sale" shall mean the sale by NEG, Inc. or any of<br />
its Subsidiaries of assets in a transaction which satisfies the
following:&nbsp;<br />
 (a) it is a transaction with an unaffiliated third party and on
arms-length<br />
terms; (b) any Subsidiary so disposed of (or which disposes of
substantially<br />
all of its assets in such transaction) releases the Borrower from
any and all<br />
claims and obligations; (c) any Subsidiary so disposed of (or which
disposes<br />
of substantially all of its assets in such transaction) which has
an<br />
obligation to the Borrower pays such obligation in full to the
Borrower at<br />
the closing of the sale (provided, that in connection with a
Qualified Asset<br />
Sale that results in the receipt by the Borrower of net cash
benefits (either<br />
in the form of cash purchase price or net tax savings that would
not<br />
otherwise accrue to the benefit of the Borrower), the Borrower may
contribute<br />
such obligation to the equity of the obligor, transfer such
obligation to the<br />
purchaser in such Qualified Asset Sale or otherwise forgive such
obligation<br />
as a part of such Qualified Asset Sale); (d) the Borrower shall
have no<br />
obligation or liability (whether fixed, contingent or otherwise)
resulting<br />
from such transaction that is not satisfied in full at such closing
by NEG,<br />
Inc., including without limitation, any tax liabilities (it being
understood<br />
that any tax liabilities of NEG, Inc. arising from such disposition
shall be<br />
paid to the Borrower at the closing of such transaction, and the
Borrower may<br />
pay such tax liabilities to the relevant taxing authority in
accordance with<br />
the usual payment schedule); provided that the Borrower may have
Remaining<br />
Obligations in connection with any Qualified Asset Sale, so long as
the<br />
amount of Remaining Obligations in connection with any Qualified
Asset Sale<br />
is contractually limited to an amount not exceeding the difference
of (i) the<br />
sum of (A) 75% of Attributable Tax Benefits received on or prior to
the date<br />
of such Qualified Asset Sale plus (B) the aggregate cash purchase
price<br />
actually received by the Borrower in connection with such Qualified
Asset<br />
Sale and any Qualified NEG Sale and Qualified Asset Sale previously
or<br />
concurrently consummated, minus (ii) the sum of (A) the aggregate
amount of<br />
Permitted NEG Reinvestments previously or concurrently made by the
Borrower<br />
plus (B) the outstanding aggregate amount of Remaining Obligations
previously<br />
or concurrently incurred by the Borrower (except to the extent that
any such<br />
outstanding Remaining Obligations were incurred based upon the
provisions of<br />
the definition of "Remaining Obligations" in this Appendix A
permitting such<br />
obligations in an amount equal to the cash purchase price actually
received<br />
by the Borrower in connection with any previous Qualified NEG Sale
or any<br />
previous Qualified Asset Sale) plus (C) the aggregate amount of
payments<br />
previously or concurrently made the Borrower in respect of any
Remaining<br />
Obligations; and (e) the Borrower receives all Net Sale Proceeds,
to the<br />
extent such Net Sale Proceeds are not applied by NEG, Inc. or
its<br />
Subsidiaries (i) to repay existing indebtedness or other
obligations to<br />
creditors of NEG, Inc. and its Subsidiaries, (ii) to pay or
cash-<br />
collateralize tax obligations arising from such sale (it being
understood<br />
that any tax liabilities of NEG, Inc. arising from such disposition
shall be<br />
paid to the Borrower at the closing of such transaction, and the
Borrower may<br />
pay such tax liabilities to the relevant taxing authority in
accordance with<br />
the usual payment schedule) or (iii) as NEG, Inc. reasonably deems
necessary<br />
to accomplish a restructuring of NEG, Inc. and its Subsidiaries,
including<br />
maintaining (but not expanding) operations of NEG, Inc. and its
Subsidiaries.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Qualified
Bankruptcy Sale" shall mean the sale by LLC or any of<br />
its Subsidiaries of assets in a transaction that (a) occurs in a
bankruptcy<br />
proceeding with respect to the entity making the sale, so long as
(i) the<br />
Borrower shall not have affirmatively undertaken or consented to
pay or incur<br />
any obligation or liability (whether fixed, contingent or
otherwise)<br />
resulting from such transaction that is not satisfied at closing by
NEG, Inc.<br />
and (ii) the Borrower has not incurred as a matter of law or
otherwise any<br />
obligation or liability (whether fixed, contingent or otherwise)
resulting<br />
from such transaction if as a result of such incurrence the sum of
(A) the<br />
aggregate outstanding amount of all obligations and liabilities of
the<br />
Borrower resulting from such transaction and all previous
Qualified<br />
Bankruptcy Sales and (B) the aggregate amount the Borrower has paid
with<br />
respect to all obligations and liabilities resulting from such
transaction<br />
and all previous Qualified Bankruptcy Sales is in excess of (1)
$100,000,000,<br />
plus (2) 75% of Attributable Tax Benefits received on or prior to
the date of<br />
such Qualified Bankruptcy Sale minus (3) the sum of (x) the
aggregate amount<br />
of Permitted NEG Reinvestments previously or concurrently made by
the<br />
Borrower with Attributable Tax Benefits plus (y) the aggregate
outstanding<br />
amount of Remaining Obligations previously or concurrently incurred
by the<br />
Borrower (except to the extent that any such outstanding
Remaining<br />
Obligations were incurred based upon the provisions of the
definition of<br />
"Remaining Obligations" in this Appendix A permitting such
obligations in an<br />
amount equal to the cash purchase price actually received by the
Borrower in<br />
connection with any previous Qualified NEG Sale or any previous
Qualified<br />
Asset Sale) plus (z) the aggregate amount of payments previously
or<br />
concurrently made the Borrower in respect of any Remaining
Obligations; or<br />
(b) is consented to by Required Waiver Lenders (it being agreed
that no<br />
Lender shall receive any fee in connection with such
consent).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Qualified
NEG Sale" shall mean the Disposition for cash of all<br />
or any portion of the equity interests in LLC or in NEG, Inc. in
a<br />
transaction which satisfies the following:&nbsp; (a) it is a
transaction with an<br />
unaffiliated third party and on arms-length terms; (b) LLC, NEG,
Inc. and<br />
each of their Subsidiaries releases the Borrower from any and all
claims and<br />
obligations; (c) LLC, NEG, Inc. and each of their Subsidiaries
which has an<br />
obligation to the Borrower pays such obligation in full to the
Borrower at<br />
the closing of the sale (provided, that in connection with a
Qualified NEG<br />
Sale that results in the receipt by the Borrower of net cash
benefits (either<br />
in the form of cash purchase price or net tax savings that would
not<br />
otherwise accrue to the benefit of the Borrower), the Borrower may
contribute<br />
such obligation to the equity of the obligor, transfer such
obligation to the<br />
purchaser in such Qualified NEG Sale or otherwise forgive such
obligation as<br />
a part of such Qualified NEG Sale); (d) the Borrower shall have no
obligation<br />
or liability (whether fixed, contingent or otherwise) resulting
from such<br />
transaction that is not satisfied in full at closing by NEG, Inc.
or out of<br />
the proceeds of such disposition, including without limitation, any
tax<br />
liabilities (it being understood that any tax liabilities of NEG,
Inc.<br />
arising from such disposition shall be paid to the Borrower at the
closing of<br />
such transaction, and the Borrower may pay such tax liabilities to
the<br />
relevant taxing authority in accordance with the usual payment
schedule);<br />
provided (i) the Borrower may pay reasonable Transaction Costs in
connection<br />
with such Qualified NEG Sale and (ii) that the Borrower may have
Remaining<br />
Obligations in connection with such Qualified NEG Sale, so long as
the amount<br />
of Remaining Obligations in connection with any Qualified NEG Sale
is<br />
contractually limited to an amount not exceeding the difference of
(A) the<br />
sum of (1) 75% of Attributable Tax Benefits received on or prior to
the date<br />
of such Qualified NEG Sale plus (2) the aggregate cash purchase
price<br />
actually received by the Borrower in connection with such Qualified
NEG Sale<br />
and any Qualified NEG Sale and Qualified Asset Sale previously
or<br />
concurrently consummated, minus (B) the sum of (1) the aggregate
amount of<br />
Permitted NEG Reinvestments previously or concurrently made by the
Borrower<br />
plus (2) the aggregate outstanding amount of Remaining Obligations
previously<br />
or concurrently incurred by the Borrower (except to the extent that
any such<br />
outstanding Remaining Obligations were incurred based upon the
provisions of<br />
the definition of "Remaining Obligations" in this Appendix A
permitting such<br />
obligations in an amount equal to the cash purchase price actually
received<br />
by the Borrower in connection with any previous Qualified NEG Sale
or any<br />
previous Qualified Asset Sale) plus (3) the aggregate amount of
payments<br />
previously or concurrently made the Borrower in respect of any
Remaining<br />
Obligations plus (4) the aggregate amount of Transaction Costs
previously or<br />
concurrently incurred by the Borrower; and (e) all Net Sale
Proceeds received<br />
by the Borrower and/or LLC, minus any net tax liability of the
Borrower<br />
resulting from such Qualified NEG Sale shall have been applied to
prepay the<br />
Loans as required by Section 3.2(g).&nbsp; Notwithstanding the
foregoing, no<br />
Disposition shall be a Qualified NEG Sale unless the Borrower shall
have<br />
delivered to the Administrative Agent a certificate demonstrating,
in<br />
reasonable detail, that such Disposition constitutes a Qualified
NEG Sale,<br />
and the Administrative Agent shall not have objected to such
certificate.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Qualified&nbsp;&nbsp; Restructuring"&nbsp;&nbsp; shall&nbsp;&nbsp;
mean&nbsp;&nbsp; any&nbsp;&nbsp; substantial<br />
restructuring of the Indebtedness or other obligations of NEG, Inc.
and its<br />
Subsidiaries in one or more contractual transactions not involving
bankruptcy<br />
proceedings in respect of the relevant obligor, which satisfies
the<br />
following: (a) NEG, Inc. releases the Borrower from any and all
claims and<br />
obligations related to the Indebtedness or other obligation that is
being<br />
restructured; (b) each direct and indirect Subsidiary of NEG, Inc.
which<br />
receives proceeds of a Permitted NEG Reinvestment in connection
with a<br />
Qualified Restructuring releases the Borrower from any and all
claims and<br />
obligations; and (c) the Borrower shall have no obligation or
liability<br />
(whether fixed, contingent or otherwise) resulting from such
restructuring<br />
that is not satisfied in full at closing by NEG, Inc., including
without<br />
limitation, any tax liabilities (it being understood that any tax
liabilities<br />
of NEG, Inc. arising from such restructuring shall be paid to the
Borrower at<br />
the closing of such restructuring, and the Borrower may pay such
tax<br />
liabilities to the relevant taxing authority in accordance with the
usual<br />
payment schedule).&nbsp; In addition, a restructuring of immaterial
debt or other<br />
immaterial obligations of NEG, Inc. or its Subsidiaries shall
constitute a<br />
"Qualified&nbsp; Restructuring"&nbsp; so&nbsp; long&nbsp; as&nbsp;
the&nbsp; Borrower&nbsp; shall&nbsp; not&nbsp; have<br />
affirmatively undertaken or consented to pay or incur any
obligation or<br />
liability (whether fixed, contingent or otherwise) resulting from
such<br />
restructuring that is not satisfied in full at the closing of
such<br />
restructuring&nbsp; by&nbsp; NEG,&nbsp; Inc.,&nbsp; including&nbsp;
without&nbsp; limitation,&nbsp; any&nbsp; tax<br />
liabilities.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Quarterly
Dates" shall mean the last Business Day of each of<br />
March, June, September and December.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Real
Estate" shall mean, with respect to any Person, all real<br />
estate assets, real property interests, including all easements,
rights of<br />
way, feehold interests, leasehold interests and any options with
respect to<br />
any of the foregoing, owned by such Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Recovery
Event" shall mean the receipt by any Person of any cash<br />
insurance proceeds or condemnation awards payable (i) by reason of
theft,<br />
loss, physical destruction, damage, taking or any other similar
event with<br />
respect to any Property or assets of such Person or (ii) under any
policy of<br />
insurance, except in the case of the Borrower, excluding such
proceeds or<br />
awards attributable to PGE Utility or any Subsidiary of PGE Utility
or any<br />
Reorganization Subsidiary.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Register"
shall have the meaning provided in Section 9.11(e) of<br />
the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Regulation
D" shall mean Regulation D of the Board of Governors<br />
of the Federal Reserve system (or any successor).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Regulation
U" shall mean Regulation U of the Board of Governors<br />
of the Federal Reserve system (or any successor).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Regulation
X" shall mean Regulation X of the Board of Governors<br />
of the Federal Reserve system (or any successor).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Release"
shall mean any spilling, leaking, pumping, pouring,<br />
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or<br />
disposing into the environment (including the abandonment or
discarding of<br />
barrels, containers, and other closed receptacles containing any
Hazardous<br />
Material, but excluding (i) emissions from the engine exhaust of a
motor<br />
vehicle and (ii) the normal application of fertilizer).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Remaining
Obligations" shall mean obligations or liabilities,<br />
whether fixed, contingent or otherwise, with respect to
indemnification, tax<br />
true-up or purchase price adjustment provisions contained in the
applicable<br />
purchase agreement, sale agreement and/or merger agreement in
connection with<br />
any Qualified Asset Sale or Qualified NEG Sale.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Reorganization Subsidiary" shall mean any of Gen, ETrans,
GTrans<br />
and Newco (as such capitalized terms are defined in Annex B), and
any<br />
successor or replacement of any such entity and any entity holding
any<br />
substantial part of the assets contemplated by Annex B to be held
by any such<br />
entity, in each case, after giving effect to the transactions
described in<br />
Annex B.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Reportable
Event" shall mean an event described in Section<br />
4043(c) of ERISA with respect to a Plan that is subject to Title IV
of ERISA<br />
other than those events as to which the 30-day notice period is
waived under<br />
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section
4043.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Required
Waiver Lenders" shall mean, at any time, the holders of<br />
more than 50% in principal amount of the Loans then outstanding (it
being<br />
understood that for the purposes of this definition only, all
amounts in the<br />
Tranche B Escrow Account shall be deemed to be Loans).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Reserve
Requirement" shall mean, at any time, the maximum rate<br />
at which reserves (including, without limitation, any marginal,
special,<br />
supplemental, or emergency reserves) are required to be maintained
under<br />
regulations issued from time to time by the Board of Governors of
the Federal<br />
Reserve System (or any successor) by member banks of the Federal
Reserve<br />
System against "Eurocurrency liabilities" (as such term is used in
Regulation<br />
D).&nbsp; Without limiting the effect of the foregoing, the Reserve
Requirement<br />
shall reflect any other reserves required to be maintained by such
member<br />
banks with respect to (i) any category of liabilities which
includes deposits<br />
by reference to which the Eurodollar Rate is to be determined, or
(ii) any<br />
category of extensions of credit or other assets which include
Eurodollar<br />
Loans.&nbsp; The Eurodollar Rate shall be adjusted automatically on
and as of the<br />
effective date of any change in the Reserve Requirement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Return"
shall have the meaning provided in Section 5.12 of the<br />
Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "SEC" shall
mean the Securities and Exchange Commission.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "SEC
Filings" shall mean the filings of the Borrower and NEG,<br />
Inc. listed on Schedule B.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Securities
Act" shall mean the Securities Act of 1933, as<br />
amended, and the rules and regulations promulgated by the SEC
thereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Security
Agreements" shall mean, collectively, the two Security<br />
Agreements, each dated as of October 18, 2002, among the Borrower,
the<br />
Administrative Agent and Deutsche Bank Trust Company Americas, as
Collateral<br />
Agent for the benefit of the Lenders holding the New Tranche B Loan
and the<br />
Lenders holding the Continued Tranche B Loan, respectively.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Security
Documents" shall mean, collectively, the LLC Pledge<br />
Agreement, the Stock Pledge Agreement, the Utility Pledge
Agreements, the<br />
Security Agreements, the Tranche B Interest Reserve Account
Control<br />
Agreements, the Tranche B Escrow Account Agreement and all Uniform
Commercial<br />
Code financing statements and other filings, recordings or
regulations<br />
required by the Credit Agreement or the LLC Pledge Agreement, the
Stock<br />
Pledge Agreement, the Utility Pledge Agreements or the Security
Agreements to<br />
be filed or made in respect of any such Security Document.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Solvent"
shall mean, with respect to any Person, as of any date<br />
of determination, (a) the amount of the "present fair saleable
value" of the<br />
assets of such Person will, as of such date, exceed the amount of
all<br />
"liabilities of such Person, contingent or otherwise", as of such
date, as<br />
such quoted terms are determined in accordance with applicable
federal and<br />
state laws governing determinations of the insolvency of debtors,
(b) the<br />
present fair saleable value of the assets of such Person will, as
of such<br />
date, be greater than the amount that will be required to pay the
liability<br />
of such Person on its debts as such debts become absolute and
matured, (c)<br />
such Person will not have, as of such date, an unreasonably small
amount of<br />
capital with which to conduct its business, and (d) such Person
will be able<br />
to pay its debts as they mature.&nbsp; For purposes of this
definition, (i) "debt"<br />
means liability on a "claim", and (ii) "claim" means any (x) right
to<br />
payment, whether or not such a right is reduced to judgment,
liquidated,<br />
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed,<br />
legal, equitable, secured or unsecured or (y) right to an equitable
remedy<br />
for breach of performance if such breach gives rise to a right to
payment,<br />
whether or not such right to an equitable remedy is reduced to
judgment,<br />
fixed, contingent, matured or unmatured, disputed, undisputed,
secured or<br />
unsecured.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Source" of
a Lender shall mean the source from which such Lender<br />
is obtaining funds in connection with the funding or maintenance of
its<br />
Eurodollar Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Specified
Change of Control" shall mean a "Change of Control"<br />
(or any other defined term having a similar purpose) as defined in
the<br />
Convertible Notes Indenture.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Spin-Off"
shall mean (A) any spin-off (including, without<br />
limitation, the Utility Spin-Off) under any plan of reorganization
of PGE<br />
Utility under Chapter 11 of the Bankruptcy Code (a) to the
shareholders of<br />
the Borrower of (i) all or any portion (either directly or
indirectly) of PGE<br />
Utility, Newco or any of the Reorganization Subsidiaries or (ii)
any of the<br />
Material Reorganization Assets or (b) to the Borrower of (i) all or
any<br />
portion of Newco or any of the Reorganization Subsidiary or (ii)
any of the<br />
Material Reorganization Assets; or (B) any sale or issuance of more
than 15%<br />
of the Capital Stock of PGE Utility pursuant to a plan of
reorganization of<br />
PGE Utility under Chapter 11 of the Bankruptcy Code.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Spin-Off
Date" shall have the meaning provided in Section 3.8(b)<br />
of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Spin Offer
to Repay" shall have the meaning provided in Section<br />
3.8(b) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Spin Offer
Settlement Date" shall have the meaning provided in<br />
Section 3.8(b) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Spin
Prepayment Fee" shall have the meaning provided in Section<br />
3.8(b) of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Standard
&amp; Poor's" shall mean Standard &amp; Poor's Ratings<br />
Services, a division of The McGraw-Hill Companies, Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Stock
Pledge Agreement" shall mean the Amended and Restated<br />
Stock Pledge Agreement, dated as of June 25, 2002, among LLC, as
pledgor,<br />
NEG, Inc., as issuer, the Administrative Agent and Deutsche Bank
Trust<br />
Company Americas, as pledgee, as Collateral Agent for the benefit
of the<br />
Lenders, and the acknowledgment, dated as of the Closing Date, of
LLC and<br />
NEG, Inc. in respect of the amendment and restatement of the
Existing Credit<br />
Agreement in the form of the Credit Agreement.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Subsidiary"
shall mean, for any Person, any corporation,<br />
partnership or other entity of which at least a majority of the
securities or<br />
other ownership interests having by the terms thereof ordinary
voting power<br />
to elect a majority of the board of directors or other persons
performing<br />
similar functions&nbsp; of such corporation, partnership&nbsp; or
other entity<br />
(irrespective of whether or not at the time securities or other
ownership<br />
interests of any other class or classes of such corporation,
partnership or<br />
other entity shall have or might have voting power by reason of the
happening<br />
of any contingency) is at the time directly or indirectly owned or
controlled<br />
by such Person or one or more Subsidiaries of such Person or by
such Person<br />
and one or more Subsidiaries of such Person.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Supermajority Lenders" shall mean, at any time, the holders
of<br />
more than 66 2/3% in principal amount of the Loans then
outstanding.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Syndication
Agent" shall mean Lehman Commercial Paper Inc.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tax" shall
have the meaning provided in Section 3.4 of the<br />
Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Test&nbsp;
Date"&nbsp; shall&nbsp; mean&nbsp; the&nbsp; thirty-first&nbsp;
day&nbsp; following<br />
confirmation (but in any event prior to consummation) of a Non-Spin
Plan of<br />
Reorganization and the first Business Day of each calendar
quarter<br />
thereafter.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Trading
Day" shall mean a day during which trading in securities<br />
generally occurs on the New York Stock Exchange or, if the
Borrower's common<br />
stock is not listed on the New York Stock Exchange, on the
principal other<br />
national or regional securities exchange on which the Borrower's
common stock<br />
then is listed or, if the Borrower's common stock is not listed on
a national<br />
or regional securities exchange, on the National Association of
Securities<br />
Dealers Automated Quotation System or, if the Borrower's common
stock is not<br />
quoted on the National Association of Securities Dealers Automated
Quotation<br />
System, on the principal other market on which the Borrower's
common stock is<br />
then traded.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Escrow Account" shall mean the Escrow Fund (as defined<br />
in the Tranche B Escrow Account Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Escrow Account Agreement" shall mean the Escrow<br />
Agreement, dated as of October 18, 2002, among the Borrower,
the<br />
Administrative Agent, the Collateral Agent and Deutsche Bank Trust
Company<br />
Americas, as Escrow Agent, as amended, supplemented or otherwise
modified<br />
from time to time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; "Tranche B
Interest Reserve Account (Combined Tranche B Loan)"<br />
shall mean the collateral account designated in the Tranche B
Interest<br />
Reserve Account Control Agreement (Combined Tranche B Loan)
maintained with<br />
the Collateral Agent for the purposes of paying interest on the
Tranche B<br />
Loan on or after the Consolidation Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Interest Reserve Account (Continued Tranche B Loan)"<br />
shall mean the collateral account, account no. 34213, maintained
with the<br />
Collateral Agent for the purposes of paying interest on the
Continued Tranche<br />
B Loan prior to the Consolidation Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Interest Reserve Account (New Tranche B Loan)" shall<br />
mean the collateral account, account no. 35140, maintained with
the<br />
Collateral Agent for the purposes of paying interest on the New
Tranche B<br />
Loan prior to the Consolidation Date.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Interest Reserve Accounts" shall mean, collectively,<br />
(a) the Tranche B Interest Reserve Account (Continued Tranche B
Loan), (b)<br />
the Tranche B Interest Reserve Account (New Tranche B Loan) and (c)
the<br />
Tranche B Interest Reserve Account (Combined Tranche B Loan).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Interest Reserve Account Control Agreement (Combined<br />
Tranche B Loan)" shall mean the amended and restated Tranche B
Interest<br />
Reserve Account Control Agreements entered into in accordance with
Section<br />
9.28 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Interest Reserve Account Control Agreements" shall<br />
mean, collectively, (a) the Amended and Restated Tranche B Interest
Reserve<br />
Account Security and Control Agreement (Continued Tranche B Loan),
dated as<br />
of October 18, 2002, among the Borrower, the Collateral Agent and
the bank<br />
party thereto, (b) the Tranche B Interest Reserve Account Security
and<br />
Control Agreement (New Tranche B Loan), dated as of October 18,
2002, among<br />
the Borrower, the Collateral Agent and the bank party thereto and
(c) the<br />
Tranche B Interest Reserve Account Control Agreement (Combined
Tranche B<br />
Loan).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Lender" shall be the collective reference to (i) the<br />
Continued Tranche B Lenders and (ii) the New Tranche B
Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Loan" shall be the collective reference to (i) the<br />
Continued Tranche B Loan and (ii) the New Tranche B Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Tranche B
Maturity Date" shall mean September 2, 2006.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Transaction
Costs" shall mean transaction costs and expenses<br />
incurred by the Borrower in connection with any Qualified NEG
Sale.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Type"
shall mean the type of Loan determined with regard to the<br />
interest option applicable thereto, i.e., whether a Base Rate Loan
or a<br />
Eurodollar Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Unaudited
Financial Statements" shall have the meaning provided<br />
in Section 5.11 of the Credit Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Unfunded
Current Liability" of any Plan shall mean the amount,<br />
if any, by which the value of the accumulated plan benefits under
the Plan<br />
determined on a plan termination basis in accordance with
actuarial<br />
assumptions at such time consistent with those prescribed by the
PBGC for<br />
purposes of Section 4044 of ERISA, exceeds the fair market value of
all plan<br />
assets allocable to such liabilities under Title IV of ERISA
(excluding any<br />
accrued but unpaid contributions).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "United
States" and "U.S." shall each mean the United States of<br />
America.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "U.S. GAAP"
shall mean generally accepted accounting principles<br />
and practices as in effect from time to time in the United
States.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Base Pledge Agreement" shall mean, collectively, the two<br />
Utility Pledge Agreements (35%), dated as of October 18, 2002,
among the<br />
Borrower, as pledgor, the Administrative Agent and Deutsche Bank
Trust<br />
Company Americas, as pledgee, as Collateral Agent for the benefit
of the<br />
Lenders holding the New Tranche B Loan and the Lenders holding the
Continued<br />
Tranche B Loan, respectively.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Pledge Agreements" shall mean, collectively, the Utility<br />
Base Pledge Agreement and the Utility Protective Pledge
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Protective Pledge Agreement" shall mean, collectively,<br />
the two Utility Pledge Agreements (65%), dated as of October 18,
2002, among<br />
the Borrower, as pledgor, the Administrative Agent and Deutsche
Bank Trust<br />
Company Americas, as pledgee, as Collateral Agent for the benefit
of the<br />
Lenders holding the New Tranche B Loan and the Lenders holding the
Continued<br />
Tranche B Loan, respectively.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Regulation" shall mean any law, regulation or rule of<br />
the Federal government, any state, or any agency or political
subdivision of<br />
the foregoing which is applicable to an entity by virtue of (i)
such entity's<br />
ownership or operation of assets used for the generation,
transmission,<br />
distribution or sale of electric energy, (ii) such entity's
transportation of<br />
natural or manufactured gas, gasoline, oil, or similar fuels,
steam, chilled<br />
water or other products resulting in regulation similar to that
imposed on<br />
the foregoing, (iii) such entity's engaging in the sale or
provision of<br />
electric energy, natural gas or similar fuels, steam, water,
chilled water,<br />
or telephone or other public utility services; provided that, such
term shall<br />
not include laws, regulations or rules of general applicability
with respect<br />
to protection of the environment, hazardous waste, or public health
or<br />
safety.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Spin-Off" shall mean individually and collectively, any<br />
transfers, Investments, Indebtedness, Dividends, and other
transactions to<br />
the extent substantially consistent with the transactions described
in the<br />
attached Annex B (which summarizes the material provisions of the
filed Plan<br />
of Reorganization, dated April 19, 2002 (without giving effect to
any<br />
subsequent amendment or modification, the "PGE Plan"), proposed by
PGE<br />
Utility in connection with its bankruptcy proceeding) and
undertaken pursuant<br />
to a confirmed plan of reorganization of PGE Utility under Chapter
11 of the<br />
Bankruptcy Code.&nbsp; In connection with the consummation of the
Utility Spin-<br />
Off, (a) PGE Utility has formed a new corporation ("Newco"), to
which shall<br />
be transferred the common stock of the Reorganization Subsidiaries,
(b) PGE<br />
Utility will dividend the common stock of Newco to the Borrower
(the "Newco<br />
Spin") and (c) the Borrower will dividend the common stock of PGE
Utility to<br />
the stockholders of the Borrower (collectively, the "PGE
Spin").<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Voluntary
Make-Whole Amount" shall mean, in respect of any<br />
optional prepayment on any Payment Date, pursuant to Section 3.1 of
the<br />
Credit Agreement, of the Tranche B Loan on or before October 1,
2003, an<br />
amount equal to the discounted present value on such Payment Date
of sum of<br />
(a) 2.50% of the principal amount of such prepayment plus (b) the
aggregate<br />
amount of interest that would accrue on the principal amount of
such<br />
prepayment from such Payment Date to October 1, 2003 pursuant to
Section 2.5<br />
of the Credit Agreement (including, without limitation, pay-in-kind
interest<br />
accruing pursuant to Section 2.5(g) of the Credit Agreement,
calculated as if<br />
October 1, 2003 were an Interest Payment Date in respect of the
principal<br />
<br />
amount being prepaid on such Payment Date), such discounted present
value to<br />
be calculated by the Administrative Agent at the rate per annum
equal to the<br />
yield to maturity (as reasonably determined by the Administrative
Agent), on<br />
the Business Day immediately preceding such Payment Date, of United
States<br />
Treasury securities having a maturity of approximately six months
(or, if<br />
less, the time remaining to the Tranche B Maturity Date), and
assuming that<br />
the sum described in the foregoing clauses (a) and (b) were paid on
October<br />
1, 2003.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Voting
Stock", with respect to any Person, shall mean Capital<br />
Stock the holders of which are ordinarily, in the absence of
contingencies,<br />
entitled to vote for the election of directors (or persons
performing similar<br />
functions) of such Person, even if the right so to vote has been
suspended by<br />
the happening of a contingency.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Warrant"
shall be the collective reference to (i) the Existing<br />
Warrant and (ii) the New Warrant.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Warrant
Agreement" shall be the collective reference to (i) the<br />
Existing Warrant Agreement and (ii) the New Warrant
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;&nbsp; Rules of Interpretation.&nbsp; In each Financing
Document,<br />
unless otherwise indicated:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;
each reference to, and the definition of, any document<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including any Financing Document) shall
be deemed to refer to such<br />
&nbsp;&nbsp;&nbsp;&nbsp; document as it may be amended,
supplemented, revised or modified from<br />
&nbsp;&nbsp;&nbsp;&nbsp; time to time in accordance with its terms
and, to the extent<br />
&nbsp;&nbsp;&nbsp;&nbsp; applicable, the terms of the Credit
Agreement;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
each reference to a Law or Governmental Approval shall be<br />
&nbsp;&nbsp;&nbsp;&nbsp; deemed to refer to such Law or
Governmental Approval as the same may be<br />
&nbsp;&nbsp;&nbsp;&nbsp; amended, supplemented or otherwise
modified from time to time;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
any reference to a Person in any capacity includes a<br />
&nbsp;&nbsp;&nbsp;&nbsp; reference to its permitted successors and
assigns in such capacity and,<br />
&nbsp;&nbsp;&nbsp;&nbsp; in the case of any Governmental Authority,
any Person succeeding to any<br />
&nbsp;&nbsp;&nbsp;&nbsp; of its functions and capacities;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;
references to days shall refer to calendar days unless<br />
&nbsp;&nbsp;&nbsp;&nbsp; Business Days are specified; references to
weeks, months or years shall<br />
&nbsp;&nbsp;&nbsp;&nbsp; be to calendar weeks, months or years,
respectively; if any calendar<br />
&nbsp;&nbsp;&nbsp;&nbsp; day is not a Business Day, then
performances required on such calendar<br />
&nbsp;&nbsp;&nbsp;&nbsp; day shall be deferred to the next Business
Day;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (e)&nbsp;
all references to&nbsp; a "Section," "Appendix," "Annex,"<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Schedule" or "Exhibit" are to a Section
of such Financing Document or<br />
&nbsp;&nbsp;&nbsp;&nbsp; to an Appendix, Annex, Schedule or Exhibit
attached thereto;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (f)&nbsp;
the table of contents and Section headings and other<br />
&nbsp;&nbsp;&nbsp;&nbsp; captions therein are for the purpose of
reference only and do not<br />
&nbsp;&nbsp;&nbsp;&nbsp; affect the interpretation of such
Financing Document;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; (g)&nbsp;
defined terms in the singular shall include the plural and<br />
&nbsp;&nbsp;&nbsp;&nbsp; vice versa, and the masculine, feminine or
neuter gender shall include<br />
&nbsp;&nbsp;&nbsp;&nbsp; all genders;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (h)&nbsp;
the words "hereof", "herein" and "hereunder", and words of<br />
&nbsp;&nbsp;&nbsp;&nbsp; similar import, when used in any Financing
Document, shall refer to<br />
&nbsp;&nbsp;&nbsp;&nbsp; such Financing Document as a whole and not
to any particular provision<br />
&nbsp;&nbsp;&nbsp;&nbsp; of such Financing Document;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
the words "include," "includes" and "including" are deemed<br />
&nbsp;&nbsp;&nbsp; &nbsp; to be followed by the phrase "without
limitation";&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (j)&nbsp;
where the terms of any Financing Document require that the<br />
&nbsp;&nbsp;&nbsp;&nbsp; approval, opinion, consent or other input
of any Secured Party be<br />
&nbsp;&nbsp;&nbsp;&nbsp; obtained, such requirement shall be deemed
satisfied only where the<br />
&nbsp;&nbsp;&nbsp;&nbsp; requisite approval, opinion, consent or
other input is given by or on<br />
&nbsp;&nbsp;&nbsp;&nbsp; behalf of the relevant party in
writing;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (k)&nbsp;
where the terms of any Financing Document require or permit<br />
&nbsp;&nbsp;&nbsp;&nbsp; any action to be taken by the Collateral
Agent, such action shall be<br />
&nbsp;&nbsp;&nbsp;&nbsp; taken strictly in accordance with the
applicable provisions of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; relevant Financing Documents;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (l)&nbsp;
whenever the phrase "material compliance" is used, it shall<br />
&nbsp;&nbsp;&nbsp;&nbsp; be interpreted to mean that either the
entity is in full compliance<br />
&nbsp;&nbsp;&nbsp;&nbsp; with the requirement or that any failure
of the entity to be in<br />
&nbsp;&nbsp;&nbsp;&nbsp; compliance in all respects with the
requirement could not reasonably be<br />
&nbsp;&nbsp;&nbsp;&nbsp; expected alone or together will all other
such failures and all of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; facts and circumstances to have a Material
Adverse Effect; and&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (m)&nbsp;
all reference to "knowledge" of a Person shall mean the<br />
&nbsp;&nbsp;&nbsp;&nbsp; knowledge or actual awareness of such
Person of the subject matter in<br />
&nbsp; &nbsp;&nbsp;&nbsp; question after due inquiry and
investigation.<br />
<br />
</font></p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>exhibit992.htm
<DESCRIPTION>UTILITY STOCK PLEDGE AGREEMENT (35%)CONTINUED TRANCHE B LOAN, DATED AS OF OCTOBER 18, 2002
<TEXT>
<html>
<head>
<title>Exhibit 99-2</title>
</head>
<body>
<div>
<p><font size="2" face=
"Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exhibit 99.2<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EXECUTION COPY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_________________________________________________________________<br />

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
UTILITY STOCK PLEDGE AGREEMENT (35%)&mdash;CONTINUED TRANCHE B
LOAN<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
by and among<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEUTSCHE BANK TRUST COMPANY AMERICAS,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Collateral Agent<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
for the benefit of the Lenders, as Pledgee<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_________________________________________________________________<br />

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dated as of October 18, 2002<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_________________________________________________________________<br />

<br />
<br />
</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; UTILITY STOCK PLEDGE
AGREEMENT (35%)&mdash;CONTINUED TRANCHE B LOAN<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp; STOCK PLEDGE AGREEMENT
(35%)&mdash;CONTINUED TRANCHE B LOAN&nbsp; (as amended,<br />
modified or supplemented from time to time, this "Agreement"),
dated as of<br />
October 18, 2002, among PG&amp;E CORPORATION, a California
corporation (the<br />
"Pledgor"), LEHMAN COMMERCIAL PAPER INC., a corporation organized
and<br />
existing under the laws of the State of New York, as Administrative
Agent<br />
for the lenders (the "Lenders") from time to time parties to the
Credit<br />
Agreement described below and DEUTSCHE BANK TRUST COMPANY AMERICAS
(the<br />
"Pledgee"), as Collateral Agent for the benefit of the
Lenders.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
W I T N E S S E T H :<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the Pledgor, is a party to the
Amended and Restated Credit<br />
Agreement, dated as of June 25, 2002 (as amended, the "Existing
Credit<br />
Agreement"), with the lenders parties thereto, Lehman Commercial
Paper<br />
Inc., as Administrative Agent, and others, pursuant to which such
lenders<br />
made the Tranche A Loan (as defined in the Existing Credit
Agreement, the<br />
"Existing Tranche A Loan") and the Tranche B Loan (as defined in
the<br />
Existing Credit Agreement, the "Existing Tranche B Loan");<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, pursuant to the Second Amended
and Restated Credit Agreement,<br />
dated as of the date hereof (as amended, supplemented or otherwise
modified<br />
from time to time, the "Credit Agreement"), among the Pledgor, the
Lenders<br />
parties thereto, the Administrative Agent and others, the Existing
Credit<br />
Agreement is being amended and restated in its entirety to modify
certain<br />
of the terms applicable to the Existing Tranche B Loan, which
shall<br />
continue to be outstanding under the Credit Agreement (the Existing
Tranche<br />
B Loan, as so modified and continued, the "Continued Tranche B
Loan"), to<br />
reflect repayment of the Existing Tranche A Loan and to provide for
the<br />
making of an additional Tranche B Loan (the "New Tranche B
Loan");<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the Pledgor owns 94% of the
issued and outstanding common<br />
stock of Pacific Gas and Electric Company, a California corporation
(the<br />
"Issuer"); and<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, it is a condition precedent to
the obligation of the Lenders<br />
parties to the Existing Credit Agreement to agree to amend and
restate the<br />
Existing Credit Agreement,&nbsp; and&nbsp; to the obligations of
the Lenders to make<br />
the New Tranche B Loan under the Credit Agreement, that this
Agreement<br />
shall have been executed and delivered;&nbsp;&nbsp;<br />
 NOW, THEREFORE, in consideration of the foregoing premises and to
induce<br />
the Administrative Agent and the Lenders to enter into the
Credit<br />
Agreement, the Pledgor hereby agrees with the Administrative Agent,
for the<br />
benefit of the Lenders, as follows:&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 1.&nbsp; SECURITY FOR OBLIGATIONS.&nbsp;
This Agreement is made by the Pledgor<br />
for the benefit of the Pledgee, acting as Collateral Agent for the
benefit<br />
of the Lenders (as more particularly described in Section 3.1), to
secure:<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
the full and prompt payment when due (whether at the stated<br />
&nbsp;&nbsp;&nbsp;&nbsp; maturity, by acceleration or otherwise) of
all Obligations of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgor under the Credit Agreement and the
other Financing Documents<br />
&nbsp;&nbsp;&nbsp;&nbsp; in respect of the Continued Tranche B Loan
and the obligations of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgor under the Option Agreement,
whether direct or indirect,<br />
&nbsp;&nbsp;&nbsp;&nbsp; absolute or contingent, due or to become
due, now existing or<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereafter arising and howsoever evidenced,
and the due performance and<br />
&nbsp;&nbsp;&nbsp;&nbsp; compliance by the Pledgor with the terms
thereof;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii)&nbsp;
any and all sums advanced by the Pledgee or any Continued<br />
Tranche B Lender in order to preserve the Collateral or preserve
its<br />
security interest in the Collateral (as defined below); and<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iii)&nbsp;
in the event of any proceeding for the collection or<br />
enforcement of any indebtedness, obligations, or liabilities
referred to in</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 clauses (i) and (ii) above, the reasonable expenses of retaking,
holding,<br />
preparing for sale or lease, selling or otherwise disposing or
realizing on<br />
the Collateral, or of any exercise by the Pledgee of its rights
hereunder<br />
with respect thereto, together with reasonable attorneys' fees and
court<br />
costs related thereto,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 all such obligations, liabilities, sums and expenses set forth in
clauses<br />
(i) through (iii) of this Section 1, whether now existing or
hereafter<br />
arising, being herein collectively called the "Secured
Obligations".<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 2.&nbsp; DEFINITIONS.&nbsp; (a) Unless
otherwise defined herein, all capitalized<br />
terms used herein and defined in Appendix A to the Credit Agreement
shall<br />
be used herein as therein defined, and the principles of
construction set<br />
forth in Appendix A to the Credit Agreement shall apply to this
Agreement.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
In addition, the following capitalized terms used herein<br />
&nbsp;&nbsp;&nbsp;&nbsp; shall have the definitions specified
below:<br />
"Agreement" has the meaning set forth in the first paragraph
hereof.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; "Collateral" has the meaning set forth in
Section 3.1 hereof.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Continued Tranche B Loan" has the meaning
set forth in the second<br />
&nbsp;&nbsp;&nbsp;&nbsp; recital hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Continued Tranche B Lender" means any
Lender holding a Continued<br />
Tranche B Loan, in its capacity as the holder of such Loan.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Credit Agreement" has the meaning set
forth in the second recital<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Existing Credit Agreement" has the
meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; recital hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Existing Tranche A Loan" has the meaning
set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; recital hereto.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; "Existing Tranche B Loan" has the meaning
set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; recital hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Issuer" has the meaning set forth in the
third recital hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Lenders" has the meaning set forth in the
first paragraph hereof.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Newco Spin" has the meaning set forth in
the Credit Agreement.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Newco Stock" means the Capital Stock of
Newco Energy Corporation, a<br />
&nbsp;&nbsp;&nbsp;&nbsp; California corporation.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche B Loan" has the meaning set
forth in the second recital<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Pledged Stock" means the shares of
Capital Stock of the Issuer<br />
described on Annex A hereto, and any shares of Capital Stock of the
Issuer<br />
at any time issued in respect of the Capital Stock described on
Annex A<br />
hereto.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Pledgee" has the meaning set forth in the
first paragraph hereof.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Pledgor" has the meaning set forth in the
first paragraph hereof.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Proceeds" has the meaning given such term
in the UCC.<br />
&nbsp; &nbsp;&nbsp;&nbsp; "Secured Obligations" has the meaning set
forth in Section 1 hereof.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Securities Act" means the Securities Act
of 1933, as amended and as<br />
&nbsp;&nbsp;&nbsp;&nbsp; in effect from time to time.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "UCC" means the Uniform Commercial Code as
in effect in the State of<br />
&nbsp;&nbsp;&nbsp;&nbsp; New York from time to time.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Utility Stock Pledge Agreement
(65%)&mdash;Continued Tranche B Loan" means<br />
the Utility Stock Pledge Agreement (65%)&mdash;Continued Tranche B
Loan, dated as<br />
of the date hereof, among the parties hereto, pursuant to which 65%
of the<br />
common stock of the Issuer is being pledged to secure Obligations
relating<br />
to the Continued Tranche B Loan.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Utility Stock Pledge Agreement
(65%)&mdash;New Tranche B Loan" means the<br />
Utility Stock Pledge Agreement (65%)&mdash;New Tranche B Loan,
dated as of the<br />
date hereof, among the parties hereto, pursuant to which 65% of the
common<br />
stock of the Issuer is being pledged&nbsp; to secure the Secured
Obligations.<br />
&nbsp;&nbsp;&nbsp;&nbsp; "Utility Stock Pledge Agreement
(35%)&mdash;Continued Tranche B Loan" means<br />
the Utility Stock Pledge Agreement (35%)&mdash;Continued Tranche B
Loan, dated as<br />
of the date hereof, among the parties hereto, pursuant to which
the<br />
Collateral is being pledged&nbsp; to secure Obligations relating to
the<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 Continued Tranche B Loan.&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp; &nbsp; 3.&nbsp; PLEDGE OF PLEDGED STOCK,
ETC.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 3.1&nbsp; Pledge. (a)&nbsp; The Pledgor
hereby transfers, pledges and assigns to<br />
the Pledgee, and grants to the Pledgee a first priority security
interest<br />
in, all of the right, title and interest of the Pledgor in and to
the<br />
following, whether now existing or hereafter from time to time
acquired by<br />
the Pledgor (collectively, the "Collateral"):<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp; the Pledged Stock;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (ii) all other property hereafter
delivered in substitution for any of<br />
the Pledged Stock, all certificates and instruments representing
or<br />
evidencing such other property and all cash, securities,
interest,<br />
dividends, distributions rights and other property at any time and
from<br />
time to time received, receivable or otherwise distributed in
respect of or<br />
in exchange for any or all thereof (including, without limitation,
any<br />
Newco Stock distributed to the Pledgor in respect of the Pledged
Stock in<br />
connection with the Newco Spin); and<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (iii)&nbsp;&nbsp;&nbsp;&nbsp; all
Proceeds of any and all of the foregoing.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; The foregoing transfer, pledge,
assignment and grant of a<br />
security interest is made to secure the prompt and complete payment
and<br />
performance when due of the Secured Obligations.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp; Concurrently herewith, the
parties hereto are entering into the<br />
Utility Stock Pledge Agreement (35%)&mdash;New Tranche B Loan. It
is the<br />
intention of the parties hereto and thereto that the security
interest and<br />
lien created hereby shall be a separate security interest and lien
from<br />
that created by the Utility Stock Pledge Agreement (35%)&mdash;New
Tranche B<br />
Loan, and that the security interest and lien created hereby shall
be equal<br />
in priority to that created by the Utility Stock Pledge Agreement
(35%)&mdash;New<br />
Tranche B Loan.&nbsp; It is also the intention of the parties
hereto and thereto<br />
that any avoidance, pursuant to Sections 547 and 550 of the
Bankruptcy<br />
Code, of the security interest and lien created by the Utility
Stock Pledge<br />
Agreement (35%)&mdash;New Tranche B Loan shall have no effect on
the lien and<br />
security interest created hereby, which shall continue as a
perfected first<br />
priority interest in the Collateral securing the Secured
Obligations<br />
notwithstanding any such avoidance of the security interest and
lien<br />
created by the Utility Stock Pledge Agreement (35%)&mdash;New
Tranche B Loan.&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp; Concurrently herewith, the
parties hereto are entering into the<br />
Utility Stock Pledge Agreement (65%)&mdash;Continued Tranche B Loan
and the<br />
Utility Stock Pledge Agreement (65%)&mdash;New Tranche B Loan, in
each case<br />
covering collateral that is separate and distinct from the
Collateral. It<br />
is the intention of the parties hereto and thereto that the
security<br />
interest and lien created hereby shall be a separate security
interest and<br />
lien from those created by the Utility Stock Pledge Agreement
(65%)&mdash;<br />
Continued Tranche B Loan and the Utility Stock Pledge Agreement
(65%)&mdash;New<br />
Tranche B Loan.&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 3.2&nbsp; Procedures.&nbsp; i)&nbsp; To
the extent that the Pledgor at any time or<br />
from time to time owns, acquires or obtains any right, title or
interest in<br />
any Collateral, such Collateral shall automatically (and without
the taking<br />
of any action by the Pledgor) be pledged pursuant to Section 3.1 of
this<br />
Agreement and, in addition thereto, the Pledgor shall (as promptly
as<br />
practicable and, in any event, within 10 days after it obtains
such<br />
Collateral) deliver to the Pledgee any stock certificates
evidencing such<br />
Collateral, duly endorsed in blank, and take such other actions as
the<br />
Pledgee shall reasonably request to perfect the Pledgee's security
interest<br />
in such Collateral.<br />
&nbsp;<br />
 &nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; In addition to the actions
required to be taken pursuant to<br />
Section 3.2(a) hereof, the Pledgor shall from time to time, at the
sole<br />
expense of the Pledgor, cause appropriate financing statements (on
Form<br />
UCC-1 or other appropriate form) under the Uniform Commercial Code
as in<br />
effect in the various relevant States, in form covering all
Collateral<br />
hereunder (with the form of such financing statements to be
satisfactory to<br />
the Pledgee), to be filed in the relevant filing offices so that at
all<br />
times the Pledgee has a security interest in all Collateral which
is<br />
perfected by the filing of such financing statements (in each case
to the<br />
maximum extent perfection by filing may be obtained under the laws
of any<br />
relevant State).<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 3.3&nbsp; Subsequently Acquired
Collateral.&nbsp; If the Pledgor shall acquire<br />
(by purchase, dividend or similar distribution or otherwise) any
additional<br />
Collateral at any time or from time to time after the date hereof,
such<br />
Collateral shall automatically (and without any further action
being<br />
required to be taken) be subject to the pledge and security
interests<br />
created pursuant to Section 3.1 hereof and, furthermore, the
Pledgor will<br />
promptly thereafter take (or cause to be taken) all action with
respect to<br />
such Collateral in accordance with the procedures set forth in
Section 3.2<br />
hereof, and will promptly thereafter deliver to the Pledgee (i)
a<br />
certificate executed by a principal executive officer of the
Pledgor<br />
describing such Collateral and certifying that the same has been
duly<br />
pledged in favor of the Pledgee (for the benefit of the Lenders)
hereunder<br />
and (ii) supplements to Annexes A and B hereto as are reasonably
necessary<br />
to cause such annexes to be complete and accurate at such
time.&nbsp;&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 3.4&nbsp; Transfer Taxes.&nbsp; Each
pledge of Collateral under Section 3.1<br />
hereof shall be accompanied by any transfer tax stamps required
in<br />
connection with the pledge of such Collateral.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 3.5&nbsp; Certain Representations and
Warranties Regarding the Collateral.&nbsp;<br />
 The Pledgor represents and warrants that on the date hereof (i)
the Pledged<br />
Stock consists of the number and type of shares described in Annex
A<br />
hereto; (ii) the Pledged Stock constitutes that percentage of the
issued<br />
and outstanding common stock of the Issuer as is set forth in Annex
A<br />
hereto; and (iii) the Pledgor has complied with the respective
procedure<br />
set forth in Sections 3.2(a) and (b) hereof with respect to each
item of<br />
Collateral hereunder.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 4.&nbsp;&nbsp; APPOINTMENT OF SUB-AGENTS;
ENDORSEMENTS, ETC.&nbsp; If and to the<br />
extent necessary to enable the Pledgee to perfect its security
interest in<br />
any of the Collateral or to exercise any of its remedies hereunder,
the<br />
Pledgee shall have the right to appoint one or more sub-agents for
the<br />
purpose of retaining physical possession of the Collateral, which
may be<br />
held in the name of the Pledgor, endorsed or assigned in blank or
in favor<br />
of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent<br />
appointed by the Pledgee.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 5.&nbsp;&nbsp; VOTING, ETC., WHILE NO
EVENT OF DEFAULT.&nbsp; Unless and until there<br />
shall have occurred and be continuing an Event of Default, the
Pledgor<br />
shall be entitled to exercise any and all voting and other
consensual<br />
rights pertaining to the Collateral owned by it, and to give
consents,<br />
waivers or ratifications in respect thereof.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 6.&nbsp;&nbsp; DIVIDENDS AND OTHER
DISTRIBUTIONS.&nbsp; All cash dividends, cash<br />
distributions, cash Proceeds and other cash amounts payable in
respect of<br />
the Collateral (other than proceeds of any foreclosure in respect
of the<br />
Collateral pursuant to Section 7 hereof, which proceeds shall
be<br />
distributed and applied as provided in Section 9 hereof) shall be
received<br />
(a) by the Pledgor, if no Event of Default shall have occurred and
be<br />
continuing and (b) by the Pledgee, if any Event of Default shall
have<br />
occurred and be continuing (all of which amounts so received by the
Pledgee<br />
to be delivered by the Pledgee to the Administrative Agent for
application<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 toward prepayment of the Secured Obligations).&nbsp; The Pledgee
shall also be<br />
entitled to receive directly, and to retain as part of the
Collateral:<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
all other or additional capital stock or other property<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including, but not limited to, cash
dividends other than as set forth<br />
&nbsp;&nbsp;&nbsp;&nbsp; above) paid or distributed by way of
dividend or otherwise in respect<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Collateral;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) all
other or additional capital stock or other property paid<br />
&nbsp;&nbsp;&nbsp;&nbsp; or distributed in respect of the
Collateral by way of split, spin-off,<br />
&nbsp;&nbsp;&nbsp;&nbsp; split-up, reclassification, combination or
similar rearrangement;<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp;&nbsp;&nbsp; all other or additional capital stock
or other property<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including, but not limited to, cash)
which may be paid in respect of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Collateral by reason of any
consolidation, merger, exchange,<br />
&nbsp; &nbsp;&nbsp;&nbsp; conveyance of assets, liquidation or
similar reorganization; and<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iv)
without limiting the generality of the foregoing, all shares<br />
&nbsp;&nbsp;&nbsp;&nbsp; of Newco Stock distributed in respect of
the Collateral.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; Nothing contained in this Section 6 shall
limit or restrict in any way<br />
the Pledgee's right to have pledged to it proceeds of the
Collateral in any<br />
form in accordance with Section 3 of this Agreement.&nbsp; All
dividends,<br />
distributions or other payments which are received by the Pledgor
contrary<br />
to the provisions of this Section 6 and Section 7 hereof shall be
received<br />
in trust for the benefit of the Pledgee, shall be segregated from
other<br />
property or funds of the Pledgor and shall be forthwith paid over
to the<br />
Pledgee as Collateral in the same form as so received (with any
necessary<br />
endorsement).<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 7.&nbsp;&nbsp; REMEDIES IN CASE OF
DEFAULT OR EVENT OF DEFAULT. Subject to the<br />
Credit Agreement, if there shall have occurred and be continuing an
Event<br />
of Default, the Pledgee shall be entitled to exercise all of the
rights,<br />
powers and remedies (whether vested in it by this Agreement, any
other<br />
Financing Document or by law) for the protection and enforcement of
its<br />
rights in respect of the Collateral, and the Pledgee shall be
entitled to<br />
exercise all the rights and remedies of a secured party under the
Uniform<br />
Commercial Code as in effect in any relevant jurisdiction and also
shall be<br />
entitled, without limitation, to exercise the following
rights:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp; to
receive all amounts payable in respect of the Collateral;<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) upon
receipt of all requisite regulatory approvals, to<br />
transfer all or any part of the Collateral into the Pledgee's name
or the<br />
name of its nominee or nominees;<br />
&nbsp;<br />
 &nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp;&nbsp;&nbsp; upon receipt of all requisite
regulatory approvals, to<br />
vote all or any part of the Collateral (whether or not transferred
into the<br />
name of the Pledgee) and give all consents, waivers and
ratifications in<br />
respect of the Collateral and otherwise act with respect thereto as
though<br />
it were the outright owner thereof (the Pledgor hereby
irrevocably<br />
constituting and appointing the Pledgee the proxy and
attorney-in-fact of<br />
the Pledgor, with full power of substitution to do so) and to
exercise any<br />
and all of the rights or powers of the Pledgor in its capacity as
a<br />
stockholder of the Issuer;<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iv) at any
time and from time to time to sell, assign and<br />
deliver, or grant options to purchase, all or any part of the
Collateral,<br />
or any interest therein, at any public or private sale, without
demand of<br />
performance, advertisement or notice of intention to sell or of the
time or<br />
place of sale or adjournment thereof or to redeem or otherwise (all
of<br />
which are hereby waived by the Pledgor to the extent permitted
by<br />
applicable Law), for cash, on credit or for other property, for
immediate<br />
or future delivery without any assumption of credit risk, and for
such<br />
price or prices and on such terms as the Pledgee in its absolute
discretion<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 may determine, in each case, to the extent permitted by applicable
Law.&nbsp;<br />
 The Pledgee shall not be obligated to make any such sale of
Collateral<br />
regardless of whether any notice of sale has theretofore been
given.&nbsp; The<br />
Pledgor hereby waives and releases to the fullest extent permitted
by law<br />
any right or equity of redemption with respect to the Collateral,
whether<br />
before or after sale hereunder (other than the right to pay the
Secured<br />
Obligations in full), and all rights, if any, of marshalling the
Collateral<br />
and any other security for the Secured Obligations or
otherwise.&nbsp; At any<br />
such sale, to the extent permitted by applicable Law, the Pledgee
may bid<br />
for and purchase all or any part of the Collateral so sold free
from any<br />
such right or equity of redemption.&nbsp; The Pledgee shall not be
liable for<br />
failure to collect or realize upon any or all of the Collateral or
for any<br />
delay in so doing nor shall any of them be under any obligation to
take any<br />
action whatsoever with regard thereto; and<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (v)&nbsp;
to set-off any and all Collateral against any and all<br />
Secured Obligations and to apply such Collateral to the payment of
any and<br />
all Secured Obligations.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; If, pursuant to applicable Law, prior
notice of any of the foregoing<br />
actions is required to be given to the Pledgee, the Pledgee
hereby<br />
acknowledges that the minimum time required by such applicable Law,
or if<br />
no minimum is specified, ten (10) days, shall be deemed a
reasonable notice<br />
period.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 8.&nbsp;&nbsp; REMEDIES, ETC.,
CUMULATIVE.&nbsp; Each and every right, power and<br />
remedy of the Pledgee provided for in this Agreement or in any
other<br />
Financing Document, or now or hereafter existing at law or in
equity or by<br />
statute shall be cumulative and concurrent and shall be in addition
to<br />
every other such right, power or remedy. The exercise or beginning
of the<br />
exercise by the Pledgee of any one or more of the rights, powers
or<br />
remedies provided for in this Agreement or any other Financing
Document or<br />
now or hereafter existing at law or in equity or by statute or
otherwise<br />
shall not preclude the simultaneous or later exercise by the
Pledgee of all<br />
such other rights, powers or remedies, and no failure or delay on
the part<br />
of the Pledgee to exercise any such right, power or remedy shall
operate as<br />
a waiver thereof.&nbsp; No notice to or demand on the Pledgor in
any case shall<br />
entitle it to any other or further notice or demand in similar or
other<br />
circumstances or constitute a waiver of any of the rights of the
Pledgee to<br />
any other or further action in any circumstances without notice or
demand.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 9.&nbsp;&nbsp; APPLICATION OF
PROCEEDS.&nbsp; All monies collected by the Pledgee<br />
upon any sale or other disposition of the Collateral pursuant to
the terms<br />
of this Agreement, together with all other monies received by the
Pledgee<br />
hereunder, shall be applied at the written instruction of the<br />
Administrative Agent for satisfaction of the Secured Obligations in
the<br />
order provided in the Credit Agreement.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 10.&nbsp; PURCHASERS OF COLLATERAL.&nbsp;
Upon any sale of the Collateral by the<br />
Pledgee hereunder (whether by virtue of the power of sale herein
granted,<br />
pursuant to judicial process or otherwise), the receipt given by
the<br />
Pledgee or the officer making the sale shall be a sufficient
discharge to<br />
the purchaser or purchasers of the Collateral so sold, and such
purchaser<br />
or purchasers shall not be obligated to see to the application of
any part<br />
of the purchase money paid over to the Pledgee or such officer or
be<br />
answerable in any way for the misapplication or nonapplication
thereof.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 11.&nbsp; [OMITTED]<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 12.&nbsp; CERTAIN LIMITATIONS&nbsp;
(a)&nbsp; The Pledgee shall not be obligated to<br />
perform or discharge any obligation of the Pledgor as a result of
the<br />
pledge hereby effected.<br />
&nbsp;<br />
<br />
 &nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; The acceptance by the Pledgee
of this Agreement, with all the<br />
rights, powers, privileges and authority so created, shall not at
any time<br />
or in any event obligate the Pledgee to appear in or defend any
action or<br />
proceeding relating to the Collateral to which it is not a party,
or to<br />
take any action hereunder or thereunder, or to expend any money or
incur<br />
any expenses or perform or discharge any obligation, duty or
liability<br />
under the Collateral.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 13.&nbsp; FURTHER ASSURANCES;
POWER-OF-ATTORNEY.&nbsp; ii)&nbsp; At any time and from<br />
time to time, upon the written request of the Pledgee, and at the
sole<br />
expense of the Pledgor, the Pledgor will promptly and duly execute
and<br />
deliver any and all such further instruments and documents and take
such<br />
further action as the Pledgee reasonably may deem appropriate in
order to<br />
perfect and preserve the Pledgee's security interest in the
Collateral and<br />
in order for the Pledgee to obtain the full benefits of this
Agreement and<br />
of the rights and powers herein granted, including, without
limitation, the<br />
filing of any financing or continuation statements under the
Uniform<br />
Commercial Code in effect in any jurisdiction and the filing of any
other<br />
equivalent or similar statement or document under any other
applicable Law<br />
with any other applicable Governmental Authority with respect to
the<br />
security interests granted hereby.&nbsp; The Pledgor also hereby
authorizes the<br />
Pledgee to file any such financing or continuation statement
without the<br />
signature of the Pledgor to the extent permitted by applicable
Law.&nbsp; If any<br />
amount payable under or in connection with any of the Collateral
shall be<br />
or become evidenced by any promissory note or other instrument,
such note<br />
or instrument shall be immediately delivered to the Pledgee and
pledged to<br />
the Pledgee hereunder, duly endorsed, to the extent necessary, to
the<br />
Pledgee.&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; The Pledgor hereby appoints the
Pledgee such Pledgor's attorney-<br />
in-fact, with full authority in the place and stead of the Pledgor
and in<br />
the name of the Pledgor or otherwise, to act from time to time,
solely<br />
after the occurrence and during the continuance of an Event of
Default and<br />
subject to the Credit Agreement, in the Pledgee's reasonable
discretion to<br />
take any action and to execute any instrument which the Pledgee may
deem<br />
reasonably necessary or advisable to accomplish the purposes of
this<br />
Agreement.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 14.&nbsp; [OMITTED]<br />
&nbsp;<br />
 &nbsp; &nbsp;&nbsp;&nbsp; 15.&nbsp; TRANSFER BY THE PLEDGOR.&nbsp;
The Pledgor will not sell or otherwise<br />
dispose of, grant any option with respect to, or mortgage, pledge
or<br />
otherwise encumber any of the Collateral or any interest therein
(except as<br />
may be permitted in accordance with the terms of the Financing
Documents).<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 16.&nbsp; REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE PLEDGOR.&nbsp; iii)&nbsp;<br />
 The Pledgor represents, warrants and covenants that:<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
it is the legal, beneficial and record owner of, and has<br />
&nbsp;&nbsp;&nbsp;&nbsp; good and marketable title to, all
Collateral consisting of Pledged<br />
&nbsp;&nbsp;&nbsp;&nbsp; Stock and it has all rights in the
Collateral necessary for the<br />
&nbsp;&nbsp;&nbsp;&nbsp; security interest purported to be created
hereunder to attach<br />
&nbsp;&nbsp;&nbsp;&nbsp; (subject, in each case, to no pledge,
lien, security interest, charge,<br />
&nbsp;&nbsp;&nbsp;&nbsp; option or other encumbrance whatsoever,
except the liens and security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interests created by this
Agreement);&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) it has
full power, authority and legal right to pledge all<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Collateral pledged by it pursuant to
this Agreement;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp;&nbsp;&nbsp; this Agreement has been duly
authorized, executed and<br />
&nbsp;&nbsp;&nbsp;&nbsp; delivered by the Pledgor and constitutes a
legal, valid and binding<br />
&nbsp;&nbsp;&nbsp;&nbsp; obligation of the Pledgor enforceable
against the Pledgor in<br />
&nbsp;&nbsp;&nbsp;&nbsp; accordance with its terms, except to the
extent that the<br />
&nbsp;&nbsp;&nbsp;&nbsp; enforceability hereof may be limited by
applicable bankruptcy,<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; insolvency, reorganization, moratorium or
other similar laws generally<br />
&nbsp;&nbsp;&nbsp;&nbsp; affecting creditors' rights and by
equitable principles (regardless of<br />
&nbsp;&nbsp;&nbsp;&nbsp; whether enforcement is sought in equity or
at law);&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iv) except
to the extent already obtained or made, no consent of<br />
&nbsp;&nbsp;&nbsp;&nbsp; any other party (including, without
limitation, any stockholder or<br />
&nbsp;&nbsp;&nbsp;&nbsp; creditor of the Pledgor or the Issuer) and
no consent, license,<br />
&nbsp;&nbsp;&nbsp;&nbsp; permit, approval or authorization of,
exemption by, notice or report<br />
&nbsp;&nbsp;&nbsp;&nbsp; to, or registration, filing or declaration
with, any Governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; Authority is required to be obtained by
the Pledgor in connection with<br />
&nbsp;&nbsp;&nbsp;&nbsp; (a) the execution, delivery or performance
of this Agreement, (b) the<br />
&nbsp;&nbsp;&nbsp;&nbsp; validity or enforceability of this
Agreement, (c) the perfection or<br />
&nbsp;&nbsp;&nbsp;&nbsp; enforceability of the Pledgee's security
interest in the Collateral or<br />
&nbsp;&nbsp;&nbsp;&nbsp; (d) except for compliance with or as may
be required by applicable<br />
&nbsp;&nbsp;&nbsp;&nbsp; securities laws, the exercise by the
Pledgee of any of its rights or<br />
&nbsp;&nbsp;&nbsp;&nbsp; remedies provided herein; provided, that
any Person acquiring the<br />
&nbsp;&nbsp;&nbsp;&nbsp; voting securities of the Issuer or Newco
may require prior approval<br />
&nbsp;&nbsp;&nbsp;&nbsp; from the Federal Energy Regulatory
Commission and the California<br />
&nbsp;&nbsp;&nbsp;&nbsp; Public Utilities
Commission.&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (v)&nbsp;
the execution, delivery and performance of this Agreement<br />
&nbsp;&nbsp;&nbsp;&nbsp; will not violate any provision of any
applicable Law or regulation or<br />
&nbsp;&nbsp;&nbsp;&nbsp; of any order, judgment, writ, award or
decree of any court, arbitrator<br />
&nbsp;&nbsp;&nbsp;&nbsp; or Governmental Authority, domestic or
foreign, applicable to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgor, or of the certificate of
incorporation, operating agreement,<br />
&nbsp;&nbsp;&nbsp;&nbsp; limited liability company agreement,
partnership agreement or by-laws<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Pledgor or of any securities or
other interests issued by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgor or the Issuer, or of any mortgage,
deed of trust, indenture,<br />
&nbsp;&nbsp;&nbsp;&nbsp; lease, loan agreement, credit agreement or
other material contract,<br />
&nbsp;&nbsp;&nbsp;&nbsp; agreement or instrument or undertaking to
which the Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer is a party or by which any of its
assets may be bound and will<br />
&nbsp;&nbsp;&nbsp;&nbsp; not result in the creation or imposition
of (or the obligation to<br />
&nbsp;&nbsp;&nbsp;&nbsp; create or impose) any lien or encumbrance
on any of the assets of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgor or the Issuer except as
contemplated by this Agreement;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; (vi) all
of the Collateral consisting of Pledged Stock has been<br />
&nbsp;&nbsp;&nbsp;&nbsp; duly and validly issued and acquired, is
fully paid and non-assessable<br />
&nbsp;&nbsp;&nbsp;&nbsp; and is subject to no options to purchase
or similar rights; and<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)&nbsp;&nbsp;&nbsp;&nbsp; the pledge and collateral assignment
to the Pledgee of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Collateral consisting of Pledged
Stock, together with continued<br />
&nbsp;&nbsp;&nbsp;&nbsp; possession by the Pledgee of any
certificates, instruments, documents<br />
&nbsp;&nbsp;&nbsp;&nbsp; or other writings evidencing the Pledged
Stock and/or the making of<br />
&nbsp;&nbsp;&nbsp;&nbsp; relevant filings or recordings and/or any
other action required to be<br />
&nbsp;&nbsp;&nbsp;&nbsp; taken in accordance with Section 3.2 (all
of which have been made or<br />
&nbsp;&nbsp;&nbsp;&nbsp; taken, as the case may be), creates in
favor of the Pledgee a valid<br />
&nbsp;&nbsp;&nbsp;&nbsp; and perfected first priority security
interest in such Collateral, and<br />
&nbsp;&nbsp;&nbsp;&nbsp; the proceeds thereof, subject to no prior
Lien or encumbrance (other<br />
&nbsp;&nbsp;&nbsp;&nbsp; than any Permitted Lien that is a
non-consensual lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law) or to any agreement
purporting to grant to any third<br />
&nbsp;&nbsp;&nbsp;&nbsp; party a Lien or encumbrance (other than
any Permitted Lien that is a<br />
&nbsp;&nbsp;&nbsp;&nbsp; non-consensual lien arising by operation
of law, and other than the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Lien created by the Utility Stock Pledge
Agreement (35%) &ndash; New Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan) on the property or assets of the
Pledgor which would include<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledged Stock and the Pledgee is
entitled to all the rights,<br />
&nbsp;&nbsp;&nbsp;&nbsp; priorities and benefits afforded by the
Uniform Commercial Code or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other relevant law as enacted in any
relevant jurisdiction to<br />
&nbsp;&nbsp;&nbsp;&nbsp; perfected security interests in respect of
such Collateral.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; The Pledgor covenants and
agrees that it will defend the<br />
Pledgee's right, title and security interest in and to the
Collateral and<br />
the proceeds thereof against the claims and demands of all
persons<br />
whomsoever; and the Pledgor covenants and agrees that it will have
like<br />
title to and right to pledge any other property at any time
hereafter<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 pledged to the Pledgee as Collateral hereunder and will likewise
defend the<br />
right thereto and security interest therein of the Pledgee.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 17.&nbsp; JURISDICTION OF ORGANIZATION;
NAME.&nbsp;&nbsp;&nbsp; The Pledgor's name,<br />
jurisdiction of organization and identification number are set
forth in<br />
Annex B hereto.&nbsp; The Pledgor will not change its name or its
jurisdiction<br />
of organization, except upon 15 days' prior written notice to
the<br />
Collateral Agent and delivery to the Collateral Agent of all
additional<br />
executed financing statements and other documents reasonably
requested by<br />
the Collateral Agent to maintain the validity, perfection and
priority of<br />
the security interests provided for herein.&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 18.&nbsp; PLEDGOR'S OBLIGATIONS ABSOLUTE,
ETC.&nbsp; The obligations of the<br />
Pledgor under this Agreement shall be absolute and unconditional
and shall<br />
remain in full force and effect without regard to, and shall not
be<br />
released, suspended, discharged, terminated or otherwise affected
by, any<br />
circumstance or occurrence whatsoever (except as provided under
Section<br />
20), including, without limitation:&nbsp; (i) any renewal,
extension, amendment<br />
or modification of or addition or supplement to or deletion from
any<br />
Financing Document or any other instrument or agreement referred
to<br />
therein, or any assignment or transfer of any thereof; (ii) any
waiver,<br />
consent, extension, indulgence or other action or inaction under or
in<br />
respect of any such agreement or instrument including, without
limitation,<br />
this Agreement; (iii) any furnishing of any additional security to
the<br />
Pledgee or its assignee or any acceptance thereof or any release of
any<br />
security by the Pledgee or its assignee (except as provided under
Section<br />
20); (iv) any limitation on any party's liability or obligations
under any<br />
such instrument or agreement or any invalidity or unenforceability,
in<br />
whole or in part, of any such instrument or agreement or any term
thereof;<br />
or (v) any bankruptcy, insolvency, reorganization, composition,
adjustment,<br />
dissolution, liquidation or other like proceeding relating to the
Pledgor<br />
or the Issuer, or any action taken with respect to this Agreement
by any<br />
trustee or receiver, or by any court, in any such proceeding,
whether or<br />
not the Pledgor shall have notice or knowledge of any of the
foregoing.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 19.&nbsp; REGISTRATION, ETC.&nbsp;
(a)&nbsp; If there shall have occurred and be<br />
continuing an Event of Default, then upon receipt by the Pledgor
from the<br />
Pledgee of a written request or requests that the Pledgor cause
any<br />
registration, qualification or compliance under any Federal or
state<br />
securities law or laws to be effected with respect to all or any
part of<br />
the Collateral consisting of Pledged Stock, the Pledgor as soon
as<br />
practicable and at its expense will cause such registration to be
effected<br />
(and be kept effective) and will cause such qualification and
compliance to<br />
be declared effected (and be kept effective) as may be so requested
if such<br />
registration, qualification or compliance is necessary to permit
or<br />
facilitate the sale and distribution of such Collateral, including,
without<br />
limitation, registration under the Securities Act, as then in
effect (or<br />
any similar statute then in effect), appropriate qualifications
under<br />
applicable blue sky or other state securities laws and
appropriate<br />
compliance with any other government requirements, provided, that
the<br />
Pledgee shall furnish to the Pledgor such information regarding the
Pledgee<br />
as the Pledgor may reasonably request in writing and as shall be
required<br />
in connection with any such registration, qualification or
compliance. The<br />
Pledgor will cause the Pledgee to be kept advised in writing as to
the<br />
progress of each such registration, qualification or compliance and
as to<br />
the completion thereof, will furnish to the Pledgee such number
of<br />
prospectuses, offering circulars or other documents incident
thereto as the<br />
Pledgee from time to time may reasonably request, and will
indemnify the<br />
Pledgee and all others participating in the distribution of such
Collateral<br />
against all claims, losses, damages and liabilities caused by any
untrue<br />
statement (or alleged untrue statement) of a material fact
contained<br />
therein (or in any related registration statement, notification or
the<br />
like) or by any omission (or alleged omission) to state therein (or
in any<br />
related registration statement, notification or the like) a
material fact<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 required to be stated therein or necessary to make the statements
therein<br />
not misleading, except insofar as the same may have been caused by
an<br />
untrue statement or omission based upon information furnished in
writing to<br />
the Pledgor by the Pledgee expressly for use therein.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; If at any time when the Pledgee
shall determine to exercise its<br />
right to sell all or any part of the Collateral consisting of
Pledged Stock<br />
pursuant to Section 7 hereof, and the Collateral or the part
thereof to be<br />
sold shall not, for any reason whatsoever, be effectively
registered under<br />
the Securities Act, as then in effect, the Pledgee may sell such
Collateral<br />
or part thereof, as the case may be, by private sale in such manner
and<br />
under such circumstances as the Pledgee may deem necessary or
reasonably<br />
advisable in order that such sale may legally be effected without
such<br />
registration.&nbsp; Without limiting the generality of the
foregoing, in any<br />
event the Pledgee (i) may proceed to make such private sale
notwithstanding<br />
that a registration statement for the purpose of registering
such<br />
Collateral or part thereof shall have been filed under such
Securities Act,<br />
(ii) may approach and negotiate with a single possible purchaser to
effect<br />
such sale, and (iii) may restrict such sale to a purchaser who
will<br />
represent and agree that such purchaser is purchasing for its own
account,<br />
for investment, and not with a view to the distribution or sale of
such<br />
Collateral or part thereof.&nbsp; In the event of any such sale,
the Pledgee<br />
shall incur no responsibility or liability, except to the extent
incurred<br />
by reason of its gross negligence, bad faith or willful misconduct,
for<br />
selling all or any part of the Collateral at a price which the
Pledgee, in<br />
its sole and absolute discretion, deems reasonable under the
circumstances,<br />
notwithstanding the possibility that a substantially higher price
might<br />
have been realized if the sale were deferred until after
registration as<br />
aforesaid.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 20.&nbsp; TERMINATION;
RELEASE.&nbsp;&nbsp;&nbsp; After payment in full of the
Secured<br />
Obligations and termination of the Credit Agreement, this Agreement
and the<br />
security interest created hereby shall terminate (provided that
all<br />
indemnities set forth herein including, without limitation, in
Section 11<br />
hereof shall survive any such termination), and the Pledgee, at the
request<br />
and expense of the Pledgor, will execute and deliver to the Pledgor
a<br />
proper instrument or instruments acknowledging the satisfaction
and<br />
termination of this Agreement, and will duly assign, transfer and
deliver<br />
to the Pledgor (without recourse and without any representation
or<br />
warranty) such of the Collateral as has not theretofore been sold
or<br />
otherwise applied or released pursuant to this Agreement, together
with any<br />
monies at the time held by the Pledgee or any of its sub-agents
hereunder.&nbsp;&nbsp;<br />
 &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 21.&nbsp; NOTICES, ETC.&nbsp; All
notices, requests, demands or other<br />
communications hereunder shall be made in the manner and with the
effect<br />
provided in Section 9.3 of the Credit Agreement at the addresses
provided<br />
below or at such other address as shall have been furnished in
writing by<br />
the relevant Person to the party required to give notice
hereunder:<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;
If to the Pledgor, at:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
One Market, Spear Tower Suite 2400<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco, CA 94105<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Assistant Treasurer&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel.: (415) 267-7052<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax.:&nbsp; (415) 267-7265<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
If to the Pledgee, at:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deutsche Bank Trust Company Americas<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Corporate Trust and Agency Services<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
100 Plaza One, MS: 0603<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Jersey City, NJ 07311<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New">&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (201) 593-6832<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax: (201) 593-6420<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to the Administrative Agent at:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lehman Commercial Paper Inc.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 745
Seventh Avenue<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New York, New York 10019<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Frank Turner/Rich Divito<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (212) 526-2696/(212) 526-2425<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax: (646) 758-1986/(646) 758-4618<br />
&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp; 22.&nbsp; WAIVER; AMENDMENT.&nbsp; None
of the terms and conditions of this<br />
Agreement may be changed, waived, modified or varied in any
manner<br />
whatsoever unless in writing duly signed by the Pledgor and the
Pledgee.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 23.&nbsp; MISCELLANEOUS.&nbsp; This
Agreement shall be binding upon the parties<br />
hereto and their respective successors and assigns and shall inure
to the<br />
benefit of and be enforceable by each of the parties hereto and
its<br />
successors and assigns, provided that the Pledgor may not assign
any of its<br />
rights or obligations under this Agreement without the prior
consent of the<br />
Pledgee.&nbsp; The headings in this Agreement are for purposes of
reference only<br />
and shall not limit or define the meaning hereof.&nbsp; This
Agreement may be<br />
executed in any number of counterparts, each of which shall be an
original,<br />
but all of which shall constitute one instrument.&nbsp; In the
event that any<br />
provision of this Agreement shall prove to be invalid or
unenforceable,<br />
such provision shall be deemed to be severable from the other
provisions of<br />
this Agreement which shall remain binding on all parties
hereto.&nbsp;&nbsp; The<br />
rights, powers, privileges and immunities of the Collateral Agent
set forth<br />
in the Credit Agreement shall apply to the Collateral Agent as if
expressly<br />
set forth herein.<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 24.&nbsp; GOVERNING LAW.&nbsp;&nbsp; THIS
AGREEMENT, INCLUDING ALL MATTERS OF<br />
CONSTRUCTION, VALIDITY AND PERFORMANCE AND MATTERS RELATING TO
THE<br />
CREATION, VALIDITY, ENFORCEMENT OR PRIORITY OF THE SECURITY
INTERESTS<br />
CREATED BY THIS AGREEMENT, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF<br />
NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS RULES THEREOF
(OTHER THAN<br />
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS
MAY BE<br />
REQUIRED BY OTHER MANDATORY PROVISIONS OF LAW.&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; 25.&nbsp; WAIVER OF JURY TRIAL.&nbsp;
EACH OF THE PARTIES HERETO HEREBY<br />
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF
THEM MAY<br />
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING<br />
OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE
OF<br />
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR<br />
ACTIONS OF ANY PARTY RELATING HERETO OR THERETO.&nbsp; THIS
PROVISION IS A<br />
MATERIAL INDUCEMENT FOR THE LENDERS TO ENTER INTO THE CREDIT
AGREEMENT AND<br />
THE OTHER FINANCING DOCUMENTS.<br />
&nbsp;<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
 &nbsp;<br />
<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
IN WITNESS WHEREOF, the Pledgor, the Pledgee, the<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Administrative Agent have caused this Agreement to be executed
by<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; their duly
elected officers duly authorized as of the date first<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; above
written.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGOR<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PETER A.
DARBEE<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; _______________<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Peter A. Darbee<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Senior Vice President<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Officer<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ADMINISTRATIVE AGENT<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JAMES P. SEERY, JR.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp; __________________&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; James P. Seery,Jr.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp; Authorized Signatory<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGEE<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEUTSCHE BANK TRUST COMPANY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
AMERICAS, as Collateral Agent&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
CARMENA BITAR DAY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp; __________________&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Vice President<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX A<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT</font></p>

<p><font size="2" face="Courier New"><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LIST OF PLEDGED STOCK<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Number<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Type of&nbsp;&nbsp;&nbsp; &nbsp;
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;
Certificate No.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Issuer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest&nbsp;&nbsp;&nbsp; Shares&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pacific Gas
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Common&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
105,641,741&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; ZQU10<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Electric
Company&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;
Stock&nbsp;&nbsp;&nbsp;&nbsp;<br />
<br />
 ____________________________________________________________________________<br />

<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX B<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name of
Pledgor:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E
Corporation<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jurisdiction
of Organization: &nbsp;&nbsp;&nbsp;California<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Identification
Number:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C1953580<br />

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>5
<FILENAME>exhibit993.htm
<DESCRIPTION>UTILITY STOCK PLEDGE AGREEMENT (35%)-NEW TRANCHE B LOAN, DATED AS OF OCTOBER 18, 2002
<TEXT>
<head>
<title>Exhibit 99-3</title>
</head>
<body>
<div>
<p><font size="2" face="Courier New"><br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exhibit 99.3<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EXECUTION COPY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;<br />
<br />
 UTILITY STOCK PLEDGE AGREEMENT (35%)&mdash;NEW TRANCHE B
LOAN<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
by and among<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Pledgor<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DEUTSCHE BANK
TRUST COMPANY AMERICAS,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Collateral Agent<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; for the benefit of the Lenders, as
Pledgee<br />
___________________________________________________________________________<br />

<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dated as of October 18, 2002<br />
___________________________________________________________________________<br />

<br clear="all" />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; UTILITY STOCK PLEDGE AGREEMENT
(35%)&mdash;NEW TRANCHE B LOAN<br />
<br />
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; STOCK
PLEDGE AGREEMENT (35%)&mdash;NEW TRANCHE B LOAN&nbsp; (as<br />
amended, modified or supplemented from time to time, this<br />
"Agreement"), dated as of October 18, 2002, among PG&amp;E<br />
CORPORATION, a California corporation (the "Pledgor"), LEHMAN<br />
COMMERCIAL PAPER INC., a corporation organized and existing
under<br />
the laws of the State of New York, as Administrative Agent
for<br />
the lenders (the "Lenders") from time to time parties to the<br />
Credit Agreement described below and DEUTSCHE BANK TRUST
COMPANY<br />
AMERICAS (the "Pledgee"), as Collateral Agent for the benefit
of<br />
the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
W I T N E S S E T H :<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Pledgor, is a party to the Amended and<br />
Restated Credit Agreement, dated as of June 25, 2002 (as
amended,<br />
the "Existing Credit Agreement"), with the lenders parties<br />
thereto, Lehman Commercial Paper Inc., as Administrative
Agent,<br />
and others, pursuant to which such lenders made the Tranche A<br />
Loan (as defined in the Existing Credit Agreement, the
"Existing<br />
Tranche A Loan") and the Tranche B Loan (as defined in the<br />
Existing Credit Agreement, the "Existing Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS,
pursuant to the Second Amended and Restated<br />
Credit Agreement, dated as of the date hereof (as amended,<br />
supplemented or otherwise modified from time to time, the
"Credit<br />
Agreement"), among the Pledgor, the Lenders parties thereto,
the<br />
Administrative Agent and others, the Existing Credit Agreement
is<br />
being amended and restated in its entirety to modify certain
of<br />
the terms applicable to the Existing Tranche B Loan, which
shall<br />
continue to be outstanding under the Credit Agreement (the<br />
Existing Tranche B Loan, as so modified and continued, the<br />
"Continued Tranche B Loan"), to reflect repayment of the
Existing<br />
Tranche A Loan and to provide for the making of an additional<br />
Tranche B Loan (the "New Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Pledgor owns 94% of the issued and<br />
outstanding common stock of Pacific Gas and Electric Company,
a<br />
California corporation (the "Issuer"); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, it
is a condition precedent to the obligation<br />
of the Lenders parties to the Existing Credit Agreement to
agree<br />
to amend and restate the Existing Credit Agreement,&nbsp; and&nbsp;
to the<br />
obligations of the Lenders to make the New Tranche B Loan
under<br />
the Credit Agreement, that this Agreement shall have been<br />
executed and delivered;&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW,
THEREFORE, in consideration of the foregoing<br />
premises and to induce the Administrative Agent and the
Lenders<br />
to enter into the Credit Agreement, the Pledgor hereby agrees<br />
with the Administrative Agent, for the benefit of the Lenders,
as<br />
follows:&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1. SECURITY
FOR OBLIGATIONS.&nbsp; This Agreement is made by<br />
the Pledgor for the benefit of the Pledgee, acting as
Collateral<br />
Agent for the benefit of the Lenders (as more particularly<br />
described in Section 3.1), to secure:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; the full and prompt payment when due (whether<br />
&nbsp;&nbsp;&nbsp;&nbsp; at the stated maturity, by acceleration or
otherwise) of all<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations of the Pledgor under the
Credit Agreement and<br />
&nbsp;&nbsp;&nbsp;&nbsp; the other Financing Documents in respect
of the New Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan, whether direct or indirect,
absolute or contingent,<br />
&nbsp;&nbsp;&nbsp;&nbsp; due or to become due, now existing or
hereafter arising and<br />
&nbsp;&nbsp;&nbsp;&nbsp; howsoever evidenced, and the due
performance and compliance<br />
&nbsp;&nbsp;&nbsp;&nbsp; by the Pledgor with the terms
thereof;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) any and all sums advanced by the Pledgee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any New Tranche B Lender in order to
preserve the Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; or preserve its security interest in the
Collateral (as<br />
&nbsp;&nbsp;&nbsp;&nbsp; defined below); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)in the event of any proceeding for the<br />
&nbsp;&nbsp;&nbsp;&nbsp; collection or enforcement of any
indebtedness, obligations,<br />
&nbsp;&nbsp;&nbsp;&nbsp; or liabilities referred to in clauses (i)
and (ii) above,<br />
&nbsp;&nbsp;&nbsp;&nbsp; the reasonable expenses of retaking,
holding, preparing for<br />
&nbsp;&nbsp;&nbsp;&nbsp; sale or lease, selling or otherwise
disposing or realizing<br />
&nbsp;&nbsp;&nbsp;&nbsp; on the Collateral, or of any exercise by
the Pledgee of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights hereunder with respect thereto,
together with<br />
&nbsp;&nbsp;&nbsp;&nbsp; reasonable attorneys' fees and court costs
related thereto,<br />
<br />
all such obligations, liabilities, sums and expenses set forth
in<br />
clauses (i) through (iii) of this Section 1, whether now
existing<br />
or hereafter arising, being herein collectively called the<br />
"Secured Obligations".<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.
DEFINITIONS.&nbsp; (a)&nbsp; Unless otherwise defined herein,<br />
all capitalized terms used herein and defined in Appendix A
to<br />
the Credit Agreement shall be used herein as therein defined,
and<br />
the principles of construction set forth in Appendix A to the<br />
Credit Agreement shall apply to this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; In
addition, the following capitalized terms used<br />
herein shall have the definitions specified below:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Agreement"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Collateral"
has the meaning set forth in Section 3.1<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continued
Tranche B Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Credit
Agreement" has the meaning set forth in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Credit Agreement" has the meaning set forth<br />
&nbsp;&nbsp;&nbsp;&nbsp; in the first recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Existing Tranche A Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the first recital hereto.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Tranche B Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the first recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Issuer" has
the meaning set forth in the third recital<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lenders"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco Spin"
has the meaning set forth in the Credit<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco
Stock" means the Capital Stock of Newco Energy<br />
&nbsp;&nbsp;&nbsp;&nbsp; Corporation, a California
corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Loan" has the meaning set forth in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Lender" means any Lender holding a New<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan, in its capacity as the
holder of such Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Pledged Stock" means the shares of Capital Stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer described on Annex A hereto,
and any shares of<br />
&nbsp;&nbsp;&nbsp;&nbsp; Capital Stock of the Issuer at any time
issued in respect of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Capital Stock described on Annex A
hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledgee"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledgor"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Proceeds"
has the meaning given such term in the UCC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Secured Obligations" has the meaning set forth in<br />
&nbsp; &nbsp;&nbsp;&nbsp; Section 1 hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Securities
Act" means the Securities Act of 1933, as<br />
&nbsp;&nbsp;&nbsp;&nbsp; amended and as in effect from time to
time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "UCC" means
the Uniform Commercial Code as in effect in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the State of New York from time to
time.<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (65%)&mdash;Continued Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan" means the Utility Stock Pledge
Agreement (65%)&mdash;<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan, dated as of the
date hereof, among<br />
&nbsp;&nbsp;&nbsp;&nbsp; the parties hereto, pursuant to which 65%
of the common<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; stock of the Issuer is being pledged to
secure Obligations<br />
&nbsp;&nbsp;&nbsp;&nbsp; relating to the Continued Tranche B
Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (65%)&mdash;New Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loan" means the Utility Stock Pledge
Agreement (65%)&mdash;New<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan, dated as of the date
hereof, among the<br />
&nbsp;&nbsp;&nbsp;&nbsp; parties hereto, pursuant to which 65% of
the common stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer is being pledged&nbsp; to
secure the Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (35%)&mdash;Continued Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan" means the Utility Stock Pledge
Agreement (35%)&mdash;<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan, dated as of the
date hereof, among<br />
&nbsp;&nbsp;&nbsp;&nbsp; the parties hereto, pursuant to which the
Collateral is<br />
&nbsp;&nbsp;&nbsp;&nbsp; being pledged&nbsp; to secure Obligations
relating to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3. PLEDGE
OF PLEDGED STOCK, ETC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.1&nbsp;
Pledge. (a)&nbsp; The Pledgor hereby transfers, pledges<br />
and assigns to the Pledgee, and grants to the Pledgee a first<br />
priority security interest in, all of the right, title and<br />
interest of the Pledgor in and to the following, whether now<br />
existing or hereafter from time to time acquired by the
Pledgor<br />
(collectively, the "Collateral"):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
the Pledged Stock;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) all
other property hereafter delivered in<br />
&nbsp;&nbsp;&nbsp;&nbsp; substitution for any of the Pledged Stock,
all certificates<br />
&nbsp;&nbsp;&nbsp;&nbsp; and instruments representing or evidencing
such other<br />
&nbsp;&nbsp;&nbsp;&nbsp; property and all cash, securities,
interest, dividends,<br />
&nbsp;&nbsp;&nbsp;&nbsp; distributions rights and other property at
any time and from<br />
&nbsp;&nbsp;&nbsp;&nbsp; time to time received, receivable or
otherwise distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; in respect of or in exchange for any or
all thereof<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including, without limitation, any Newco
Stock distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; to the Pledgor in respect of the Pledged
Stock in connection<br />
&nbsp;&nbsp;&nbsp;&nbsp; with the Newco Spin); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp;&nbsp;&nbsp; all Proceeds of any and all of the
foregoing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The foregoing transfer, pledge, assignment and<br />
grant of a security interest is made to secure the prompt and<br />
complete payment and performance when due of the Secured<br />
Obligations.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
Concurrently herewith, the parties hereto are<br />
entering into the Utility Stock Pledge Agreement
(35%)&mdash;Continued<br />
Tranche B Loan. It is the intention of the parties hereto and<br />
thereto that the security interest and lien created hereby
shall<br />
be a separate security interest and lien from that created by
the<br />
Utility Stock Pledge Agreement (35%)&mdash;Continued Tranche B
Loan,<br />
and that the security interest and lien created hereby shall
be<br />
equal in priority to that created by the Utility Stock Pledge<br />
Agreement (35%)&mdash;Continued Tranche B Loan.&nbsp; It is also
the<br />
intention of the parties hereto and thereto that any
avoidance,<br />
pursuant to Sections 547 and 550 of the Bankruptcy Code, of
the<br />
security interest and lien created by the Utility Stock
Pledge<br />
Agreement (35%)&mdash;Continued Tranche B Loan shall have no effect
on<br />
the lien and security interest created hereby, which shall<br />
continue as a perfected first priority interest in the
Collateral<br />
securing the Secured Obligations notwithstanding any such<br />
avoidance of the security interest and lien created by the<br />
Utility Stock Pledge Agreement (35%)&mdash;Continued Tranche B
Loan.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;
Concurrently herewith, the parties hereto are<br />
entering into the Utility Stock Pledge Agreement
(65%)&mdash;Continued<br />
Tranche B Loan and the Utility Stock Pledge Agreement
(65%)&mdash;New<br />
Tranche B Loan, in each case covering collateral that is
separate<br />
and distinct from the Collateral. It is the intention of the<br />
parties hereto and thereto that the security interest and
lien<br />
created hereby shall be a separate security interest and lien<br />
from those created by the Utility Stock Pledge Agreement
(65%)&mdash;<br />
Continued Tranche B Loan and the Utility Stock Pledge
Agreement<br />
(65%)&mdash;New Tranche B Loan.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.2&nbsp;
Procedures.&nbsp; (a)&nbsp; To the extent that the Pledgor<br />
at any time or from time to time owns, acquires or obtains
any<br />
right, title or interest in any Collateral, such Collateral
shall<br />
automatically (and without the taking of any action by the<br />
Pledgor) be pledged pursuant to Section 3.1 of this Agreement<br />
and, in addition thereto, the Pledgor shall (as promptly as<br />
practicable and, in any event, within 10 days after it
obtains<br />
such Collateral) deliver to the Pledgee any stock
certificates<br />
evidencing such Collateral, duly endorsed in blank, and take
such<br />
other actions as the Pledgee shall reasonably request to
perfect<br />
the Pledgee's security interest in such Collateral.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
In addition to the actions required to be taken<br />
pursuant to Section 3.2(a) hereof, the Pledgor shall from time
to<br />
time, at the sole expense of the Pledgor, cause appropriate<br />
financing statements (on Form UCC-1 or other appropriate
form)<br />
under the Uniform Commercial Code as in effect in the various<br />
relevant States, in form covering all Collateral hereunder
(with<br />
the form of such financing statements to be satisfactory to
the<br />
Pledgee), to be filed in the relevant filing offices so that
at<br />
all times the Pledgee has a security interest in all
Collateral<br />
which is perfected by the filing of such financing statements
(in<br />
each case to the maximum extent perfection by filing may be<br />
obtained under the laws of any relevant State).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.3&nbsp;
Subsequently Acquired Collateral.&nbsp; If the Pledgor<br />
shall acquire (by purchase, dividend or similar distribution
or<br />
otherwise) any additional Collateral at any time or from time
to<br />
time after the date hereof, such Collateral shall
automatically<br />
(and without any further action being required to be taken)
be<br />
subject to the pledge and security interests created pursuant
to<br />
Section 3.1 hereof and, furthermore, the Pledgor will
promptly<br />
thereafter take (or cause to be taken) all action with respect
to<br />
such Collateral in accordance with the procedures set forth
in<br />
Section 3.2 hereof, and will promptly thereafter deliver to
the<br />
Pledgee (i) a certificate executed by a principal executive<br />
officer of the Pledgor describing such Collateral and
certifying<br />
that the same has been duly pledged in favor of the Pledgee
(for<br />
the benefit of the Lenders) hereunder and (ii) supplements to<br />
Annexes A and B hereto as are reasonably necessary to cause
such<br />
annexes to be complete and accurate at such time.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.4&nbsp;
Transfer Taxes.&nbsp; Each pledge of Collateral under<br />
Section 3.1 hereof shall be accompanied by any transfer tax<br />
stamps required in connection with the pledge of such
Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.5&nbsp;
Certain Representations and Warranties Regarding<br />
the Collateral.&nbsp; The Pledgor represents and warrants that on
the<br />
date hereof (i) the Pledged Stock consists of the number and
type<br />
of shares described in Annex A hereto; (ii) the Pledged Stock<br />
constitutes that percentage of the issued and outstanding
common<br />
stock of the Issuer as is set forth in Annex A hereto; and
(iii)<br />
the Pledgor has complied with the respective procedure set
forth<br />
in Sections 3.2(a) and (b) hereof with respect to each item
of<br />
Collateral hereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.
APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.&nbsp; If<br />
and to the extent necessary to enable the Pledgee to perfect
its<br />
security interest in any of the Collateral or to exercise any
of<br />
its remedies hereunder, the Pledgee shall have the right to<br />
appoint one or more sub-agents for the purpose of retaining<br />
physical possession of the Collateral, which may be held in
the<br />
name of the Pledgor, endorsed or assigned in blank or in favor
of<br />
the Pledgee or any nominee or nominees of the Pledgee or a
sub-<br />
agent appointed by the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5. VOTING,
ETC., WHILE NO EVENT OF DEFAULT.&nbsp; Unless and<br />
until there shall have occurred and be continuing an Event of<br />
Default, the Pledgor shall be entitled to exercise any and
all<br />
voting and other consensual rights pertaining to the
Collateral<br />
owned by it, and to give consents, waivers or ratifications
in<br />
respect thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6. DIVIDENDS
AND OTHER DISTRIBUTIONS.&nbsp; All cash<br />
dividends, cash distributions, cash Proceeds and other cash<br />
amounts payable in respect of the Collateral (other than
proceeds<br />
of any foreclosure in respect of the Collateral pursuant to<br />
Section 7 hereof, which proceeds shall be distributed and
applied<br />
as provided in Section 9 hereof) shall be received (a) by the<br />
Pledgor, if no Event of Default shall have occurred and be<br />
continuing and (b) by the Pledgee, if any Event of Default
shall<br />
have occurred and be continuing (all of which amounts so
received<br />
by the Pledgee to be delivered by the Pledgee to the<br />
Administrative Agent for application toward prepayment of the<br />
Secured Obligations).&nbsp; The Pledgee shall also be entitled
to<br />
receive directly, and to retain as part of the Collateral:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property (including, but not limited
to, cash<br />
&nbsp;&nbsp;&nbsp;&nbsp; dividends other than as set forth above)
paid or distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; by way of dividend or otherwise in respect
of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property paid or distributed in
respect of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral by way of split, spin-off,
split-up,<br />
&nbsp;&nbsp;&nbsp;&nbsp; reclassification, combination or similar
rearrangement;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property (including, but not limited
to, cash) which<br />
&nbsp;&nbsp;&nbsp;&nbsp; may be paid in respect of the Collateral
by reason of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; consolidation, merger, exchange,
conveyance of assets,<br />
&nbsp;&nbsp;&nbsp;&nbsp; liquidation or similar reorganization;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) without limiting the generality of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; foregoing, all shares of Newco Stock
distributed in respect<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nothing
contained in this Section 6 shall limit or<br />
restrict in any way the Pledgee's right to have pledged to it<br />
proceeds of the Collateral in any form in accordance with
Section<br />
3 of this Agreement.&nbsp; All dividends, distributions or
other<br />
payments which are received by the Pledgor contrary to the<br />
provisions of this Section 6 and Section 7 hereof shall be<br />
received in trust for the benefit of the Pledgee, shall be<br />
segregated from other property or funds of the Pledgor and
shall<br />
be forthwith paid over to the Pledgee as Collateral in the
same<br />
form as so received (with any necessary endorsement).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7. REMEDIES
IN CASE OF DEFAULT OR EVENT OF DEFAULT.<br />
Subject to the Credit Agreement, if there shall have occurred
and<br />
be continuing an Event of Default, the Pledgee shall be
entitled<br />
to exercise all of the rights, powers and remedies (whether<br />
vested in it by this Agreement, any other Financing Document
or<br />
by law) for the protection and enforcement of its rights in<br />
respect of the Collateral, and the Pledgee shall be entitled
to<br />
exercise all the rights and remedies of a secured party under
the<br />
Uniform Commercial Code as in effect in any relevant
jurisdiction<br />
and also shall be entitled, without limitation, to exercise
the<br />
following rights:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; to receive all amounts payable in respect of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Collateral;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) upon receipt of all requisite regulatory<br />
&nbsp;&nbsp;&nbsp;&nbsp; approvals, to transfer all or any part of
the Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; into the Pledgee's name or the name of its
nominee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; nominees;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)upon receipt of all requisite regulatory<br />
&nbsp;&nbsp;&nbsp;&nbsp; approvals, to vote all or any part of the
Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; (whether or not transferred into the name
of the Pledgee)<br />
&nbsp;&nbsp;&nbsp;&nbsp; and give all consents, waivers and
ratifications in respect<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Collateral and otherwise act with
respect thereto as<br />
&nbsp;&nbsp;&nbsp;&nbsp; though it were the outright owner thereof
(the Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereby irrevocably constituting and
appointing the Pledgee<br />
&nbsp;&nbsp;&nbsp;&nbsp; the proxy and attorney-in-fact of the
Pledgor, with full<br />
&nbsp;&nbsp;&nbsp;&nbsp; power of substitution to do so) and to
exercise any and all<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the rights or powers of the Pledgor in
its capacity as a<br />
&nbsp;&nbsp;&nbsp;&nbsp; stockholder of the Issuer;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) at any time and from time to time to sell,<br />
&nbsp;&nbsp;&nbsp;&nbsp; assign and deliver, or grant options to
purchase, all or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; part of the Collateral, or any interest
therein, at any<br />
&nbsp;&nbsp;&nbsp;&nbsp; public or private sale, without demand of
performance,<br />
&nbsp;&nbsp;&nbsp;&nbsp; advertisement or notice of intention to
sell or of the time<br />
&nbsp;&nbsp;&nbsp;&nbsp; or place of sale or adjournment thereof or
to redeem or<br />
&nbsp;&nbsp;&nbsp;&nbsp; otherwise (all of which are hereby waived
by the Pledgor to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the extent permitted by applicable Law),
for cash, on credit<br />
&nbsp;&nbsp;&nbsp;&nbsp; or for other property, for immediate or
future delivery<br />
&nbsp;&nbsp;&nbsp; &nbsp; without any assumption of credit risk,
and for such price or<br />
&nbsp;&nbsp;&nbsp;&nbsp; prices and on such terms as the Pledgee in
its absolute<br />
&nbsp;&nbsp;&nbsp;&nbsp; discretion may determine, in each case, to
the extent<br />
&nbsp;&nbsp;&nbsp;&nbsp; permitted by applicable Law.&nbsp; The
Pledgee shall not be<br />
&nbsp;&nbsp;&nbsp;&nbsp; obligated to make any such sale of
Collateral regardless of<br />
&nbsp;&nbsp;&nbsp;&nbsp; whether any notice of sale has theretofore
been given.&nbsp; The<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgor hereby waives and releases to the
fullest extent<br />
&nbsp;&nbsp;&nbsp;&nbsp; permitted by law any right or equity of
redemption with<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect to the Collateral, whether before
or after sale<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereunder (other than the right to pay the
Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations in full), and all rights, if
any, of marshalling<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Collateral and any other security for
the Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations or otherwise.&nbsp; At any
such sale, to the extent<br />
&nbsp;&nbsp;&nbsp;&nbsp; permitted by applicable Law, the Pledgee
may bid for and<br />
&nbsp;&nbsp;&nbsp;&nbsp; purchase all or any part of the Collateral
so sold free from<br />
&nbsp;&nbsp;&nbsp;&nbsp; any such right or equity of
redemption.&nbsp; The Pledgee shall<br />
&nbsp;&nbsp;&nbsp;&nbsp; not be liable for failure to collect or
realize upon any or<br />
&nbsp;&nbsp;&nbsp;&nbsp; all of the Collateral or for any delay in
so doing nor shall<br />
&nbsp;&nbsp;&nbsp;&nbsp; any of them be under any obligation to
take any action<br />
&nbsp;&nbsp;&nbsp;&nbsp; whatsoever with regard thereto; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp; to set-off any and all Collateral against any<br />
&nbsp;&nbsp;&nbsp;&nbsp; and all Secured Obligations and to apply
such Collateral to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the payment of any and all Secured
Obligations.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If, pursuant
to applicable Law, prior notice of any of<br />
the foregoing actions is required to be given to the Pledgee,
the<br />
Pledgee hereby acknowledges that the minimum time required by<br />
such applicable Law, or if no minimum is specified, ten (10)<br />
days, shall be deemed a reasonable notice period.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8. REMEDIES,
ETC., CUMULATIVE.&nbsp; Each and every right,<br />
power and remedy of the Pledgee provided for in this Agreement
or<br />
in any other Financing Document, or now or hereafter existing
at<br />
law or in equity or by statute shall be cumulative and
concurrent<br />
and shall be in addition to every other such right, power or<br />
remedy. The exercise or beginning of the exercise by the
Pledgee<br />
of any one or more of the rights, powers or remedies provided
for<br />
in this Agreement or any other Financing Document or now or<br />
hereafter existing at law or in equity or by statute or
otherwise<br />
shall not preclude the simultaneous or later exercise by the<br />
Pledgee of all such other rights, powers or remedies, and no<br />
failure or delay on the part of the Pledgee to exercise any
such<br />
right, power or remedy shall operate as a waiver thereof.&nbsp;
No<br />
notice to or demand on the Pledgor in any case shall entitle
it<br />
to any other or further notice or demand in similar or other<br />
circumstances or constitute a waiver of any of the rights of
the<br />
Pledgee to any other or further action in any circumstances<br />
without notice or demand.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9.
APPLICATION OF PROCEEDS.&nbsp; All monies collected by<br />
the Pledgee upon any sale or other disposition of the
Collateral<br />
pursuant to the terms of this Agreement, together with all
other<br />
monies received by the Pledgee hereunder, shall be applied at
the<br />
written instruction of the Administrative Agent for
satisfaction<br />
of the Secured Obligations in the order provided in the
Credit<br />
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.&nbsp;
PURCHASERS OF COLLATERAL.&nbsp; Upon any sale of the<br />
Collateral by the Pledgee hereunder (whether by virtue of the<br />
power of sale herein granted, pursuant to judicial process or<br />
otherwise), the receipt given by the Pledgee or the officer<br />
making the sale shall be a sufficient discharge to the
purchaser<br />
or purchasers of the Collateral so sold, and such purchaser
or<br />
purchasers shall not be obligated to see to the application
of<br />
any part of the purchase money paid over to the Pledgee or
such<br />
officer or be answerable in any way for the misapplication or<br />
nonapplication thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11.&nbsp;
[OMITTED]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12.&nbsp;
CERTAIN LIMITATIONS&nbsp; (a)&nbsp; The Pledgee shall not be<br />
obligated to perform or discharge any obligation of the
Pledgor<br />
as a result of the pledge hereby effected.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; (b)&nbsp;
The acceptance by the Pledgee of this Agreement,<br />
with all the rights, powers, privileges and authority so
created,<br />
shall not at any time or in any event obligate the Pledgee to<br />
appear in or defend any action or proceeding relating to the<br />
Collateral to which it is not a party, or to take any action<br />
hereunder or thereunder, or to expend any money or incur any<br />
expenses or perform or discharge any obligation, duty or<br />
liability under the Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13.&nbsp;
FURTHER ASSURANCES; POWER-OF-ATTORNEY.&nbsp; (a)&nbsp; At<br />
any time and from time to time, upon the written request of
the<br />
Pledgee, and at the sole expense of the Pledgor, the Pledgor
will<br />
promptly and duly execute and deliver any and all such
further<br />
instruments and documents and take such further action as the<br />
Pledgee reasonably may deem appropriate in order to perfect
and<br />
preserve the Pledgee's security interest in the Collateral and
in<br />
order for the Pledgee to obtain the full benefits of this<br />
Agreement and of the rights and powers herein granted,
including,<br />
without limitation, the filing of any financing or
continuation<br />
statements under the Uniform Commercial Code in effect in any<br />
jurisdiction and the filing of any other equivalent or
similar<br />
statement or document under any other applicable Law with any<br />
other applicable Governmental Authority with respect to the<br />
security interests granted hereby.&nbsp; The Pledgor also
hereby<br />
authorizes the Pledgee to file any such financing or
continuation<br />
statement without the signature of the Pledgor to the extent<br />
permitted by applicable Law.&nbsp; If any amount payable under or
in<br />
connection with any of the Collateral shall be or become<br />
evidenced by any promissory note or other instrument, such
note<br />
or instrument shall be immediately delivered to the Pledgee
and<br />
pledged to the Pledgee hereunder, duly endorsed, to the
extent<br />
necessary, to the Pledgee.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The Pledgor hereby appoints the Pledgee such<br />
Pledgor's attorney-in-fact, with full authority in the place
and<br />
stead of the Pledgor and in the name of the Pledgor or
otherwise,<br />
to act from time to time, solely after the occurrence and
during<br />
the continuance of an Event of Default and subject to the
Credit<br />
Agreement, in the Pledgee's reasonable discretion to take any<br />
action and to execute any instrument which the Pledgee may
deem<br />
reasonably necessary or advisable to accomplish the purposes
of<br />
this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14.&nbsp;
[OMITTED]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15.&nbsp;
TRANSFER BY THE PLEDGOR.&nbsp; The Pledgor will not<br />
sell or otherwise dispose of, grant any option with respect
to,<br />
or mortgage, pledge or otherwise encumber any of the
Collateral<br />
or any interest therein (except as may be permitted in
accordance<br />
with the terms of the Financing Documents).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16.&nbsp;
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE<br />
PLEDGOR.&nbsp; (a)&nbsp; The Pledgor represents, warrants and
covenants<br />
that:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; it is the legal, beneficial and record owner<br />
&nbsp;&nbsp;&nbsp;&nbsp; of, and has good and marketable title to,
all Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; consisting of Pledged Stock and it has all
rights in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral necessary for the security
interest purported to<br />
&nbsp;&nbsp;&nbsp;&nbsp; be created hereunder to attach (subject,
in each case, to no<br />
&nbsp;&nbsp;&nbsp;&nbsp; pledge, lien, security interest, charge,
option or other<br />
&nbsp;&nbsp;&nbsp;&nbsp; encumbrance whatsoever, except the liens
and security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interests created by this
Agreement);&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) it has full power, authority and legal right<br />
&nbsp;&nbsp;&nbsp;&nbsp; to pledge all the Collateral pledged by it
pursuant to this<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp; (iii)this Agreement has been duly
authorized,<br />
&nbsp;&nbsp;&nbsp;&nbsp; executed and delivered by the Pledgor and
constitutes a<br />
&nbsp;&nbsp;&nbsp;&nbsp; legal, valid and binding obligation of the
Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; enforceable against the Pledgor in
accordance with its<br />
&nbsp;&nbsp;&nbsp;&nbsp; terms, except to the extent that the
enforceability hereof<br />
&nbsp;&nbsp;&nbsp;&nbsp; may be limited by applicable bankruptcy,
insolvency,<br />
&nbsp;&nbsp;&nbsp;&nbsp; reorganization, moratorium or other
similar laws generally<br />
&nbsp;&nbsp;&nbsp;&nbsp; affecting creditors' rights and by
equitable principles<br />
&nbsp;&nbsp;&nbsp;&nbsp; (regardless of whether enforcement is
sought in equity or at<br />
&nbsp;&nbsp;&nbsp;&nbsp; law);&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) except to the extent already obtained or<br />
&nbsp;&nbsp;&nbsp;&nbsp; made, no consent of any other party
(including, without<br />
&nbsp;&nbsp;&nbsp;&nbsp; limitation, any stockholder or creditor of
the Pledgor or<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer) and no consent, license,
permit, approval or<br />
&nbsp;&nbsp;&nbsp;&nbsp; authorization of, exemption by, notice or
report to, or<br />
&nbsp;&nbsp;&nbsp;&nbsp; registration, filing or declaration with,
any Governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; Authority is required to be obtained by
the Pledgor in<br />
&nbsp;&nbsp;&nbsp;&nbsp; connection with (a) the execution,
delivery or performance<br />
&nbsp;&nbsp;&nbsp;&nbsp; of this Agreement, (b) the validity or
enforceability of<br />
&nbsp;&nbsp;&nbsp;&nbsp; this Agreement, (c) the perfection or
enforceability of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee's security interest in the
Collateral or (d) except<br />
&nbsp;&nbsp;&nbsp;&nbsp; for compliance with or as may be required
by applicable<br />
&nbsp;&nbsp;&nbsp;&nbsp; securities laws, the exercise by the
Pledgee of any of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights or remedies provided herein;
provided, that any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Person acquiring the voting securities of
the Issuer or<br />
&nbsp;&nbsp;&nbsp;&nbsp; Newco may require prior approval from the
Federal Energy<br />
&nbsp;&nbsp;&nbsp;&nbsp; Regulatory Commission and the California
Public Utilities<br />
&nbsp;&nbsp;&nbsp;&nbsp; Commission.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp; the execution, delivery and performance of<br />
&nbsp;&nbsp;&nbsp;&nbsp; this Agreement will not violate any
provision of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; applicable Law or regulation or of any
order, judgment,<br />
&nbsp;&nbsp;&nbsp;&nbsp; writ, award or decree of any court,
arbitrator or<br />
&nbsp;&nbsp;&nbsp;&nbsp; Governmental Authority, domestic or
foreign, applicable to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledgor, or of the certificate of
incorporation,<br />
&nbsp;&nbsp;&nbsp; &nbsp; operating agreement, limited liability
company agreement,<br />
&nbsp;&nbsp;&nbsp;&nbsp; partnership agreement or by-laws of the
Pledgor or of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; securities or other interests issued by
the Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer, or of any mortgage, deed of trust,
indenture, lease,<br />
&nbsp;&nbsp;&nbsp;&nbsp; loan agreement, credit agreement or other
material contract,<br />
&nbsp;&nbsp;&nbsp;&nbsp; agreement or instrument or undertaking to
which the Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; or the Issuer is a party or by which any
of its assets may<br />
&nbsp;&nbsp;&nbsp;&nbsp; be bound and will not result in the
creation or imposition<br />
&nbsp;&nbsp;&nbsp;&nbsp; of (or the obligation to create or impose)
any lien or<br />
&nbsp;&nbsp;&nbsp;&nbsp; encumbrance on any of the assets of the
Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer except as contemplated by this
Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi) all of the Collateral consisting of Pledged<br />
&nbsp;&nbsp;&nbsp;&nbsp; Stock has been duly and validly issued and
acquired, is<br />
&nbsp;&nbsp;&nbsp;&nbsp; fully paid and non-assessable and is
subject to no options<br />
&nbsp;&nbsp;&nbsp;&nbsp; to purchase or similar rights; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)the pledge and collateral assignment to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee of the Collateral consisting of
Pledged Stock,<br />
&nbsp;&nbsp;&nbsp;&nbsp; together with continued possession by the
Pledgee of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; certificates, instruments, documents or
other writings<br />
&nbsp;&nbsp;&nbsp;&nbsp; evidencing the Pledged Stock and/or the
making of relevant<br />
&nbsp;&nbsp;&nbsp;&nbsp; filings or recordings and/or any other
action required to be<br />
&nbsp;&nbsp;&nbsp;&nbsp; taken in accordance with Section 3.2 (all
of which have been<br />
&nbsp;&nbsp;&nbsp;&nbsp; made or taken, as the case may be),
creates in favor of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee a valid and perfected first
priority security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interest in such Collateral, and the
proceeds thereof,<br />
&nbsp;&nbsp;&nbsp;&nbsp; subject to no prior Lien or encumbrance
(other than any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted Lien that is a non-consensual
lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law) or to any agreement
purporting to grant to<br />
&nbsp;&nbsp;&nbsp;&nbsp; any third party a Lien or encumbrance
(other than any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted Lien that is a non-consensual
lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law, and other than the Lien
created by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Utility Stock Pledge Agreement (35%)
&ndash; Continued Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loan) on the property or assets of the
Pledgor which would<br />
&nbsp;&nbsp;&nbsp;&nbsp; include the Pledged Stock and the Pledgee
is entitled to all<br />
&nbsp;&nbsp;&nbsp;&nbsp; the rights, priorities and benefits
afforded by the Uniform<br />
&nbsp;&nbsp;&nbsp;&nbsp; Commercial Code or other relevant law as
enacted in any<br />
&nbsp;&nbsp;&nbsp;&nbsp; relevant jurisdiction to perfected
security interests in<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect of such Collateral.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The Pledgor covenants and agrees that it will<br />
defend the Pledgee's right, title and security interest in and
to<br />
the Collateral and the proceeds thereof against the claims
and<br />
demands of all persons whomsoever; and the Pledgor covenants
and<br />
agrees that it will have like title to and right to pledge
any<br />
other property at any time hereafter pledged to the Pledgee
as<br />
Collateral hereunder and will likewise defend the right
thereto<br />
and security interest therein of the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17.&nbsp;
JURISDICTION OF ORGANIZATION; NAME.&nbsp;&nbsp;&nbsp; The<br />
Pledgor's name, jurisdiction of organization and
identification<br />
number are set forth in Annex B hereto.&nbsp; The Pledgor will
not<br />
change its name or its jurisdiction of organization, except
upon<br />
15 days' prior written notice to the Collateral Agent and<br />
delivery to the Collateral Agent of all additional executed<br />
financing statements and other documents reasonably requested
by<br />
the Collateral Agent to maintain the validity, perfection and<br />
priority of the security interests provided for herein.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18.&nbsp;
PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC.&nbsp; The<br />
obligations of the Pledgor under this Agreement shall be
absolute<br />
and unconditional and shall remain in full force and effect<br />
without regard to, and shall not be released, suspended,<br />
discharged, terminated or otherwise affected by, any
circumstance<br />
or occurrence whatsoever (except as provided under Section
20),<br />
including, without limitation:&nbsp; (i) any renewal,
extension,<br />
amendment or modification of or addition or supplement to or<br />
deletion from any Financing Document or any other instrument
or<br />
agreement referred to therein, or any assignment or transfer
of<br />
any thereof; (ii) any waiver, consent, extension, indulgence
or<br />
other action or inaction under or in respect of any such<br />
agreement or instrument including, without limitation, this<br />
Agreement; (iii) any furnishing of any additional security to
the<br />
Pledgee or its assignee or any acceptance thereof or any
release<br />
of any security by the Pledgee or its assignee (except as<br />
provided under Section 20); (iv) any limitation on any
party's<br />
liability or obligations under any such instrument or
agreement<br />
or any invalidity or unenforceability, in whole or in part,
of<br />
any such instrument or agreement or any term thereof; or (v)
any<br />
bankruptcy, insolvency, reorganization, composition,
adjustment,<br />
dissolution, liquidation or other like proceeding relating to
the<br />
Pledgor or the Issuer, or any action taken with respect to
this<br />
Agreement by any trustee or receiver, or by any court, in any<br />
such proceeding, whether or not the Pledgor shall have notice
or<br />
knowledge of any of the foregoing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19.&nbsp;
REGISTRATION, ETC.&nbsp; (a)&nbsp; If there shall have<br />
occurred and be continuing an Event of Default, then upon
receipt<br />
by the Pledgor from the Pledgee of a written request or
requests<br />
that the Pledgor cause any registration, qualification or<br />
compliance under any Federal or state securities law or laws
to<br />
be effected with respect to all or any part of the Collateral<br />
consisting of Pledged Stock, the Pledgor as soon as
practicable<br />
and at its expense will cause such registration to be
effected<br />
(and be kept effective) and will cause such qualification and<br />
compliance to be declared effected (and be kept effective) as
may<br />
be so requested if such registration, qualification or
compliance<br />
is necessary to permit or facilitate the sale and distribution
of<br />
such Collateral, including, without limitation, registration<br />
under the Securities Act, as then in effect (or any similar<br />
statute then in effect), appropriate qualifications under<br />
applicable blue sky or other state securities laws and<br />
appropriate compliance with any other government
requirements,<br />
provided, that the Pledgee shall furnish to the Pledgor such<br />
information regarding the Pledgee as the Pledgor may
reasonably<br />
request in writing and as shall be required in connection
with<br />
any such registration, qualification or compliance. The
Pledgor<br />
will cause the Pledgee to be kept advised in writing as to
the<br />
progress of each such registration, qualification or
compliance<br />
and as to the completion thereof, will furnish to the Pledgee<br />
such number of prospectuses, offering circulars or other<br />
documents incident thereto as the Pledgee from time to time
may<br />
reasonably request, and will indemnify the Pledgee and all
others<br />
participating in the distribution of such Collateral against
all<br />
claims, losses, damages and liabilities caused by any untrue<br />
statement (or alleged untrue statement) of a material fact<br />
contained therein (or in any related registration statement,<br />
notification or the like) or by any omission (or alleged<br />
omission) to state therein (or in any related registration<br />
statement, notification or the like) a material fact required
to<br />
be stated therein or necessary to make the statements therein
not<br />
misleading, except insofar as the same may have been caused by
an<br />
untrue statement or omission based upon information furnished
in<br />
writing to the Pledgor by the Pledgee expressly for use
therein.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; If
at any time when the Pledgee shall determine to<br />
exercise its right to sell all or any part of the Collateral<br />
consisting of Pledged Stock pursuant to Section 7 hereof, and
the<br />
Collateral or the part thereof to be sold shall not, for any<br />
reason whatsoever, be effectively registered under the
Securities<br />
Act, as then in effect, the Pledgee may sell such Collateral
or<br />
part thereof, as the case may be, by private sale in such
manner<br />
and under such circumstances as the Pledgee may deem necessary
or<br />
reasonably advisable in order that such sale may legally be<br />
effected without such registration.&nbsp; Without limiting
the<br />
generality of the foregoing, in any event the Pledgee (i) may<br />
proceed to make such private sale notwithstanding that a<br />
registration statement for the purpose of registering such<br />
Collateral or part thereof shall have been filed under such<br />
Securities Act, (ii) may approach and negotiate with a single<br />
possible purchaser to effect such sale, and (iii) may
restrict<br />
such sale to a purchaser who will represent and agree that
such<br />
purchaser is purchasing for its own account, for investment,
and<br />
not with a view to the distribution or sale of such Collateral
or<br />
part thereof.&nbsp; In the event of any such sale, the Pledgee
shall<br />
incur no responsibility or liability, except to the extent<br />
incurred by reason of its gross negligence, bad faith or
willful<br />
misconduct, for selling all or any part of the Collateral at
a<br />
price which the Pledgee, in its sole and absolute discretion,<br />
deems reasonable under the circumstances, notwithstanding the<br />
possibility that a substantially higher price might have been<br />
realized if the sale were deferred until after registration
as<br />
aforesaid.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20.&nbsp;
TERMINATION; RELEASE.&nbsp;&nbsp;&nbsp; After payment in full
of<br />
the Secured Obligations and termination of the Credit
Agreement,<br />
this Agreement and the security interest created hereby shall<br />
terminate (provided that all indemnities set forth herein<br />
including, without limitation, in Section 11 hereof shall
survive<br />
any such termination), and the Pledgee, at the request and<br />
expense of the Pledgor, will execute and deliver to the Pledgor
a<br />
proper instrument or instruments acknowledging the
satisfaction<br />
and termination of this Agreement, and will duly assign,
transfer<br />
and deliver to the Pledgor (without recourse and without any<br />
representation or warranty) such of the Collateral as has not<br />
theretofore been sold or otherwise applied or released
pursuant<br />
to this Agreement, together with any monies at the time held
by<br />
the Pledgee or any of its sub-agents hereunder.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21.&nbsp;
NOTICES, ETC.&nbsp; All notices, requests, demands or<br />
other communications hereunder shall be made in the manner
and<br />
with the effect provided in Section 9.3 of the Credit
Agreement<br />
at the addresses provided below or at such other address as
shall<br />
have been furnished in writing by the relevant Person to the<br />
party required to give notice hereunder:<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp; If
to the Pledgor, at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
One Market, Spear Tower Suite 2400<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco, CA 94105&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention: Assistant Treasurer&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel.: (415) 267-7052<br />
&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax.: (415) 267-7265<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; If
to the Pledgee, at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deutsche Bank Trust Company Americas<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Corporate Trust and Agency Services<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
100 Plaza One, MS: 0603<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Jersey City, NJ 07311<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (201) 593-6832<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax: (201) 593-6420<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to the Administrative Agent at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lehman Commercial Paper Inc.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 745 Seventh Avenue<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New York, New York 10019<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Frank Turner/Rich Divito<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (212) 526-2696/(212) 526-2425<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax: (646) 758-1986/(646) 758-4618<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22.&nbsp;
WAIVER; AMENDMENT.&nbsp; None of the terms and<br />
conditions of this Agreement may be changed, waived, modified
or<br />
varied in any manner whatsoever unless in writing duly signed
by<br />
the Pledgor and the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23.&nbsp;
MISCELLANEOUS.&nbsp; This Agreement shall be binding<br />
upon the parties hereto and their respective successors and<br />
assigns and shall inure to the benefit of and be enforceable
by<br />
each of the parties hereto and its successors and assigns,<br />
provided that the Pledgor may not assign any of its rights or<br />
obligations under this Agreement without the prior consent of
the<br />
Pledgee.&nbsp; The headings in this Agreement are for purposes
of<br />
reference only and shall not limit or define the meaning
hereof.&nbsp;<br />
 This Agreement may be executed in any number of
counterparts,<br />
each of which shall be an original, but all of which shall<br />
constitute one instrument.&nbsp; In the event that any provision
of<br />
this Agreement shall prove to be invalid or unenforceable,
such<br />
provision shall be deemed to be severable from the other<br />
provisions of this Agreement which shall remain binding on
all<br />
parties hereto.&nbsp; The rights, powers, privileges and immunities
of<br />
the Collateral Agent set forth in the Credit Agreement shall<br />
apply to the Collateral Agent as if expressly set forth
herein.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24.&nbsp;
GOVERNING LAW.&nbsp;&nbsp; THIS AGREEMENT, INCLUDING ALL<br />
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE AND MATTERS<br />
RELATING TO THE CREATION, VALIDITY, ENFORCEMENT OR PRIORITY
OF<br />
THE SECURITY INTERESTS CREATED BY THIS AGREEMENT, SHALL BE<br />
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO<br />
THE CONFLICT OF LAWS RULES THEREOF (OTHER THAN SECTION 5-1401
OF<br />
THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS MAY BE
REQUIRED<br />
BY OTHER MANDATORY PROVISIONS OF LAW.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25.&nbsp;
WAIVER OF JURY TRIAL.&nbsp; EACH OF THE PARTIES HERETO<br />
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT<br />
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY<br />
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION<br />
WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF<br />
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY<br />
PARTY RELATING HERETO OR THERETO.&nbsp; THIS PROVISION IS A
MATERIAL<br />
INDUCEMENT FOR THE LENDERS TO ENTER INTO THE CREDIT AGREEMENT
AND<br />
THE OTHER FINANCING DOCUMENTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS
WHEREOF, the Pledgor, the Pledgee, the<br />
Administrative Agent have caused this Agreement to be executed
by<br />
their duly elected officers duly authorized as of the date
first<br />
above written.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGOR<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PETER A. DARBEE<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Peter A. Darbee<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Senior Vice President<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial Officer<br />
<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ADMINISTRATIVE AGENT<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JAMES P. SEERY, JR.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp;&nbsp;&nbsp;&nbsp; James P. Seery,Jr.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp; Authorized Signatory<br />
<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGEE<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEUTSCHE BANK TRUST COMPANY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
AMERICAS, as Collateral Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp; CARMENA BITAR DAY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

</u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Vice President<br />
<br />
_____________________________________________________________________<br />

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ANNEX
A<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LIST OF PLEDGED STOCK<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Number<br />
&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Type
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certificate No.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Issuer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp; Pacific Gas
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Common&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
105,641,741&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ZQU10<br />
&nbsp;&nbsp;&nbsp; Electric
Company&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stock&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 ______________________________________________________________________&nbsp;<br />

<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX B<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT<br />
<br />
&nbsp;<br />
<br />
 &nbsp;<br />
<br />
 Name of
Pledgor:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
<br />
Jurisdiction of Organization:&nbsp;&nbsp;&nbsp; California<br />
<br />
Identification Number:
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C1953580</font></p>
</div>
</body>
</html>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>6
<FILENAME>exhibit994.htm
<DESCRIPTION>UTILITY STOCK PLEDGE AGREEMENT (65%)-CONTINUED TRANCHE B LOAN, DATED AS OF OCTOBER 18, 2002
<TEXT>
<head>
<title>Exhibit 99-4</title>
</head>
<body>
<div>
<p><font size="2" face="Device Font 10cpi"><br />
<br />
<br />
&nbsp;<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exhibit 99.4<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EXECUTION COPY<br />
&nbsp;
_____________________________________________________________<br />
<br />
&nbsp; UTILITY STOCK PLEDGE AGREEMENT (65%)--</font></p>

<p><font size="2" face="Device Font 10cpi">-CONTINUED TRANCHE B
LOAN<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
by and among<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Pledgor<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; as Administrative Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEUTSCHE BANK TRUST COMPANY AMERICAS,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Collateral Agent<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; for
the benefit of the Lenders, as Pledgee<br />
<br />
&nbsp;
_____________________________________________________________<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dated as of October 18, 2002<br />
<br />
&nbsp;
_____________________________________________________________<br />
<br />
<br />
&nbsp; UTILITY STOCK PLEDGE AGREEMENT (65%)--</font></p>

<p><font size="2" face="Device Font 10cpi">-CONTINUED TRANCHE B
LOAN<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; STOCK PLEDGE
AGREEMENT (65%)---CONTINUED TRANCHE B LOAN&nbsp;<br />
 (as amended, modified or supplemented from time to time,
this<br />
"Agreement"), dated as of October 18, 2002, among PG&amp;E<br />
CORPORATION, a California corporation (the "Pledgor"),&nbsp;
LEHMAN<br />
COMMERCIAL PAPER INC., a corporation organized and existing
under<br />
the laws of the State of New York, as Administrative Agent
for<br />
the lenders (the "Lenders") from time to time parties to the<br />
Credit Agreement described below and DEUTSCHE BANK TRUST
COMPANY<br />
AMERICAS (the "Pledgee"), as Collateral Agent for the benefit
of<br />
the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
W I T N E S S E T H :<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Pledgor, is a party to the Amended and<br />
Restated Credit Agreement, dated as of June 25, 2002 (as
amended,<br />
the "Existing Credit Agreement"), with the lenders parties<br />
thereto, Lehman Commercial Paper Inc., as Administrative
Agent,<br />
and others, pursuant to which such lenders made the Tranche A<br />
Loan (as defined in the Existing Credit Agreement, the
"Existing<br />
Tranche A Loan") and the Tranche B Loan (as defined in the<br />
Existing Credit Agreement, the "Existing Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS,
pursuant to the Second Amended and Restated<br />
Credit Agreement, dated as of the date hereof (as amended,<br />
supplemented or otherwise modified from time to time, the
"Credit<br />
Agreement"), among the Pledgor, the Lenders parties thereto,
the<br />
Administrative Agent and others, the Existing Credit Agreement
is<br />
being amended and restated in its entirety to modify certain
of<br />
the terms applicable to the Existing Tranche B Loan, which
shall<br />
continue to be outstanding under the Credit Agreement (the<br />
Existing Tranche B Loan, as so modified and continued, the<br />
"Continued Tranche B Loan"), to reflect repayment of the
Existing<br />
Tranche A Loan and to provide for the making of an additional<br />
Tranche B Loan (the "New Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Pledgor owns 94% of the issued and<br />
outstanding common stock of&nbsp; Pacific Gas and Electric Company,
a<br />
California corporation (the "Issuer"); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, it
is a condition precedent to the obligation<br />
of the Lenders parties to the Existing Credit Agreement to
agree<br />
to amend and restate the Existing Credit Agreement,&nbsp; and&nbsp;
to the<br />
obligations of the Lenders to make the New Tranche B Loan
under<br />
the Credit Agreement, that this Agreement shall have been<br />
executed and delivered;&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW,
THEREFORE, in consideration of the foregoing<br />
premises and to induce the Administrative Agent and the
Lenders<br />
to enter into the Credit Agreement, the Pledgor hereby agrees<br />
with the Administrative Agent, for the benefit of the Lenders,
as<br />
follows:&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1. SECURITY
FOR OBLIGATIONS.&nbsp; This Agreement is made by<br />
the Pledgor for the benefit of the Pledgee, acting as
Collateral<br />
Agent for the benefit of the Lenders (as more particularly<br />
described in Section 3.1), to secure:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; the full and prompt payment when due (whether<br />
&nbsp;&nbsp;&nbsp;&nbsp; at the stated maturity, by acceleration or
otherwise) of all<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations of the Pledgor under the
Credit Agreement and<br />
&nbsp;&nbsp;&nbsp;&nbsp; the other Financing Documents in respect
of the Continued<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan and the obligations of the
Pledgor under the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Option Agreement,&nbsp; whether direct or
indirect, absolute or<br />
&nbsp;&nbsp;&nbsp;&nbsp; contingent, due or to become due, now
existing or hereafter<br />
&nbsp;&nbsp;&nbsp;&nbsp; arising and howsoever evidenced, and the
due performance and<br />
&nbsp;&nbsp;&nbsp;&nbsp; compliance by the Pledgor with the terms
thereof;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) any and all sums advanced by the Pledgee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any Continued Tranche B Lender in order to
preserve the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral or preserve its security
interest in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral (as defined below); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)in the event of any proceeding for the<br />
&nbsp;&nbsp;&nbsp;&nbsp; collection or enforcement of any
indebtedness, obligations,<br />
&nbsp;&nbsp;&nbsp;&nbsp; or liabilities referred to in clauses (i)
and (ii) above,<br />
&nbsp;&nbsp;&nbsp;&nbsp; the reasonable expenses of retaking,
holding, preparing for<br />
&nbsp;&nbsp;&nbsp;&nbsp; sale or lease, selling or otherwise
disposing or realizing<br />
&nbsp;&nbsp;&nbsp;&nbsp; on the Collateral, or of any exercise by
the Pledgee of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights hereunder with respect thereto,
together with<br />
&nbsp;&nbsp;&nbsp;&nbsp; reasonable attorneys' fees and court costs
related thereto,<br />
<br />
all such obligations, liabilities, sums and expenses set forth
in<br />
clauses (i) through (iii) of this Section 1, whether now
existing<br />
or hereafter arising, being herein collectively called the<br />
"Secured Obligations".<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.
DEFINITIONS.&nbsp; (a)&nbsp; Unless otherwise defined herein,<br />
all capitalized terms used herein and defined, in Appendix A
to<br />
the Credit Agreement shall be used herein as therein defined,
and<br />
the principles of construction set forth in Appendix A to the<br />
Credit Agreement shall apply to this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; In
addition, the following capitalized terms used<br />
herein shall have the definitions specified below:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Agreement"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Collateral"
has the meaning set forth in Section 3.1<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continued
Tranche B Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continued
Tranche B Lender" means each Lender holding<br />
&nbsp;&nbsp;&nbsp;&nbsp; a Continued Tranche B Loan, in its
capacity as the holder of<br />
&nbsp;&nbsp;&nbsp;&nbsp; such Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Credit
Agreement" has the meaning set forth in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Credit Agreement" has the meaning set forth<br />
&nbsp;&nbsp;&nbsp;&nbsp; in the first recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Existing Tranche A Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the first recital hereto.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Tranche B Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the first recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Issuer" has
the meaning set forth in the third recital<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lenders"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco Spin"
has the meaning set forth in the Credit<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco
Stock" means the Capital Stock of Newco Energy<br />
&nbsp;&nbsp;&nbsp;&nbsp; Corporation, a California
corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New
Tranche B Loan" has the meaning set forth in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledged
Stock" means the shares of Capital Stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer described on Annex A hereto,
and any shares of&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; Capital Stock of the Issuer at any time
issued in respect of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Capital Stock described on Annex A
hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledgee"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledgor"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Proceeds"
has the meaning given such term in the UCC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Secured Obligations" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; Section 1 hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Securities
Act" means the Securities Act of 1933, as<br />
&nbsp;&nbsp;&nbsp;&nbsp; amended and as in effect from time to
time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "UCC" means
the Uniform Commercial Code as in effect in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the State of New York from time to
time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (65%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loan" means the Utility Stock Pledge
Agreement (65%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan, dated as of the date
hereof, among the<br />
&nbsp;&nbsp;&nbsp;&nbsp; parties hereto, pursuant to which 65% of
the common stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer is being pledged to secure
Obligations relating<br />
&nbsp;&nbsp;&nbsp;&nbsp; to the New Tranche B Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (35%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loan" means the Utility Stock Pledge
Agreement (35%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan, dated as of the date
hereof, among the<br />
&nbsp;&nbsp;&nbsp;&nbsp; parties hereto, pursuant to which 35% of
the common stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer is being pledged&nbsp; to
secure the Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (35%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-Continued<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan" means the Utility Stock
Pledge Agreement<br />
&nbsp;&nbsp;&nbsp;&nbsp; (35%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp; -</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-Continued Tranche B Loan, dated as of the date<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereof, among the parties hereto, pursuant
to which the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral is being pledged&nbsp; to
secure Obligations relating<br />
&nbsp;&nbsp;&nbsp;&nbsp; to the Continued Tranche B
Loan.&nbsp;<br />
<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; 3. PLEDGE
OF PLEDGED STOCK, ETC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.1&nbsp;
Pledge. (a)&nbsp; The Pledgor hereby transfers, pledges<br />
and assigns to the Pledgee, and grants to the Pledgee a first<br />
priority security interest in, all of the right, title and<br />
interest of the Pledgor in and to the following, whether now<br />
existing or hereafter from time to time acquired by the
Pledgor<br />
(collectively, the "Collateral"):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
the Pledged Stock;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) all
other property hereafter delivered in<br />
&nbsp;&nbsp;&nbsp;&nbsp; substitution for any of the Pledged Stock,
all certificates<br />
&nbsp;&nbsp;&nbsp;&nbsp; and instruments representing or evidencing
such other<br />
&nbsp;&nbsp;&nbsp;&nbsp; property and all cash, securities,
interest, dividends,<br />
&nbsp;&nbsp;&nbsp;&nbsp; distributions rights and other property at
any time and from<br />
&nbsp;&nbsp;&nbsp;&nbsp; time to time received, receivable or
otherwise distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; in respect of or in exchange for any or
all thereof<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including, without limitation, any Newco
Stock distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; to the Pledgor in respect of the Pledged
Stock in connection<br />
&nbsp;&nbsp;&nbsp;&nbsp; with the Newco Spin); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp;&nbsp;&nbsp; all Proceeds of any and all of the
foregoing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The foregoing transfer, pledge, assignment and<br />
grant of a security interest is made to secure the prompt and<br />
complete payment and performance when due of the Secured<br />
Obligations.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
Concurrently herewith, the parties hereto are<br />
entering into the Utility Stock Pledge Agreement (65%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New<br />
Tranche B Loan. It is the intention of the parties hereto and<br />
thereto that the security interest and lien created hereby
shall<br />
be a separate security interest and lien from that created by
the<br />
Utility Stock Pledge Agreement (65%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New Tranche B Loan, and<br />
that the security interest and lien created hereby shall be
equal<br />
in priority to that created by the Utility Stock Pledge
Agreement<br />
(65%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New Tranche B Loan.&nbsp; It is also the intention of the<br />
parties hereto and thereto that any avoidance, pursuant to<br />
Sections 547 and 550 of the Bankruptcy Code, of the security<br />
interest and lien created by the Utility Stock Pledge
Agreement<br />
(65%)--</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-New Tranche B Loan shall have no effect on the lien and<br />
security interest created hereby, which shall continue as a<br />
perfected first priority interest in the Collateral securing
the<br />
Secured Obligations notwithstanding any such avoidance of the<br />
security interest and lien created by the Utility Stock
Pledge<br />
Agreement (65%) --</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
- New Tranche B Loan.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; (d)&nbsp;
Concurrently herewith, the parties hereto are<br />
entering into the Utility Stock Pledge Agreement
(35%)---Continued<br />
Tranche B Loan and the Utility Stock Pledge Agreement
(35%)---New<br />
Tranche B Loan, in each case covering collateral that is
separate<br />
and distinct from the Collateral. It is the intention of the<br />
parties hereto and thereto that the security interest and
lien<br />
created hereby shall be a separate security interest and lien<br />
from those created by the Utility Stock Pledge Agreement
(35%)--</font></p>

<p><font size="2" face="Device Font 10cpi"><br />
Continued Tranche B Loan and the Utility Stock Pledge
Agreement<br />
(35%)---New Tranche B Loan.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.2&nbsp;
Procedures.&nbsp; (a)&nbsp; To the extent that the Pledgor<br />
at any time or from time to time owns, acquires or obtains
any<br />
right, title or interest in any Collateral, such Collateral
shall<br />
automatically (and without the taking of any action by the<br />
Pledgor) be pledged pursuant to Section 3.1 of this Agreement<br />
and, in addition thereto, the Pledgor shall (as promptly as<br />
practicable and, in any event, within 10 days after it
obtains<br />
such Collateral) deliver to the Pledgee any stock
certificates<br />
evidencing such Collateral, duly endorsed in blank, and take
such<br />
other actions as the Pledgee shall reasonably request to
perfect<br />
the Pledgee's security interest in such Collateral.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
In addition to the actions required to be taken<br />
pursuant to Section 3.2(a) hereof, the Pledgor shall from time
to<br />
time, at the sole expense of the Pledgor, cause appropriate<br />
financing statements (on Form UCC-1 or other appropriate
form)<br />
under the Uniform Commercial Code as in effect in the various<br />
relevant States, in form covering all Collateral hereunder
(with<br />
the form of such financing statements to be satisfactory to
the<br />
Pledgee), to be filed in the relevant filing offices so that
at<br />
all times the Pledgee has a security interest in all
Collateral<br />
which is perfected by the filing of such financing statements
(in<br />
each case to the maximum extent perfection by filing may be<br />
obtained under the laws of any relevant State).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.3&nbsp;
Subsequently Acquired Collateral.&nbsp; If the Pledgor<br />
shall acquire (by purchase, dividend or similar distribution
or<br />
otherwise) any additional Collateral at any time or from time
to<br />
time after the date hereof, such Collateral shall
automatically<br />
(and without any further action being required to be taken)
be<br />
subject to the pledge and security interests created pursuant
to<br />
Section 3.1 hereof and, furthermore, the Pledgor will
promptly<br />
thereafter take (or cause to be taken) all action with respect
to<br />
such Collateral in accordance with the procedures set forth
in<br />
Section 3.2 hereof, and will promptly thereafter deliver to
the<br />
Pledgee (i) a certificate executed by a principal executive<br />
officer of the Pledgor describing such Collateral and
certifying<br />
that the same has been duly pledged in favor of the Pledgee
(for<br />
the benefit of the Lenders) hereunder and (ii) supplements to<br />
Annexes A and B hereto as are reasonably necessary to cause
such<br />
annexes to be complete and accurate at such time.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.4&nbsp;
Transfer Taxes.&nbsp; Each pledge of Collateral under<br />
Section 3.1 hereof shall be accompanied by any transfer tax<br />
stamps required in connection with the pledge of such
Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.5&nbsp;
Certain Representations and Warranties Regarding<br />
the Collateral.&nbsp; The Pledgor represents and warrants that on
the<br />
date hereof (i) the Pledged Stock consists of the number and
type<br />
<br />
<br />
of shares described in Annex A hereto; (ii) the Pledged Stock<br />
constitutes that percentage of the issued and outstanding
common<br />
stock of the Issuer as is set forth in Annex A hereto; and
(iii)<br />
the Pledgor has complied with the respective procedure set
forth<br />
in Sections 3.2(a) and (b) hereof with respect to each item
of<br />
Collateral hereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.
APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.&nbsp; If<br />
and to the extent necessary to enable the Pledgee to perfect
its<br />
security interest in any of the Collateral or to exercise any
of<br />
its remedies hereunder, the Pledgee shall have the right to<br />
appoint one or more sub-agents for the purpose of retaining<br />
physical possession of the Collateral, which may be held in
the<br />
name of the Pledgor, endorsed or assigned in blank or in favor
of<br />
the Pledgee or any nominee or nominees of the Pledgee or a
sub-<br />
agent appointed by the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5. VOTING,
ETC.&nbsp; The Pledgor shall be entitled to<br />
exercise any and all voting and other consensual rights<br />
pertaining to the Collateral owned by it, and to give
consents,<br />
waivers or ratifications in respect thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6. DIVIDENDS
AND OTHER DISTRIBUTIONS.&nbsp; All cash<br />
dividends, cash distributions, cash Proceeds and other cash<br />
amounts payable in respect of the Collateral shall be
received<br />
(a) by the Pledgor,&nbsp; if no Event of Default shall have
occurred<br />
and be continuing and (b) by the Pledgee, if any Event of
Default<br />
shall have occurred and be continuing&nbsp; (all of which amounts
so<br />
received by the Pledgee to be delivered by the Pledgee to the<br />
Administrative Agent for application toward prepayment of the<br />
Secured Obligations).&nbsp; The Pledgee shall also be entitled
to<br />
receive directly, and to retain as part of the Collateral:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property (including, but not limited
to, cash<br />
&nbsp;&nbsp;&nbsp;&nbsp; dividends other than as set forth above)
paid or distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; by way of dividend or otherwise in respect
of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property paid or distributed in
respect of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral by way of split, spin-off,
split-up,<br />
&nbsp;&nbsp;&nbsp;&nbsp; reclassification, combination or similar
rearrangement;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property (including, but not limited
to, cash) which<br />
&nbsp;&nbsp;&nbsp;&nbsp; may be paid in respect of the Collateral
by reason of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; consolidation, merger, exchange,
conveyance of assets,<br />
&nbsp;&nbsp;&nbsp;&nbsp; liquidation or similar reorganization;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) without limiting the generality of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; foregoing, all shares of Newco Stock
distributed in respect<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nothing
contained in this Section 6 shall limit or<br />
restrict in any way the Pledgee's right to have pledged to it<br />
proceeds of the Collateral in any form in accordance with
Section<br />
3 of this Agreement.&nbsp; All dividends, distributions or
other<br />
payments which are received by the Pledgor contrary to the<br />
provisions of this Section 6 and Section 7 hereof shall be<br />
received in trust for the benefit of the Pledgee, shall be<br />
segregated from other property or funds of the Pledgor and
shall<br />
be forthwith paid over to the Pledgee as Collateral in the
same<br />
form as so received (with any necessary endorsement).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.
LIMITATION ON REMEDIES.&nbsp; It is expressly agreed<br />
that, subject to Section 8 hereof, notwithstanding the
occurrence<br />
of any Default or Event of Default, neither the Pledgee, the<br />
Administrative Agent, nor any Lender, nor any Person acting
on<br />
behalf of any thereof, shall have any right:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; to transfer all or any part of the Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; into the Pledgee's name or the name of its
nominee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; nominees;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) to vote all or any part of the Collateral,<br />
&nbsp;&nbsp;&nbsp;&nbsp; give consents, waivers and ratifications
in respect of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral or otherwise act with respect
thereto as though<br />
&nbsp;&nbsp;&nbsp;&nbsp; it were the outright owner thereof or to
exercise any of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights or powers of a stockholder of the
Issuer;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)to sell, assign or deliver, or grant options<br />
&nbsp;&nbsp;&nbsp;&nbsp; to purchase, all or any part of the
Collateral, or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; interest therein, or otherwise foreclose
on any of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) to set-off any Collateral against any Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations and to apply such Collateral
to the payment of<br />
&nbsp;&nbsp;&nbsp;&nbsp; any Secured Obligations;<br />
<br />
provided, however, that in the event of any sale or other<br />
disposition of any of the Collateral, the Pledgee shall be<br />
entitled to receive the Proceeds thereof, whether such sale
or<br />
other disposition is consummated in connection with a
bankruptcy<br />
proceeding in respect of the Pledgor, or otherwise (it being<br />
agreed by the parties hereto that this Agreement creates in
favor<br />
of the Pledgee a first priority security interest in the<br />
Collateral notwithstanding that the Pledgee has agreed not to<br />
exercise remedies of a secured party in respect of the<br />
Collateral).&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8. REMEDIES
IN RESPECT OF COLLATERAL OTHER THAN PLEDGED<br />
STOCK, ETC. Anything herein or in any other Financing
Document<br />
to the contrary notwithstanding, (a) the Pledgee shall have,
in<br />
respect of all Collateral other than the Pledged Stock and
any<br />
shares of Newco Stock that may become Collateral hereunder,
all<br />
rights and remedies granted to the Pledgee under the Utility<br />
Stock Pledge Agreement (35%)-New Tranche B Loan, including,<br />
without limitation, all rights and remedies of a secured
party<br />
under Article 9 of the UCC and (b) in the event of a
bankruptcy<br />
proceeding in respect of the Pledgor, the Pledgee shall have,
in<br />
respect of the Pledgor and all Collateral, all rights and<br />
remedies of a secured creditor, subject to the Bankruptcy
Code.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9.
APPLICATION OF PROCEEDS.&nbsp; All monies collected by<br />
the Pledgee upon any sale or other disposition of the
Collateral<br />
pursuant to the terms of this Agreement, together with all
other<br />
monies received by the Pledgee hereunder, shall be applied at
the<br />
written instruction of the Administrative Agent for
satisfaction<br />
of the Secured Obligations in the order provided in the
Credit<br />
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.&nbsp;
[OMITTED].&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11.&nbsp;
[OMITTED]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12.&nbsp;
CERTAIN LIMITATIONS&nbsp; (a)&nbsp; The Pledgee shall not be<br />
obligated to perform or discharge any obligation of the
Pledgor<br />
as a result of the pledge hereby effected.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; (b)&nbsp;
The acceptance by the Pledgee of this Agreement,<br />
with all the rights, powers, privileges and authority so
created,<br />
shall not at any time or in any event obligate the Pledgee to<br />
appear in or defend any action or proceeding relating to the<br />
Collateral to which it is not a party, or to take any action<br />
hereunder or thereunder, or to expend any money or incur any<br />
expenses or perform or discharge any obligation, duty or<br />
liability under the Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
Nothing in this Agreement shall obligate the<br />
Pledgor to sell or otherwise dispose of the Pledged Stock or
any<br />
shares of Newco Stock that may become Collateral hereunder
during<br />
the continuance of an Event of Default or otherwise.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13.&nbsp;
FURTHER ASSURANCES; POWER-OF-ATTORNEY.&nbsp; (a)&nbsp; At<br />
any time and from time to time, upon the written request of
the<br />
Pledgee, and at the sole expense of the Pledgor, the Pledgor
will<br />
promptly and duly execute and deliver any and all such
further<br />
instruments and documents and take such further action as the<br />
Pledgee reasonably may deem appropriate in order to perfect
and<br />
preserve the Pledgee's security interest in the Collateral and
in<br />
order for the Pledgee to obtain the full benefits of this<br />
Agreement and of the rights and powers herein granted,
including,<br />
without limitation, the filing of any financing or
continuation<br />
statements under the Uniform Commercial Code in effect in any<br />
jurisdiction and the filing of any other equivalent or
similar<br />
statement or document under any other applicable Law with any<br />
other applicable Governmental Authority with respect to the<br />
security interests granted hereby.&nbsp; The Pledgor also
hereby<br />
authorizes the Pledgee to file any such financing or
continuation<br />
statement without the signature of the Pledgor to the extent<br />
permitted by applicable Law.&nbsp; If any amount payable under or
in<br />
connection with any of the Collateral shall be or become<br />
evidenced by any promissory note or other instrument, such
note<br />
or instrument shall be immediately delivered to the Pledgee
and<br />
pledged to the Pledgee hereunder, duly endorsed, to the
extent<br />
necessary, to the Pledgee.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The Pledgor hereby appoints the Pledgee such<br />
Pledgor's attorney-in-fact, with full authority in the place
and<br />
stead of the Pledgor and in the name of the Pledgor or
otherwise,<br />
to act from time to time, solely after the occurrence and
during<br />
the continuance of an Event of Default and subject to the
Credit<br />
Agreement, in the Pledgee's reasonable discretion to take any<br />
action and to execute any instrument which the Pledgee may
deem<br />
reasonably necessary or advisable to accomplish the purposes
of<br />
this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14.&nbsp;
[OMITTED]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15.&nbsp;
TRANSFER BY THE PLEDGOR.&nbsp; The Pledgor will not<br />
sell or otherwise dispose of, grant any option with respect
to,<br />
or mortgage, pledge or otherwise encumber any of the
Collateral<br />
or any interest therein (except as may be permitted in
accordance<br />
with the terms of the Financing Documents).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16.&nbsp;
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE<br />
PLEDGOR.&nbsp; (a)&nbsp; The Pledgor represents, warrants and
covenants<br />
that:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; it is the legal, beneficial and record owner<br />
&nbsp;&nbsp;&nbsp;&nbsp; of, and has good and marketable title to,
all Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; consisting of Pledged Stock and it has all
rights in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral necessary for the security
interest purported to<br />
&nbsp;&nbsp;&nbsp;&nbsp; be created hereunder to attach (subject,
in each case, to no<br />
&nbsp;&nbsp;&nbsp;&nbsp; pledge, lien, security interest, charge,
option or other<br />
&nbsp;&nbsp;&nbsp;&nbsp; encumbrance whatsoever, except the liens
and security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interests created by this
Agreement);&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) it has full power, authority and legal right<br />
&nbsp;&nbsp;&nbsp;&nbsp; to pledge all the Collateral pledged by it
pursuant to this<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)this Agreement has been duly authorized,<br />
&nbsp;&nbsp;&nbsp;&nbsp; executed and delivered by the Pledgor and
constitutes a<br />
&nbsp;&nbsp;&nbsp;&nbsp; legal, valid and binding obligation of the
Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; enforceable against the Pledgor in
accordance with its<br />
&nbsp;&nbsp;&nbsp;&nbsp; terms, except to the extent that the
enforceability hereof<br />
&nbsp;&nbsp;&nbsp;&nbsp; may be limited by applicable bankruptcy,
insolvency,<br />
&nbsp;&nbsp;&nbsp;&nbsp; reorganization, moratorium or other
similar laws generally<br />
&nbsp;&nbsp;&nbsp;&nbsp; affecting creditors' rights and by
equitable principles<br />
&nbsp;&nbsp;&nbsp;&nbsp; (regardless of whether enforcement is
sought in equity or at<br />
&nbsp;&nbsp;&nbsp;&nbsp; law);&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) except to the extent already obtained or<br />
&nbsp;&nbsp;&nbsp;&nbsp; made, no consent of any other party
(including, without<br />
&nbsp;&nbsp;&nbsp;&nbsp; limitation, any stockholder or creditor of
the Pledgor or<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer) and no consent, license,
permit, approval or<br />
&nbsp;&nbsp;&nbsp;&nbsp; authorization of, exemption by, notice or
report to, or<br />
&nbsp;&nbsp;&nbsp;&nbsp; registration, filing or declaration with,
any Governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; Authority is required to be obtained by
the Pledgor in<br />
&nbsp;&nbsp;&nbsp;&nbsp; connection with (a) the execution,
delivery or performance<br />
&nbsp;&nbsp;&nbsp;&nbsp; of this Agreement, (b) the validity or
enforceability of<br />
&nbsp;&nbsp;&nbsp;&nbsp; this Agreement or (c) the perfection or
enforceability of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledgee's security interest in the
Collateral;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp; the execution, delivery and performance of<br />
&nbsp;&nbsp;&nbsp;&nbsp; this Agreement will not violate any
provision of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; applicable Law or regulation or of any
order, judgment,<br />
&nbsp;&nbsp;&nbsp;&nbsp; writ, award or decree of any court,
arbitrator or<br />
&nbsp;&nbsp;&nbsp;&nbsp; Governmental Authority, domestic or
foreign, applicable to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledgor, or of the certificate of
incorporation,<br />
&nbsp;&nbsp;&nbsp;&nbsp; operating agreement, limited liability
company agreement,<br />
&nbsp;&nbsp;&nbsp;&nbsp; partnership agreement or by-laws of the
Pledgor or of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; securities or other interests issued by
the Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer, or of any mortgage, deed of trust,
indenture, lease,<br />
&nbsp;&nbsp;&nbsp;&nbsp; loan agreement, credit agreement or other
material contract,<br />
&nbsp;&nbsp;&nbsp;&nbsp; agreement or instrument or undertaking to
which the Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; or the Issuer is a party or by which any
of its assets may<br />
&nbsp;&nbsp;&nbsp;&nbsp; be bound and will not result in the
creation or imposition<br />
&nbsp;&nbsp;&nbsp;&nbsp; of (or the obligation to create or impose)
any lien or<br />
&nbsp;&nbsp;&nbsp;&nbsp; encumbrance on any of the assets of the
Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer except as contemplated by this
Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi) all of the Collateral consisting of Pledged<br />
&nbsp;&nbsp;&nbsp;&nbsp; Stock has been duly and validly issued and
acquired, is<br />
&nbsp;&nbsp;&nbsp;&nbsp; fully paid and non-assessable and is
subject to no options<br />
&nbsp;&nbsp;&nbsp;&nbsp; to purchase or similar rights; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp; (vii)the pledge and collateral assignment
to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee of the Collateral consisting of
Pledged Stock,<br />
&nbsp;&nbsp;&nbsp;&nbsp; together with continued possession by the
Pledgee of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; certificates, instruments, documents or
other writings<br />
&nbsp;&nbsp;&nbsp;&nbsp; evidencing the Pledged Stock and/or the
making of relevant<br />
&nbsp;&nbsp;&nbsp;&nbsp; filings or recordings and/or any other
action required to be<br />
&nbsp;&nbsp;&nbsp;&nbsp; taken in accordance with Section 3.2 (all
of which have been<br />
&nbsp;&nbsp;&nbsp;&nbsp; made or taken, as the case may be),
creates in favor of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee a valid and perfected first
priority security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interest in such Collateral, and the
proceeds thereof,<br />
&nbsp;&nbsp;&nbsp;&nbsp; subject to no prior Lien or encumbrance
(other than any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted Lien that is a non-consensual
lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law) or to any agreement
purporting to grant to<br />
&nbsp;&nbsp;&nbsp;&nbsp; any third party a Lien or encumbrance
(other than any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted Lien that is a non-consensual
lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law, and other than the Lien
created by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Utility Stock Pledge Agreement (65%)
-</font></p>

<p><font size="2" face=
"Device Font 10cpi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
- New Tranche B Loan)<br />
&nbsp;&nbsp;&nbsp;&nbsp; on the property or assets of the Pledgor
which would include<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledged Stock and the Pledgee is
entitled to all the<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights, priorities and benefits afforded
by the Uniform<br />
&nbsp;&nbsp;&nbsp;&nbsp; Commercial Code or other relevant law as
enacted in any<br />
&nbsp;&nbsp;&nbsp;&nbsp; relevant jurisdiction to perfected
security interests in<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect of such Collateral.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The Pledgor covenants and agrees that it will<br />
defend the Pledgee's right, title and security interest in and
to<br />
the Collateral and the proceeds thereof against the claims
and<br />
demands of all persons whomsoever; and the Pledgor covenants
and<br />
agrees that it will have like title to and right to pledge
any<br />
other property at any time hereafter pledged to the Pledgee
as<br />
Collateral hereunder and will likewise defend the right
thereto<br />
and security interest therein of the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17.&nbsp;
JURISDICTION OF ORGANIZATION; NAME.&nbsp;&nbsp;&nbsp; The<br />
Pledgor's name, jurisdiction of organization and
identification<br />
number are set forth in Annex B hereto.&nbsp; The Pledgor will
not<br />
change its name or its jurisdiction of organization, except
upon<br />
15 days' prior written notice to the Collateral Agent and<br />
delivery to the Collateral Agent of all additional executed<br />
financing statements and other documents reasonably requested
by<br />
the Collateral Agent to maintain the validity, perfection and<br />
priority of the security interests provided for herein.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18.&nbsp;
PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC.&nbsp; The<br />
obligations of the Pledgor under this Agreement shall be
absolute<br />
and unconditional and shall remain in full force and effect<br />
without regard to, and shall not be released, suspended,<br />
discharged, terminated or otherwise affected by, any
circumstance<br />
or occurrence whatsoever (except as provided under Section
20),<br />
including, without limitation:&nbsp; (i) any renewal,
extension,<br />
amendment or modification of or addition or supplement to or<br />
deletion from any Financing Document or any other instrument
or<br />
agreement referred to therein, or any assignment or transfer
of<br />
any thereof; (ii) any waiver, consent, extension, indulgence
or<br />
other action or inaction under or in respect of any such<br />
agreement or instrument including, without limitation, this<br />
Agreement; (iii) any furnishing of any additional security to
the<br />
Pledgee or its assignee or any acceptance thereof or any
release<br />
of any security by the Pledgee or its assignee (except as<br />
provided under Section 20); (iv) any limitation on any
party's<br />
liability or obligations under any such instrument or
agreement<br />
or any invalidity or unenforceability, in whole or in part,
of<br />
any such instrument or agreement or any term thereof; or (v)
any<br />
bankruptcy, insolvency, reorganization, composition,
adjustment,<br />
dissolution, liquidation or other like proceeding relating to
the<br />
Pledgor or the Issuer, or any action taken with respect to
this<br />
Agreement by any trustee or receiver, or by any court, in any<br />
such proceeding, whether or not the Pledgor shall have notice
or<br />
knowledge of any of the foregoing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19.&nbsp;
[OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20.&nbsp;
TERMINATION; RELEASE.&nbsp; After payment in full of<br />
the Secured Obligations and termination of the Credit
Agreement,<br />
this Agreement and the security interest created hereby shall<br />
terminate (provided that all indemnities set forth herein<br />
including, without limitation, in Section 11 hereof shall
survive<br />
any such termination), and the Pledgee, at the request and<br />
expense of the Pledgor, will execute and deliver to the Pledgor
a<br />
proper instrument or instruments acknowledging the
satisfaction<br />
and termination of this Agreement, and will duly assign,
transfer<br />
and deliver to the Pledgor (without recourse and without any<br />
representation or warranty) such of the Collateral as has not<br />
theretofore been sold or otherwise applied or released
pursuant<br />
to this Agreement, together with any monies at the time held
by<br />
the Pledgee or any of its sub-agents hereunder.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21.&nbsp;
NOTICES, ETC.&nbsp; All notices, requests, demands or<br />
other communications hereunder shall be made in the manner
and<br />
with the effect provided in Section 9.3 of the Credit
Agreement<br />
at the addresses provided below or at such other address as
shall<br />
have been furnished in writing by the relevant Person to the<br />
party required to give notice hereunder:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp; If
to the Pledgor, at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
One Market, Spear Tower Suite 2400<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco, CA 94105&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention: Assistant Treasurer&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel.: (415) 267-7052<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax.: (415) 267-7265<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
If to the Pledgee, at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deutsche Bank Trust Company Americas<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Corporate Trust and Agency Services<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
100 Plaza One, MS: 0603<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Jersey City, NJ 07311<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (201) 593-6832<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax: (201) 593-6420<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to the Administrative Agent at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lehman Commercial Paper Inc.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
745 Seventh Avenue<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New York, New York 10019<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Frank Turner/Rich Divito<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (212) 526-2696/(212) 526-2425<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp; Fax: (646) 758-1986/(646)
758-4618&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22.&nbsp;
WAIVER; AMENDMENT.&nbsp; None of the terms and<br />
conditions of this Agreement may be changed, waived, modified
or<br />
varied in any manner whatsoever unless in writing duly signed
by<br />
the Pledgor and the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23.&nbsp;
MISCELLANEOUS.&nbsp; This Agreement shall be binding<br />
upon the parties hereto and their respective successors and<br />
assigns and shall inure to the benefit of and be enforceable
by<br />
each of the parties hereto and its successors and assigns,<br />
provided that the Pledgor may not assign any of its rights or<br />
obligations under this Agreement without the prior consent of
the<br />
Pledgee.&nbsp; The headings in this Agreement are for purposes
of<br />
reference only and shall not limit or define the meaning
hereof.&nbsp;<br />
 This Agreement may be executed in any number of
counterparts,<br />
each of which shall be an original, but all of which shall<br />
constitute one instrument.&nbsp; In the event that any provision
of<br />
this Agreement shall prove to be invalid or unenforceable,
such<br />
provision shall be deemed to be severable from the other<br />
provisions of this Agreement which shall remain binding on
all<br />
parties hereto.&nbsp; The rights, powers, privileges and immunities
of<br />
the Collateral Agent set forth in the Credit Agreement shall<br />
apply to the Collateral Agent as if expressly set forth
herein.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24.&nbsp;
GOVERNING LAW.&nbsp;&nbsp; THIS AGREEMENT, INCLUDING ALL<br />
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE AND MATTERS<br />
RELATING TO THE CREATION, VALIDITY, ENFORCEMENT OR PRIORITY
OF<br />
THE SECURITY INTERESTS CREATED BY THIS AGREEMENT, SHALL BE<br />
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO<br />
THE CONFLICT OF LAWS RULES THEREOF (OTHER THAN SECTION 5-1401
OF<br />
THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS MAY BE
REQUIRED<br />
BY OTHER MANDATORY PROVISIONS OF LAW.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25.&nbsp;
WAIVER OF JURY TRIAL.&nbsp; EACH OF THE PARTIES HERETO<br />
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT<br />
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY<br />
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION<br />
WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF<br />
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY<br />
PARTY RELATING HERETO OR THERETO.&nbsp; THIS PROVISION IS A
MATERIAL<br />
INDUCEMENT FOR THE LENDERS TO ENTER INTO THE CREDIT AGREEMENT
AND<br />
THE OTHER FINANCING DOCUMENTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS
WHEREOF, the Pledgor, the Pledgee and the<br />
Administrative Agent have caused this Agreement to be executed
by<br />
their duly elected officers duly authorized as of the date
first<br />
above written.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGOR<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PETER A. DARBEE<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;</u> &nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Peter A. Darbee<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Senior Vice President<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Officer<br />
<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ADMINISTRATIVE AGENT<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JAMES P. SEERY, JR.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

</u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; James P. Seery,Jr.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp; Authorized Signatory<br />
<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGEE<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEUTSCHE BANK TRUST COMPANY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
AMERICAS, as Collateral Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
CARMENA BITAR DAY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

</u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Vice President<br />
<br />
&nbsp;<br />
 =================================================================<br />

<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX A<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LIST OF PLEDGED STOCK<br />
<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Number<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Type
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certificate No.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Issuer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp; Interest&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 Pacific Gas and Electric Company&nbsp;&nbsp;&nbsp;&nbsp;
Common&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;196,191,806&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ZQU11<br />

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stock<br />
&nbsp;<br />
 =================================================================</font></p>

<p><font size="2" face="Device Font 10cpi">&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX B<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT<br />
<br />
&nbsp;<br />
<br />
 &nbsp;<br />
<br />
 Name of Pledgor:
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
<br />
Jurisdiction of Organization:&nbsp;&nbsp;&nbsp; California<br />
<br />
Identification
Number:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
C1953580</font></p>
</div>
</body>
</html>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>7
<FILENAME>exhibit995.htm
<DESCRIPTION>UTILITY STOCK PLEDGE AGREEMENT (65%)-NEW TRANCHE B LOAN, DATED AS OF OCTOBER 18, 2002
<TEXT>
<head>
<title>Exhibit 99.5</title>
</head>
<body>
<div>
<p><font size="2" face=
"Courier New">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Exhibit 99.5<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EXECUTION COPY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>

<p><font size="2" face=
"Courier New">___________________________________________________________________________</font></p>

<p><font size="2" face="Courier New"><br />
<br />
UTILITY STOCK PLEDGE AGREEMENT (65%)-NEW TRANCHE B LOAN<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
by and among<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Pledgor<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DEUTSCHE BANK
TRUST COMPANY AMERICAS,<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Collateral Agent<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; for the benefit of the Lenders, as
Pledgee</font></p>

<p><font size="2" face=
"Courier New">___________________________________________________________________________</font></p>

<p><font size="2" face="Courier New"><br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dated as of October 18, 2002</font></p>

<p><font size="2" face=
"Courier New">___________________________________________________________________________</font></p>

<p><font size="2" face="Courier New"><br />
<br />
&nbsp;</font></p>

<p><font size="2" face="Courier New"><br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; UTILITY STOCK PLEDGE AGREEMENT (65%)-NEW
TRANCHE B LOAN<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; STOCK PLEDGE
AGREEMENT (65%)-NEW TRANCHE B LOAN&nbsp; (as<br />
amended, modified or supplemented from time to time, this<br />
"Agreement"), dated as of October 18, 2002, among PG&amp;E<br />
CORPORATION, a California corporation (the "Pledgor"),&nbsp;
LEHMAN<br />
COMMERCIAL PAPER INC., a corporation organized and existing
under<br />
the laws of the State of New York, as Administrative Agent
for<br />
the lenders (the "Lenders") from time to time parties to the<br />
Credit Agreement described below and DEUTSCHE BANK TRUST
COMPANY<br />
AMERICAS (the "Pledgee"), as Collateral Agent for the benefit
of<br />
the Lenders.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
W I T N E S S E T H :<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Pledgor, is a party to the Amended and<br />
Restated Credit Agreement, dated as of June 25, 2002 (as
amended,<br />
the "Existing Credit Agreement"), with the lenders parties<br />
thereto, Lehman Commercial Paper Inc., as Administrative
Agent,<br />
and others, pursuant to which such lenders made the Tranche A<br />
Loan (as defined in the Existing Credit Agreement, the
"Existing<br />
Tranche A Loan") and the Tranche B Loan (as defined in the<br />
Existing Credit Agreement, the "Existing Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS,
pursuant to the Second Amended and Restated<br />
Credit Agreement, dated as of the date hereof (as amended,<br />
supplemented or otherwise modified from time to time, the
"Credit<br />
Agreement"), among the Pledgor, the Lenders parties thereto,
the<br />
Administrative Agent and others, the Existing Credit Agreement
is<br />
being amended and restated in its entirety to modify certain
of<br />
the terms applicable to the Existing Tranche B Loan, which
shall<br />
continue to be outstanding under the Credit Agreement (the<br />
Existing Tranche B Loan, as so modified and continued, the<br />
"Continued Tranche B Loan"), to reflect repayment of the
Existing<br />
Tranche A Loan and to provide for the making of an additional<br />
Tranche B Loan (the "New Tranche B Loan");<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the
Pledgor owns 94% of the issued and<br />
outstanding common stock of&nbsp; Pacific Gas and Electric Company,
a<br />
California corporation (the "Issuer"); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, it
is a condition precedent to the obligation<br />
of the Lenders parties to the Existing Credit Agreement to
agree<br />
to amend and restate the Existing Credit Agreement,&nbsp; and&nbsp;
to the<br />
obligations of the Lenders to make the New Tranche B Loan
under<br />
the Credit Agreement, that this Agreement shall have been<br />
executed and delivered;&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW,
THEREFORE, in consideration of the foregoing<br />
premises and to induce the Administrative Agent and the
Lenders<br />
to enter into the Credit Agreement, the Pledgor hereby agrees<br />
with the Administrative Agent, for the benefit of the Lenders,
as<br />
follows:&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1. SECURITY
FOR OBLIGATIONS.&nbsp; This Agreement is made by<br />
the Pledgor for the benefit of the Pledgee, acting as
Collateral<br />
Agent for the benefit of the Lenders (as more particularly<br />
described in Section 3.1), to secure:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; the full and prompt payment when due (whether<br />
&nbsp;&nbsp;&nbsp;&nbsp; at the stated maturity, by acceleration or
otherwise) of all<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations of the Pledgor under the
Credit Agreement and<br />
&nbsp;&nbsp;&nbsp;&nbsp; the other Financing Documents in respect
of the New Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan,&nbsp; whether direct or indirect,
absolute or contingent,<br />
&nbsp;&nbsp;&nbsp;&nbsp; due or to become due, now existing or
hereafter arising and<br />
&nbsp;&nbsp;&nbsp;&nbsp; howsoever evidenced, and the due
performance and compliance<br />
&nbsp;&nbsp;&nbsp;&nbsp; by the Pledgor with the terms
thereof;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) any and all sums advanced by the Pledgee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; any New Tranche B Lender in order to
preserve the Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; or preserve its security interest in the
Collateral (as<br />
&nbsp;&nbsp;&nbsp;&nbsp; defined below); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)in the event of any proceeding for the<br />
&nbsp;&nbsp;&nbsp;&nbsp; collection or enforcement of any
indebtedness, obligations,<br />
&nbsp;&nbsp;&nbsp;&nbsp; or liabilities referred to in clauses (i)
and (ii) above,<br />
&nbsp;&nbsp;&nbsp;&nbsp; the reasonable expenses of retaking,
holding, preparing for<br />
&nbsp;&nbsp;&nbsp;&nbsp; sale or lease, selling or otherwise
disposing or realizing<br />
&nbsp;&nbsp;&nbsp;&nbsp; on the Collateral, or of any exercise by
the Pledgee of its<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights hereunder with respect thereto,
together with<br />
&nbsp;&nbsp;&nbsp;&nbsp; reasonable attorneys' fees and court costs
related thereto,<br />
<br />
all such obligations, liabilities, sums and expenses set forth
in<br />
clauses (i) through (iii) of this Section 1, whether now
existing<br />
or hereafter arising, being herein collectively called the<br />
"Secured Obligations".<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.
DEFINITIONS.&nbsp; (a)&nbsp; Unless otherwise defined herein,<br />
all capitalized terms used herein and defined, in Appendix A
to<br />
the Credit Agreement shall be used herein as therein defined,
and<br />
the principles of construction set forth in Appendix A to the<br />
Credit Agreement shall apply to this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; In
addition, the following capitalized terms used<br />
herein shall have the definitions specified below:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Agreement"
has the meaning set forth in the first<br />
&nbsp; &nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Collateral"
has the meaning set forth in Section 3.1<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Continued
Tranche B Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Credit
Agreement" has the meaning set forth in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Credit Agreement" has the meaning set forth<br />
&nbsp;&nbsp;&nbsp;&nbsp; in the first recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Existing Tranche A Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the first recital hereto.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Existing
Tranche B Loan" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the first recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Issuer" has
the meaning set forth in the third recital<br />
&nbsp;&nbsp;&nbsp;&nbsp; hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Lenders"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco
Spin" has the meaning set forth in the Credit<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Newco
Stock" means the Capital Stock of Newco Energy<br />
&nbsp;&nbsp;&nbsp;&nbsp; Corporation, a California
corporation.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Lender" means any Lender holding a New<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan, in its capacity as the
holder of such Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "New Tranche
B Loan" has the meaning set forth in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; second recital hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledged
Stock" means the shares of Capital Stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer described on Annex A hereto,
and any shares of&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp; Capital Stock of the Issuer at any time
issued in respect of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Capital Stock described on Annex A
hereto.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledgee"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Pledgor"
has the meaning set forth in the first<br />
&nbsp;&nbsp;&nbsp;&nbsp; paragraph hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Proceeds"
has the meaning given such term in the UCC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
"Secured Obligations" has the meaning set forth in<br />
&nbsp;&nbsp;&nbsp;&nbsp; Section 1 hereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Securities
Act" means the Securities Act of 1933, as<br />
&nbsp;&nbsp;&nbsp;&nbsp; amended and as in effect from time to
time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "UCC" means
the Uniform Commercial Code as in effect in<br />
&nbsp;&nbsp;&nbsp;&nbsp; the State of New York from time to
time.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (65%)-Continued Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan" means the Utility Stock Pledge
Agreement (65%)-<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan, dated as of the
date hereof, among<br />
&nbsp;&nbsp;&nbsp;&nbsp; the parties hereto, pursuant to which 65%
of the common<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; stock of the Issuer is being pledged to
secure Obligations<br />
&nbsp;&nbsp;&nbsp;&nbsp; relating to the Continued Tranche B
Loan.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (35%)-New Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loan" means the Utility Stock Pledge
Agreement (35%)-New<br />
&nbsp;&nbsp;&nbsp;&nbsp; Tranche B Loan, dated as of the date
hereof, among the<br />
&nbsp;&nbsp;&nbsp;&nbsp; parties hereto, pursuant to which 35% of
the common stock of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer is being pledged&nbsp; to
secure the Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; "Utility
Stock Pledge Agreement (35%)-Continued Tranche<br />
&nbsp;&nbsp;&nbsp;&nbsp; B Loan" means the Utility Stock Pledge
Agreement (35%)-<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan, dated as of the
date hereof, among<br />
&nbsp;&nbsp;&nbsp;&nbsp; the parties hereto, pursuant to which the
Collateral is<br />
&nbsp;&nbsp;&nbsp;&nbsp; being pledged&nbsp; to secure Obligations
relating to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Continued Tranche B Loan.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3. PLEDGE
OF PLEDGED STOCK, ETC.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.1&nbsp;
Pledge. (a)&nbsp; The Pledgor hereby transfers, pledges<br />
and assigns to the Pledgee, and grants to the Pledgee a first<br />
priority security interest in, all of the right, title and<br />
interest of the Pledgor in and to the following, whether now<br />
existing or hereafter from time to time acquired by the
Pledgor<br />
(collectively, the "Collateral"):<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)&nbsp;
the Pledged Stock;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) all
other property hereafter delivered in<br />
&nbsp;&nbsp;&nbsp;&nbsp; substitution for any of the Pledged Stock,
all certificates<br />
&nbsp;&nbsp;&nbsp;&nbsp; and instruments representing or evidencing
such other<br />
&nbsp;&nbsp;&nbsp;&nbsp; property and all cash, securities,
interest, dividends,<br />
&nbsp;&nbsp;&nbsp;&nbsp; distributions rights and other property at
any time and from<br />
&nbsp;&nbsp;&nbsp;&nbsp; time to time received, receivable or
otherwise distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; in respect of or in exchange for any or
all thereof<br />
&nbsp;&nbsp;&nbsp;&nbsp; (including, without limitation, any Newco
Stock distributed<br />
&nbsp;&nbsp;&nbsp;&nbsp; to the Pledgor in respect of the Pledged
Stock in connection<br />
&nbsp;&nbsp;&nbsp;&nbsp; with the Newco Spin); and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)&nbsp;&nbsp;&nbsp;&nbsp; all Proceeds of any and all of the
foregoing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The foregoing transfer, pledge, assignment and<br />
grant of a security interest is made to secure the prompt and<br />
complete payment and performance when due of the Secured<br />
Obligations.<br />
&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
Concurrently herewith, the parties hereto are<br />
entering into the Utility Stock Pledge Agreement
(65%)-Continued<br />
Tranche B Loan. It is the intention of the parties hereto and<br />
thereto that the security interest and lien created hereby
shall<br />
be a separate security interest and lien from that created by
the<br />
Utility Stock Pledge Agreement (65%)-Continued Tranche B
Loan,<br />
and that the security interest and lien created hereby shall
be<br />
equal in priority to that created by the Utility Stock Pledge<br />
<br />
Agreement (65%)-Continued Tranche B Loan.&nbsp; It is also
the<br />
intention of the parties hereto and thereto that any
avoidance,<br />
pursuant to Sections 547 and 550 of the Bankruptcy Code, of
the<br />
security interest and lien created by the Utility Stock
Pledge<br />
Agreement (65%)-Continued Tranche B Loan shall have no effect
on<br />
the lien and security interest created hereby, which shall<br />
continue as a perfected first priority interest in the
Collateral<br />
securing the Secured Obligations notwithstanding any such<br />
avoidance of the security interest and lien created by the<br />
Utility Stock Pledge Agreement (65%) - Continued Tranche B
Loan.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (d)&nbsp;
Concurrently herewith, the parties hereto are<br />
entering into the Utility Stock Pledge Agreement
(35%)-Continued<br />
Tranche B Loan and the Utility Stock Pledge Agreement
(35%)-New<br />
Tranche B Loan, in each case covering collateral that is
separate<br />
and distinct from the Collateral. It is the intention of the<br />
parties hereto and thereto that the security interest and
lien<br />
created hereby shall be a separate security interest and lien<br />
from those created by the Utility Stock Pledge Agreement
(35%)-<br />
Continued Tranche B Loan and the Utility Stock Pledge
Agreement<br />
(35%)-New Tranche B Loan.&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; 3.2&nbsp;
Procedures.&nbsp; (a)&nbsp; To the extent that the Pledgor<br />
at any time or from time to time owns, acquires or obtains
any<br />
right, title or interest in any Collateral, such Collateral
shall<br />
automatically (and without the taking of any action by the<br />
Pledgor) be pledged pursuant to Section 3.1 of this Agreement<br />
and, in addition thereto, the Pledgor shall (as promptly as<br />
practicable and, in any event, within 10 days after it
obtains<br />
such Collateral) deliver to the Pledgee any stock
certificates<br />
evidencing such Collateral, duly endorsed in blank, and take
such<br />
other actions as the Pledgee shall reasonably request to
perfect<br />
the Pledgee's security interest in such Collateral.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
In addition to the actions required to be taken<br />
pursuant to Section 3.2(a) hereof, the Pledgor shall from time
to<br />
time, at the sole expense of the Pledgor, cause appropriate<br />
financing statements (on Form UCC-1 or other appropriate
form)<br />
under the Uniform Commercial Code as in effect in the various<br />
relevant States, in form covering all Collateral hereunder
(with<br />
the form of such financing statements to be satisfactory to
the<br />
Pledgee), to be filed in the relevant filing offices so that
at<br />
all times the Pledgee has a security interest in all
Collateral<br />
which is perfected by the filing of such financing statements
(in<br />
each case to the maximum extent perfection by filing may be<br />
obtained under the laws of any relevant State).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.3&nbsp;
Subsequently Acquired Collateral.&nbsp; If the Pledgor<br />
shall acquire (by purchase, dividend or similar distribution
or<br />
otherwise) any additional Collateral at any time or from time
to<br />
time after the date hereof, such Collateral shall
automatically<br />
(and without any further action being required to be taken)
be<br />
subject to the pledge and security interests created pursuant
to<br />
Section 3.1 hereof and, furthermore, the Pledgor will
promptly<br />
<br />
thereafter take (or cause to be taken) all action with respect
to<br />
such Collateral in accordance with the procedures set forth
in<br />
Section 3.2 hereof, and will promptly thereafter deliver to
the<br />
Pledgee (i) a certificate executed by a principal executive<br />
officer of the Pledgor describing such Collateral and
certifying<br />
that the same has been duly pledged in favor of the Pledgee
(for<br />
the benefit of the Lenders) hereunder and (ii) supplements to<br />
Annexes A and B hereto as are reasonably necessary to cause
such<br />
annexes to be complete and accurate at such time.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.4&nbsp;
Transfer Taxes.&nbsp; Each pledge of Collateral under<br />
Section 3.1 hereof shall be accompanied by any transfer tax<br />
stamps required in connection with the pledge of such
Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.5&nbsp;
Certain Representations and Warranties Regarding<br />
the Collateral.&nbsp; The Pledgor represents and warrants that on
the<br />
date hereof (i) the Pledged Stock consists of the number and
type<br />
of shares described in Annex A hereto; (ii) the Pledged Stock<br />
constitutes that percentage of the issued and outstanding
common<br />
stock of the Issuer as is set forth in Annex A hereto; and
(iii)<br />
the Pledgor has complied with the respective procedure set
forth<br />
in Sections 3.2(a) and (b) hereof with respect to each item
of<br />
Collateral hereunder.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.
APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.&nbsp; If<br />
and to the extent necessary to enable the Pledgee to perfect
its<br />
security interest in any of the Collateral or to exercise any
of<br />
its remedies hereunder, the Pledgee shall have the right to<br />
appoint one or more sub-agents for the purpose of retaining<br />
physical possession of the Collateral, which may be held in
the<br />
name of the Pledgor, endorsed or assigned in blank or in favor
of<br />
the Pledgee or any nominee or nominees of the Pledgee or a
sub-<br />
agent appointed by the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5. VOTING,
ETC.&nbsp; The Pledgor shall be entitled to<br />
exercise any and all voting and other consensual rights<br />
pertaining to the Collateral owned by it, and to give
consents,<br />
waivers or ratifications in respect thereof.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6. DIVIDENDS
AND OTHER DISTRIBUTIONS.&nbsp; All cash<br />
dividends, cash distributions, cash Proceeds and other cash<br />
amounts payable in respect of the Collateral shall be
received<br />
(a) by the Pledgor,&nbsp; if no Event of Default shall have
occurred<br />
and be continuing and (b) by the Pledgee, if any Event of
Default<br />
shall have occurred and be continuing&nbsp; (all of which amounts
so<br />
received by the Pledgee to be delivered by the Pledgee to the<br />
Administrative Agent for application toward prepayment of the<br />
Secured Obligations).&nbsp; The Pledgee shall also be entitled
to<br />
receive directly, and to retain as part of the Collateral:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property (including, but not limited
to, cash<br />
&nbsp;&nbsp;&nbsp;&nbsp; dividends other than as set forth above)
paid or distributed<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; by way of dividend or otherwise in respect
of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property paid or distributed in
respect of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral by way of split, spin-off,
split-up,<br />
&nbsp;&nbsp;&nbsp;&nbsp; reclassification, combination or similar
rearrangement;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)all other or additional capital stock or<br />
&nbsp;&nbsp;&nbsp;&nbsp; other property (including, but not limited
to, cash) which<br />
&nbsp;&nbsp;&nbsp;&nbsp; may be paid in respect of the Collateral
by reason of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; consolidation, merger, exchange,
conveyance of assets,<br />
&nbsp;&nbsp;&nbsp;&nbsp; liquidation or similar reorganization;
and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) without limiting the generality of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; foregoing, all shares of Newco Stock
distributed in respect<br />
&nbsp;&nbsp;&nbsp;&nbsp; of the Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nothing
contained in this Section 6 shall limit or<br />
restrict in any way the Pledgee's right to have pledged to it<br />
proceeds of the Collateral in any form in accordance with
Section<br />
3 of this Agreement.&nbsp; All dividends, distributions or
other<br />
payments which are received by the Pledgor contrary to the<br />
provisions of this Section 6 and Section 7 hereof shall be<br />
received in trust for the benefit of the Pledgee, shall be<br />
segregated from other property or funds of the Pledgor and
shall<br />
be forthwith paid over to the Pledgee as Collateral in the
same<br />
form as so received (with any necessary endorsement).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 7.
LIMITATION ON REMEDIES.&nbsp; It is expressly agreed<br />
that, subject to Section 8 hereof, notwithstanding the
occurrence<br />
of any Default or Event of Default, neither the Pledgee, the<br />
Administrative Agent, nor any Lender, nor any Person acting
on<br />
behalf of any thereof, shall have any right:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; to transfer all or any part of the Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; into the Pledgee's name or the name of its
nominee or<br />
&nbsp;&nbsp;&nbsp;&nbsp; nominees;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) to vote all or any part of the Collateral,<br />
&nbsp;&nbsp;&nbsp;&nbsp; give consents, waivers and ratifications
in respect of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral or otherwise act with respect
thereto as though<br />
&nbsp;&nbsp;&nbsp;&nbsp; it were the outright owner thereof or to
exercise any of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; rights or powers of a stockholder of the
Issuer;<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)to sell, assign or deliver, or grant options<br />
&nbsp;&nbsp;&nbsp;&nbsp; to purchase, all or any part of the
Collateral, or any<br />
&nbsp;&nbsp;&nbsp;&nbsp; interest therein, or otherwise foreclose
on any of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral; or<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) to set-off any Collateral against any Secured<br />
&nbsp;&nbsp;&nbsp;&nbsp; Obligations and to apply such Collateral
to the payment of<br />
&nbsp;&nbsp;&nbsp;&nbsp; any Secured Obligations;<br />
<br />
provided, however, that in the event of any sale or other<br />
disposition of any of the Collateral, the Pledgee shall be<br />
entitled to receive the Proceeds thereof, whether such sale
or<br />
other disposition is consummated in connection with a
bankruptcy<br />
proceeding in respect of the Pledgor, or otherwise (it being<br />
agreed by the parties hereto that this Agreement creates in
favor<br />
of the Pledgee a first priority security interest in the<br />
Collateral notwithstanding that the Pledgee has agreed not to<br />
exercise remedies of a secured party in respect of the<br />
Collateral).&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 8.
REMEDIES IN RESPECT OF COLLATERAL OTHER THAN PLEDGED<br />
STOCK, ETC. Anything herein or in any other Financing
Document<br />
to the contrary notwithstanding, (a) the Pledgee shall have,
in<br />
respect of all Collateral other than the Pledged Stock and
any<br />
shares of Newco Stock that may become Collateral hereunder,
all<br />
rights and remedies granted to the Pledgee under the Utility<br />
Stock Pledge Agreement (35%)-New Tranche B Loan, including,<br />
without limitation, all rights and remedies of a secured
party<br />
under Article 9 of the UCC and (b) in the event of a
bankruptcy<br />
proceeding in respect of the Pledgor, the Pledgee shall have,
in<br />
respect of the Pledgor and all Collateral, all rights and<br />
remedies of a secured creditor, subject to the Bankruptcy
Code.<br />
<br />
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9.
APPLICATION OF PROCEEDS.&nbsp; All monies collected by<br />
the Pledgee upon any sale or other disposition of the
Collateral<br />
pursuant to the terms of this Agreement, together with all
other<br />
monies received by the Pledgee hereunder, shall be applied at
the<br />
written instruction of the Administrative Agent for
satisfaction<br />
of the Secured Obligations in the order provided in the
Credit<br />
Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.&nbsp;
[OMITTED].&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 11.&nbsp;
[OMITTED]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 12.&nbsp;
CERTAIN LIMITATIONS&nbsp; (a)&nbsp; The Pledgee shall not be<br />
obligated to perform or discharge any obligation of the
Pledgor<br />
as a result of the pledge hereby effected.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The acceptance by the Pledgee of this Agreement,<br />
with all the rights, powers, privileges and authority so
created,<br />
shall not at any time or in any event obligate the Pledgee to<br />
appear in or defend any action or proceeding relating to the<br />
Collateral to which it is not a party, or to take any action<br />
hereunder or thereunder, or to expend any money or incur any<br />
expenses or perform or discharge any obligation, duty or<br />
liability under the Collateral.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (c)&nbsp;
Nothing in this Agreement shall obligate the<br />
Pledgor to sell or otherwise dispose of the Pledged Stock or
any<br />
<br />
shares of Newco Stock that may become Collateral hereunder
during<br />
the continuance of an Event of Default or otherwise.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13.&nbsp;
FURTHER ASSURANCES; POWER-OF-ATTORNEY.&nbsp; (a)&nbsp; At<br />
any time and from time to time, upon the written request of
the<br />
Pledgee, and at the sole expense of the Pledgor, the Pledgor
will<br />
promptly and duly execute and deliver any and all such
further<br />
instruments and documents and take such further action as the<br />
Pledgee reasonably may deem appropriate in order to perfect
and<br />
preserve the Pledgee's security interest in the Collateral and
in<br />
order for the Pledgee to obtain the full benefits of this<br />
Agreement and of the rights and powers herein granted,
including,<br />
without limitation, the filing of any financing or
continuation<br />
statements under the Uniform Commercial Code in effect in any<br />
jurisdiction and the filing of any other equivalent or
similar<br />
statement or document under any other applicable Law with any<br />
other applicable Governmental Authority with respect to the<br />
security interests granted hereby.&nbsp; The Pledgor also
hereby<br />
authorizes the Pledgee to file any such financing or
continuation<br />
statement without the signature of the Pledgor to the extent<br />
permitted by applicable Law.&nbsp; If any amount payable under or
in<br />
connection with any of the Collateral shall be or become<br />
evidenced by any promissory note or other instrument, such
note<br />
or instrument shall be immediately delivered to the Pledgee
and<br />
pledged to the Pledgee hereunder, duly endorsed, to the
extent<br />
necessary, to the Pledgee.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The Pledgor hereby appoints the Pledgee such<br />
Pledgor's attorney-in-fact, with full authority in the place
and<br />
stead of the Pledgor and in the name of the Pledgor or
otherwise,<br />
to act from time to time, solely after the occurrence and
during<br />
the continuance of an Event of Default and subject to the
Credit<br />
Agreement, in the Pledgee's reasonable discretion to take any<br />
action and to execute any instrument which the Pledgee may
deem<br />
reasonably necessary or advisable to accomplish the purposes
of<br />
this Agreement.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14.&nbsp;
[OMITTED]<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15.&nbsp;
TRANSFER BY THE PLEDGOR.&nbsp; The Pledgor will not<br />
sell or otherwise dispose of, grant any option with respect
to,<br />
or mortgage, pledge or otherwise encumber any of the
Collateral<br />
or any interest therein (except as may be permitted in
accordance<br />
with the terms of the Financing Documents).<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16.&nbsp;
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE<br />
PLEDGOR.&nbsp; (a)&nbsp; The Pledgor represents, warrants and
covenants<br />
that:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp; it is the legal, beneficial and record owner<br />
&nbsp;&nbsp;&nbsp;&nbsp; of, and has good and marketable title to,
all Collateral<br />
&nbsp;&nbsp;&nbsp;&nbsp; consisting of Pledged Stock and it has all
rights in the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Collateral necessary for the security
interest purported to<br />
&nbsp;&nbsp;&nbsp;&nbsp; be created hereunder to attach (subject,
in each case, to no<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp; pledge, lien, security interest, charge,
option or other<br />
&nbsp;&nbsp;&nbsp;&nbsp; encumbrance whatsoever, except the liens
and security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interests created by this
Agreement);&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) it has full power, authority and legal right<br />
&nbsp;&nbsp;&nbsp;&nbsp; to pledge all the Collateral pledged by it
pursuant to this<br />
&nbsp;&nbsp;&nbsp;&nbsp; Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii)this Agreement has been duly authorized,<br />
&nbsp;&nbsp;&nbsp;&nbsp; executed and delivered by the Pledgor and
constitutes a<br />
&nbsp;&nbsp;&nbsp;&nbsp; legal, valid and binding obligation of the
Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; enforceable against the Pledgor in
accordance with its<br />
&nbsp;&nbsp;&nbsp;&nbsp; terms, except to the extent that the
enforceability hereof<br />
&nbsp;&nbsp;&nbsp;&nbsp; may be limited by applicable bankruptcy,
insolvency,<br />
&nbsp;&nbsp;&nbsp;&nbsp; reorganization, moratorium or other
similar laws generally<br />
&nbsp;&nbsp;&nbsp;&nbsp; affecting creditors' rights and by
equitable principles<br />
&nbsp;&nbsp;&nbsp;&nbsp; (regardless of whether enforcement is
sought in equity or at<br />
&nbsp;&nbsp;&nbsp;&nbsp; law);&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iv) except to the extent already obtained or<br />
&nbsp;&nbsp;&nbsp;&nbsp; made, no consent of any other party
(including, without<br />
&nbsp;&nbsp;&nbsp;&nbsp; limitation, any stockholder or creditor of
the Pledgor or<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Issuer) and no consent, license,
permit, approval or<br />
&nbsp;&nbsp;&nbsp;&nbsp; authorization of, exemption by, notice or
report to, or<br />
&nbsp;&nbsp;&nbsp;&nbsp; registration, filing or declaration with,
any Governmental<br />
&nbsp;&nbsp;&nbsp;&nbsp; Authority is required to be obtained by
the Pledgor in<br />
&nbsp;&nbsp;&nbsp;&nbsp; connection with (a) the execution,
delivery or performance<br />
&nbsp;&nbsp;&nbsp;&nbsp; of this Agreement, (b) the validity or
enforceability of<br />
&nbsp;&nbsp;&nbsp;&nbsp; this Agreement or (c) the perfection or
enforceability of<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledgee's security interest in the
Collateral;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(v)&nbsp; the execution, delivery and performance of<br />
&nbsp;&nbsp;&nbsp;&nbsp; this Agreement will not violate any
provision of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; applicable Law or regulation or of any
order, judgment,<br />
&nbsp;&nbsp;&nbsp;&nbsp; writ, award or decree of any court,
arbitrator or<br />
&nbsp;&nbsp;&nbsp;&nbsp; Governmental Authority, domestic or
foreign, applicable to<br />
&nbsp;&nbsp;&nbsp;&nbsp; the Pledgor, or of the certificate of
incorporation,<br />
&nbsp;&nbsp;&nbsp;&nbsp; operating agreement, limited liability
company agreement,<br />
&nbsp;&nbsp;&nbsp;&nbsp; partnership agreement or by-laws of the
Pledgor or of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; securities or other interests issued by
the Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer, or of any mortgage, deed of trust,
indenture, lease,<br />
&nbsp;&nbsp;&nbsp;&nbsp; loan agreement, credit agreement or other
material contract,<br />
&nbsp;&nbsp;&nbsp;&nbsp; agreement or instrument or undertaking to
which the Pledgor<br />
&nbsp;&nbsp;&nbsp;&nbsp; or the Issuer is a party or by which any
of its assets may<br />
&nbsp;&nbsp;&nbsp;&nbsp; be bound and will not result in the
creation or imposition<br />
&nbsp;&nbsp;&nbsp;&nbsp; of (or the obligation to create or impose)
any lien or<br />
&nbsp;&nbsp;&nbsp;&nbsp; encumbrance on any of the assets of the
Pledgor or the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Issuer except as contemplated by this
Agreement;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi) all of the Collateral consisting of Pledged<br />
&nbsp;&nbsp;&nbsp;&nbsp; Stock has been duly and validly issued and
acquired, is<br />
&nbsp;&nbsp;&nbsp;&nbsp; fully paid and non-assessable and is
subject to no options<br />
&nbsp;&nbsp;&nbsp;&nbsp; to purchase or similar rights; and<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vii)the pledge and collateral assignment to the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee of the Collateral consisting of
Pledged Stock,<br />
&nbsp;&nbsp;&nbsp;&nbsp; together with continued possession by the
Pledgee of any<br />
&nbsp;&nbsp;&nbsp;&nbsp; certificates, instruments, documents or
other writings<br />
&nbsp;&nbsp;&nbsp;&nbsp; evidencing the Pledged Stock and/or the
making of relevant<br />
&nbsp;&nbsp;&nbsp;&nbsp; filings or recordings and/or any other
action required to be<br />
&nbsp;&nbsp;&nbsp;&nbsp; taken in accordance with Section 3.2 (all
of which have been<br />
&nbsp;&nbsp;&nbsp;&nbsp; made or taken, as the case may be),
creates in favor of the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Pledgee a valid and perfected first
priority security<br />
&nbsp;&nbsp;&nbsp;&nbsp; interest in such Collateral, and the
proceeds thereof,<br />
&nbsp;&nbsp;&nbsp;&nbsp; subject to no prior Lien or encumbrance
(other than any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted Lien that is a non-consensual
lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law) or to any agreement
purporting to grant to<br />
&nbsp;&nbsp;&nbsp;&nbsp; any third party a Lien or encumbrance
(other than any<br />
&nbsp;&nbsp;&nbsp;&nbsp; Permitted Lien that is a non-consensual
lien arising by<br />
&nbsp;&nbsp;&nbsp;&nbsp; operation of law, and other than the Lien
created by the<br />
&nbsp;&nbsp;&nbsp;&nbsp; Utility Stock Pledge Agreement (65%) -
Continued Tranche B<br />
&nbsp;&nbsp;&nbsp;&nbsp; Loan) on the property or assets of the
Pledgor which would<br />
&nbsp;&nbsp;&nbsp;&nbsp; include the Pledged Stock and the Pledgee
is entitled to all<br />
&nbsp;&nbsp;&nbsp;&nbsp; the rights, priorities and benefits
afforded by the Uniform<br />
&nbsp;&nbsp;&nbsp;&nbsp; Commercial Code or other relevant law as
enacted in any<br />
&nbsp;&nbsp;&nbsp;&nbsp; relevant jurisdiction to perfected
security interests in<br />
&nbsp;&nbsp;&nbsp;&nbsp; respect of such Collateral.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp;
The Pledgor covenants and agrees that it will<br />
defend the Pledgee's right, title and security interest in and
to<br />
the Collateral and the proceeds thereof against the claims
and<br />
demands of all persons whomsoever; and the Pledgor covenants
and<br />
agrees that it will have like title to and right to pledge
any<br />
other property at any time hereafter pledged to the Pledgee
as<br />
Collateral hereunder and will likewise defend the right
thereto<br />
and security interest therein of the Pledgee.<br />
<br />
&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17.&nbsp;
JURISDICTION OF ORGANIZATION; NAME.&nbsp;&nbsp;&nbsp; The<br />
Pledgor's name, jurisdiction of organization and
identification<br />
number are set forth in Annex B hereto.&nbsp; The Pledgor will
not<br />
change its name or its jurisdiction of organization, except
upon<br />
15 days' prior written notice to the Collateral Agent and<br />
delivery to the Collateral Agent of all additional executed<br />
financing statements and other documents reasonably requested
by<br />
the Collateral Agent to maintain the validity, perfection and<br />
priority of the security interests provided for herein.&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18.&nbsp;
PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC.&nbsp; The<br />
obligations of the Pledgor under this Agreement shall be
absolute<br />
and unconditional and shall remain in full force and effect<br />
without regard to, and shall not be released, suspended,<br />
discharged, terminated or otherwise affected by, any
circumstance<br />
or occurrence whatsoever (except as provided under Section
20),<br />
including, without limitation:&nbsp; (i) any renewal,
extension,<br />
amendment or modification of or addition or supplement to or<br />
deletion from any Financing Document or any other instrument
or<br />
agreement referred to therein, or any assignment or transfer
of<br />
any thereof; (ii) any waiver, consent, extension, indulgence
or<br />
<br />
other action or inaction under or in respect of any such<br />
agreement or instrument including, without limitation, this<br />
Agreement; (iii) any furnishing of any additional security to
the<br />
Pledgee or its assignee or any acceptance thereof or any
release<br />
of any security by the Pledgee or its assignee (except as<br />
provided under Section 20); (iv) any limitation on any
party's<br />
liability or obligations under any such instrument or
agreement<br />
or any invalidity or unenforceability, in whole or in part,
of<br />
any such instrument or agreement or any term thereof; or (v)
any<br />
bankruptcy, insolvency, reorganization, composition,
adjustment,<br />
dissolution, liquidation or other like proceeding relating to
the<br />
Pledgor or the Issuer, or any action taken with respect to
this<br />
Agreement by any trustee or receiver, or by any court, in any<br />
such proceeding, whether or not the Pledgor shall have notice
or<br />
knowledge of any of the foregoing.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19.&nbsp;
[OMITTED].<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20.&nbsp;
TERMINATION; RELEASE.&nbsp; After payment in full of<br />
the Secured Obligations and termination of the Credit
Agreement,<br />
this Agreement and the security interest created hereby shall<br />
terminate (provided that all indemnities set forth herein<br />
including, without limitation, in Section 11 hereof shall
survive<br />
any such termination), and the Pledgee, at the request and<br />
expense of the Pledgor, will execute and deliver to the Pledgor
a<br />
proper instrument or instruments acknowledging the
satisfaction<br />
and termination of this Agreement, and will duly assign,
transfer<br />
and deliver to the Pledgor (without recourse and without any<br />
representation or warranty) such of the Collateral as has not<br />
theretofore been sold or otherwise applied or released
pursuant<br />
to this Agreement, together with any monies at the time held
by<br />
the Pledgee or any of its sub-agents hereunder.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21.&nbsp;
NOTICES, ETC.&nbsp; All notices, requests, demands or<br />
other communications hereunder shall be made in the manner
and<br />
with the effect provided in Section 9.3 of the Credit
Agreement<br />
at the addresses provided below or at such other address as
shall<br />
have been furnished in writing by the relevant Person to the<br />
party required to give notice hereunder:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp; If
to the Pledgor, at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
One Market, Spear Tower Suite
2400&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
San Francisco, CA 94105<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Assistant Treasurer&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel.: (415) 267-7052<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax.:&nbsp; (415) 267-7265<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (b)&nbsp; If
to the Pledgee, at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deutsche Bank Trust Company Americas<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Corporate Trust and Agency Services<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
100 Plaza One, MS: 0603<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Jersey City, NJ 07311<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (201) 593-6832<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fax: (201)
593-6420<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
with a copy to the Administrative Agent at:<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lehman Commercial Paper Inc.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
745 Seventh Avenue<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New York, New York 10019<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Attention:&nbsp; Frank Turner/Rich Divito<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Tel: (212) 526-2696/(212) 526-2425<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fax: (646) 758-1986/(646) 758-4618&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22.&nbsp;
WAIVER; AMENDMENT.&nbsp; None of the terms and<br />
conditions of this Agreement may be changed, waived, modified
or<br />
varied in any manner whatsoever unless in writing duly signed
by<br />
the Pledgor and the Pledgee.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23.&nbsp;
MISCELLANEOUS.&nbsp; This Agreement shall be binding<br />
upon the parties hereto and their respective successors and<br />
assigns and shall inure to the benefit of and be enforceable
by<br />
each of the parties hereto and its successors and assigns,<br />
provided that the Pledgor may not assign any of its rights or<br />
obligations under this Agreement without the prior consent of
the<br />
Pledgee.&nbsp; The headings in this Agreement are for purposes
of<br />
reference only and shall not limit or define the meaning
hereof.&nbsp;<br />
 This Agreement may be executed in any number of
counterparts,<br />
each of which shall be an original, but all of which shall<br />
constitute one instrument.&nbsp; In the event that any provision
of<br />
this Agreement shall prove to be invalid or unenforceable,
such<br />
provision shall be deemed to be severable from the other<br />
provisions of this Agreement which shall remain binding on
all<br />
parties hereto.&nbsp; The rights, powers, privileges and immunities
of<br />
the Collateral Agent set forth in the Credit Agreement shall<br />
apply to the Collateral Agent as if expressly set forth
herein.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24.&nbsp;
GOVERNING LAW.&nbsp;&nbsp; THIS AGREEMENT, INCLUDING ALL<br />
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE AND MATTERS<br />
RELATING TO THE CREATION, VALIDITY, ENFORCEMENT OR PRIORITY
OF<br />
THE SECURITY INTERESTS CREATED BY THIS AGREEMENT, SHALL BE<br />
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO<br />
THE CONFLICT OF LAWS RULES THEREOF (OTHER THAN SECTION 5-1401
OF<br />
THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS MAY BE
REQUIRED<br />
BY OTHER MANDATORY PROVISIONS OF LAW.&nbsp;&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25.&nbsp;
WAIVER OF JURY TRIAL.&nbsp; EACH OF THE PARTIES HERETO<br />
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT<br />
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY<br />
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION<br />
WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF<br />
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY<br />
PARTY RELATING HERETO OR THERETO.&nbsp; THIS PROVISION IS A
MATERIAL<br />
<br />
INDUCEMENT FOR THE LENDERS TO ENTER INTO THE CREDIT AGREEMENT
AND<br />
THE OTHER FINANCING DOCUMENTS.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS
WHEREOF, the Pledgor, the Pledgee and the<br />
Administrative Agent have caused this Agreement to be executed
by<br />
their duly elected officers duly authorized as of the date
first<br />
above written.<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGOR<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E CORPORATION<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PETER A. DARBEE<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name: Peter A. Darbee<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp; Senior Vice President<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial Officer<br />
<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ADMINISTRATIVE AGENT<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LEHMAN COMMERCIAL PAPER INC.,<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
as Administrative Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
JAMES P. SEERY, JR.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; James P. Seery,Jr.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp; Authorized Signatory<br />
<br />
&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGEE<br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
DEUTSCHE BANK TRUST COMPANY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
AMERICAS, as Collateral Agent&nbsp;<br />
<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
CARMENA BITAR DAY<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp; Carmina Bitar Day<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Title:&nbsp;&nbsp;&nbsp; Vice President<br />
</font></p>

<p><font size="2" face="Courier New"><br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX A<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT</font></p>

<p><font size="2" face="Courier New"><br />
&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
LIST OF PLEDGED STOCK</font></p>

<p><font size="2" face="Courier New"><br />
<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Number<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Type
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certificate No.<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Issuer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br />

 Pacific Gas
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Common&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
196,191,806&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ZQU11_<br />
Electric
Company&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stock&nbsp;&nbsp;&nbsp;&nbsp;</font></p>

<p><font size="2" face=
"Courier New">__________________________________________________________________________<br />

<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
ANNEX B<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp; to<br />
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PLEDGE AGREEMENT<br />
<br />
<br />
Name of
Pledgor:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation<br />
<br />
Jurisdiction of Organization:&nbsp;&nbsp;&nbsp; California<br />
<br />
Identification
Number:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
C1953580</font></p>
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