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Exhibit 10-2

CREDIT AND REIMBURSEMENT AGREEMENT

        This CREDIT AND REIMBURSEMENT AGREEMENT dated as of January 31, 2001
(this "Agreement") is made by and among (a) SITHE BOSTON GENERATING, LLC, a
Delaware limited liability company (the "Borrower"), (b) the financial
institutions listed on the signature pages hereof under the heading "The
Lenders" and the other financial institutions from time to time party hereto
(each, a "Lender" and collectively, the "Lenders"), (c) BNP PARIBAS, as
administrative agent for the Lenders (the "Administrative Agent"), and
(d) BAYERISCHE LANDESBANK GIROZENTRALE, in its capacity as issuer of the DSR
Letter of Credit (the "DSR LC Issuer") and BNP PARIBAS, in its capacity as the
issuer of the Project Letters of Credit (the "Project LC Issuer" and together
with the DSR LC Issuer, the "LC Issuers").

PRELIMINARY STATEMENT

        Each of Sithe Mystic LLC, Sithe Mystic Development LLC and Sithe Fore
River Development, LLC (collectively, the "Project Companies") are wholly-owned
subsidiaries of the Borrower. The Borrower is a wholly-owned indirect subsidiary
of Sithe Energies, Inc. ("Sithe").

        Sithe Mystic LLC owns a 1,005 MW electric generating facility in
operation in Boston and Everett, Massachusetts (the "Sithe Mystic Project").
Sithe Mystic Development LLC owns a 2 × 800 MW combined-cycle electric
generating facility under construction which is adjacent to the Mystic Station
Project in Everett, Massachusetts (the "Mystic 8&9 Project"). Sithe Fore River
Development, LLC owns an 800 MW combined-cycle electric generating facility
under construction in Weymouth and Quincy, Massachusetts (the "Fore River
Project", and together with the Sithe Mystic Project and the Mystic 8&9 Project,
the "Projects").

        In connection with the development, construction and operation of the
Projects, the Borrower has requested that the Lenders provide senior secured
credit facilities in an aggregate amount of $1,250,000,000. The Lenders have
agreed to provide such financing on the terms and subject to the conditions set
forth in this Agreement.

        The Borrower will contribute a portion of the proceeds of such
facilities to each of Sithe Mystic Development and Sithe Fore River for the
payment of Project Costs.

        The Borrower will use a portion of the proceeds of such facilities to
repay the $116,561,970.91 (together with accrued interest from February 1, 2001
until the date repaid) of outstanding indebtedness incurred in connection with
the acquisition by Sithe New England Holdings, LLC of certain assets of Boston
Edison Company.

        In addition, on the Closing Date, the Borrower may make a reimbursement
to Sithe (or any Affiliate thereof) in respect of certain Pre-Closing Project
Costs in an amount equal to $317,298,521.59.

        The Borrower's Obligations hereunder will be guaranteed by each Project
Company pursuant to the terms and conditions of that certain Project Company
Guarantee dated as of the date hereof in favor of the Collateral Agent, on
behalf of all Secured Parties (the "Project Company Guarantee"). Each of the
Project Companies will also execute and deliver the Mortgage and the Security
Agreement granting Liens on the assets owned by it to secure its obligations
under the Project Company Guarantee. The Borrower's Obligations will also be
secured by the Borrower Pledge Agreement, pursuant to which the Borrower's
membership interests in the Project Companies shall be pledged to the Collateral
Agent for the benefit of the Secured Parties.

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        Accordingly, in consideration of the mutual promises herein contained,
the parties hereby agree as follows:

DEFINITIONS AND ACCOUNTING TERMS

        Certain Defined Terms.    Except as otherwise expressly provided herein,
capitalized terms used herein are defined in Annex A hereto.

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

        Accounting Principles and Terms.    Except as otherwise provided in this
Agreement, (a) all computations and determinations as to financial matters, and
all financial statements to be delivered under this Agreement, shall be made or
prepared in accordance with GAAP (including principles of consolidation where
appropriate but excluding footnote disclosure on interim financial statements)
and on a consistent basis and (b) all accounting terms used in this Agreement
shall have the meaning respectively ascribed to such terms by such principles.

        Rules of Construction.    When used in this Agreement: (a) "or" is not
exclusive solely in the sense that where a series of items is connected with
"or," the applicability of more than one of such items shall not cancel the
applicability of the series and "include" and "including" are not limiting;
(b) a reference to a law includes any amendment or modification to such law and
any rules or regulations issued thereunder or any law enacted in substitution or
replacement therefor; (c) a reference to a Person includes its permitted
successors and permitted assigns; (d) a reference to an agreement, instrument or
document shall include such agreement, instrument or document as the same may be
amended, modified or supplemented from time to time in accordance with its terms
and as permitted by the Loan Documents; (e) the singular includes the plural and
the plural includes the singular; (f) "hereby", "herein", "hereof", "hereunder"
or other like words refer to this Agreement; (g) a reference herein to an
Article, Section, Exhibit or Schedule without further reference is to the
relevant Article, Section, Exhibit or Schedule to this Agreement; (h) time shall
be of the essence with respect to the performance of all obligations; (i) all
obligations are continuing obligations; and (j) the headings of the Articles,
Sections and subsections are for convenience only and shall not affect the
meaning of this Agreement.

THE LOAN FACILITIES

Project Advances.

Project Commitments.

        Subject to the terms and conditions of this Agreement, each Lender
severally shall make Project Advances to the Borrower on any Business Day on or
prior to earlier of (A) the 60th day following the Second Completion Date and
(B) the Date Certain. Any Project Advance or portion thereof which is prepaid
cannot be reborrowed. At no time shall the aggregate principal amount of all
outstanding Project Advances exceed the Aggregate Project Commitment.

        Each Lender's obligation to make Project Advances shall not in any event
exceed the amount set forth next to such Lender's name as its "Project
Commitment" on Schedule 1.

        Each Borrowing shall be in an aggregate amount not less than $1,000,000
or an integral multiple of $100,000 in excess thereof (or such lesser amount as
shall be equal to the total amount of the unused Project Commitments available
on such date). Each Lender's Project Commitment shall be reduced by the amount
and on the date of such Lender's Project Advance. The Project Commitments shall
terminate in their entirety at the earliest of (i) full utilization of the
Aggregate Project

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Commitment and (ii) the earlier of (x) the Date Certain and (y) the 60th day
following the Second Completion Date, unless earlier terminated by the
Administrative Agent pursuant to Section 8.01 following the occurrence and
during the continuation of a Borrower Event of Default.

        Use of Proceeds of Project Advances.    The proceeds of Project Advances
shall be applied by the Borrower exclusively as follows: (i) to be contributed
to Sithe Mystic Development and to be applied by Sithe Mystic Development as
payment of, or reimbursement for, Project Costs for the Mystic 8&9 Project
pursuant to the terms and conditions of the Project Company Guarantee; (ii) to
be contributed to Sithe Fore River and to be applied by Sithe Fore River as
payment of, or reimbursement for, Project Costs for the Fore River Project
pursuant to the terms and conditions of the Project Company Guarantee; (iii) to
the payment of, or reimbursement for, the Borrower's and each Development
Project Company's Financing Costs; (iv) at Closing, for payment (by way of
distribution, reimbursement or otherwise) of Debt of Sithe New England in an
amount equal to $116,561,970.91 (together with accrued interest from February 1,
2001 until the date repaid) and (v) at Closing, to the reimbursement of Sithe
(or any Affiliate thereof) of certain Pre-Closing Project Costs, in an aggregate
amount equal to $317,298,521.59. The proceeds of Project Advances used for the
purposes described in clause (i), (ii) and (iii) above, shall be applied in
accordance with the applicable Project Budget, provided, however, that the
Borrower may re-allocate a portion of the Project Commitments from a completed
line item in a Project Budget to the contingency for the Development Projects
upon submission of a completed Reallocation Certificate in the form of
Exhibit 2.01(b) signed by an Authorized Officer of the Borrower and confirmed by
the Independent Engineer, provided, further, that on September 30, 2001, and not
more than once each Calendar Quarter thereafter, the Borrower may re-allocate a
portion of the Project Commitments from an incomplete line item in a Project
Budget (other than the line item entitled "IDC"), so long as savings with
respect to such line item have been demonstrated to the satisfaction of the
Administrative Agent and the Independent Engineer, to the contingency for the
Development Projects upon submission of a completed Reallocation Certificate in
the form of Exhibit 2.01(b) signed by an Authorized Officer of the Borrower and
confirmed by the Independent Engineer and the Administrative Agent, provided,
further, in the event that it is determined that National Grid USA does not
require the issuance of an Interconnection Security Letter of Credit, then the
Borrower may re-characterize up to $2,000,000 of the Aggregate LC Commitment as
Project Commitment to be used as contingency for the Development Projects upon
(x) submission of a completed Reallocation Certificate in the form of
Exhibit 2.01(b) signed by an Authorized Officer of the Borrower and confirmed by
the Administrative Agent and (y) execution and delivery of additional Project
Notes payable to each Lender for the account of its Lending Office in an
aggregate principal amount equal to such Lender's Percentage of such
recharacterized commitment and otherwise duly completed.

        Notice of Borrowing.    The Borrower shall request Project Advances by
delivering to the Administrative Agent a written notice in the form of
Exhibit 2.01(c), appropriately completed (a "Notice of Borrowing"), which
specifies, among other things:

        the amounts of requested Project Advances;

        the requested date of such Borrowing;

        the requested Type of Advances comprising such Borrowing; and

        with respect to LIBOR Rate Advances, the requested Interest Period for
each such Advance.

        Borrower shall so deliver each such Notice of Borrowing so as to provide
the Minimum Notice Period applicable to Advances of the Type requested. Such
Notice of Borrowing shall be accompanied by a Certificate of the Independent
Engineer in the form of Exhibit 5.03(d) hereto.

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        Interest on Project Advances.    The Borrower shall pay interest on the
unpaid principal amount of each Project Advance owing to each Lender from the
date of such Project Advance until such principal amount shall be paid in full,
at the following rates per annum:

        Base Rate Advances.    If such Project Advance is a Base Rate Advance, a
rate per annum equal at all times to the sum of the Base Rate in effect from
time to time plus the Applicable Margin for such Base Rate Advance in effect
from time to time, payable quarterly in arrears on each Payment Date and on the
date such Base Rate Advance shall be paid in full.

        LIBOR Rate Advances.    If such Advance is a LIBOR Rate Advance, a rate
per annum equal, at all times during the Interest Period then applicable to such
Advance, to the sum of the LIBOR Rate for such Interest Period plus the
Applicable Margin for such LIBOR Rate Advance in effect from time to time,
payable on the last day of such Interest Period and, if such Interest Period has
a duration of more than three months, on each Payment Date which occurs during
such Interest Period.

        Repayment of Project Advances.    Borrower shall repay to the
Administrative Agent, for the account of each Lender, the aggregate unpaid
principal amount of all Project Advances made by such Lender in installments
payable on each Payment Date in accordance with the repayment schedule set forth
on Schedule 2.01(e), with any remaining principal, interest, fees and costs due
in respect of the Project Advances due and payable on the Maturity Date.

        Notes.    The Project Advances made by each Lender shall be evidenced by
a Project Note of the Borrower in the form of Exhibit 2.01(f) dated the Closing
Date, payable to such Lender for the account of its Lending Office in an
aggregate principal amount equal to its Project Commitment and otherwise duly
completed.

        Termination of Project Commitment.    The Borrower shall have the right,
exercisable upon at least ten (10) Business Days' irrevocable notice to the
Administrative Agent, to terminate in whole or permanently reduce the unused
portion of the Project Commitment, provided, that (i) each partial reduction
shall be in the aggregate principal amount of $1,000,000 or an integral multiple
of $100,000 in excess thereof and (ii) no such termination or reduction shall be
permitted if the Borrower has failed to provide evidence to the Administrative
Agent of sufficient funds available to each of the Development Projects for each
such Project to achieve Project Completion.

Working Capital Advances.

        Working Capital Commitments.    Subject to the satisfaction or waiver of
each of the conditions set forth in Section 5.03, each Lender severally shall
make Working Capital Advances to the Borrower commencing on the Closing Date, in
an aggregate amount not to exceed the amount set forth next to such Lender's
name as its "Working Capital Commitment" on Schedule 2 (the foregoing obligation
to make a Working Capital Advance being hereinafter referred to as each Lender's
"Working Capital Commitment"). At no time shall the aggregate principal amount
of all outstanding Working Capital Advances exceed the Aggregate Working Capital
Commitment. Notwithstanding the foregoing, Working Capital Advances made prior
to the First Distrigas Payment Date shall be limited to $10,000,000. The Working
Capital Commitment shall terminate at the close of business on the Maturity Date
unless earlier terminated by the Administrative Agent pursuant to Section 8.01
following the occurrence and continuation of a Borrower Event of Default. Any
Working Capital Advance or portion thereof which is prepaid or repaid may, until
the date that is 15 days prior to the Maturity Date, be reborrowed.

        Use of Proceeds of Working Capital Advances.    The proceeds of Working
Capital Advances may be used by the Borrower, or shall be contributed by the
Borrower to the Project Companies, for payment of their respective Operating
Expenses; provided, however, that prior to the Second Completion Date, Working
Capital Advances used (i) in respect of Sithe Mystic, shall be limited to
$10,000,000 and (ii) in

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respect of the Development Project Companies, shall be limited to the lesser of
(A) $30,000,000 and (B) Pre-Completion Operating Expenses.

        Termination of Working Capital Commitment.    The Borrower shall have
the right, exercisable upon at least ten (10) Business Days' irrevocable notice
to the Administrative Agent, to terminate in whole or permanently reduce the
unused portion of the Working Capital Commitment, provided, that (i) each
partial reduction shall be in the aggregate principal amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof and (ii) no such termination or
reduction shall be permitted if, after giving effect thereto, the aggregate
principal amount of Working Capital Advances then outstanding would exceed the
Working Capital Commitment then in effect.

        Notice of Working Capital Borrowing.    The Borrower shall request
Working Capital Advances by delivering to the Administrative Agent a written
notice in the form of Exhibit 2.02(d), appropriately completed (a "Notice of
Working Capital Borrowing"), which specifies, among other things:

        the amount of the requested Working Capital Advance, which shall be
integral multiples of $500,000, but not less than $2,000,000;

        the requested date of such Borrowing;

        the requested Type of Advances comprising such Borrowing; and

        with respect to LIBOR Rate Advances, the requested Interest Period for
each such Advance.

        Borrower shall so deliver each such Notice of Borrowing so as to provide
the Minimum Notice Period applicable to Advances of the Type requested.

        Interest on Working Capital Advances.    The Borrower shall pay interest
on the unpaid principal amount of each Working Capital Advance owing to each
Lender from the date of such Working Capital Advance until such principal amount
shall be paid in full, at the same rates per annum payable with respect to the
Project Advances.

        Repayment of Working Capital Advances.    To the extent that Working
Capital Advances are applied prior to the Second Completion Date to the payment
of Operating Expenses associated with either Development Project, Pre-Completion
Revenues received by such Development Project shall be used to repay, to the
extent of such Pre-Completion Revenues received, any outstanding Working Capital
Advances pursuant to Sections 4.01(d) and 4.02 of the Depositary Agreement.
Commencing with the Second Completion Date, during each twelve month period, the
Borrower shall repay to the Collateral Agent, for the account of each Lender, in
full the unpaid principal amount of all Working Capital Advances, and the
Borrower shall not thereafter reborrow the same, for a period of at least thirty
(30) consecutive days selected by the Borrower (the "Clean Up Requirement"). Any
remaining principal, interest, fees and costs due in respect of the Working
Capital Advances shall be due and payable on the Maturity Date.

        Notes.    The Working Capital Advances made by each Lender shall be
evidenced by a Working Capital Note of the Borrower in the form of
Exhibit 2.02(g), dated the Closing Date, payable to such Lender for the account
of its Lending Office in an aggregate principal amount equal to its Working
Capital Commitment and otherwise duly completed.

Provisions Relating to All Advances.

        Borrowings.    (i) Each Borrowing shall be made on the same day by all
of the Lenders, ratably according to their respective Percentages. All Advances
to be made as part of each Borrowing shall consist of Advances of the same Type
and Interest Period. The Borrower shall only be entitled to request a Project
Borrowing once during any calendar month.

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        (ii)  The Administrative Agent shall give each Lender prompt notice of
each applicable Notice of Borrowing or Notice of Working Capital Borrowing, as
the case may be. In the case of a proposed Borrowing comprised of LIBOR Rate
Advances, the Administrative Agent shall promptly notify each Lender of the
applicable interest rate promptly after determination thereof. So long as a Swap
Agreement is in effect, the Borrower shall use commercially reasonable efforts
to make each Borrowing on a day which constitutes a payment date under such Swap
Agreement.

        (iii)  Each Lender shall, before 12:00 noon (New York City time) on the
date of any Borrowing, deposit with the Collateral Agent, in same day funds,
such Lender's ratable portion of such Borrowing. After the Administrative
Agent's receipt of a confirmation by the Collateral Agent of its receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article V,
the Administrative Agent will instruct the Collateral Agent to apply such funds
in accordance with the terms of the Depositary Agreement.

        (iv)  Unless the Administrative Agent shall have received notice from a
Lender or the Borrower (the "Payor") prior to the scheduled date on which the
Payor is to make payment to the Administrative Agent that, (x) in the case of a
Lender, such Lender will not make available to the Administrative Agent such
Lender's ratable portion of a Borrowing or, (y) in the case of the Borrower, the
Borrower will not make a payment for the account of one or more Lenders to be
made hereunder, the Administrative Agent may assume that such Payor has made
such portion available to the Administrative Agent on the required date and the
Administrative Agent may, in reliance upon such assumption (but shall not be
required to), make available to the recipient of such amounts on such date a
corresponding amount. If and to the extent that any Lender (a "Non-performing
Lender") shall not have so made such ratable portion available to the
Administrative Agent, or the Borrower shall have not made such payment for the
account of the Lenders, the Non-performing Lender or the Borrower, as
applicable, severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount, together with interest thereon for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (A) in the case of the
Borrower, the interest rate applicable at the time to Advances comprising such
Borrowing and (B) in the case of such Non-performing Lender, the Federal Funds
Rate; provided, that if the Borrower repays such corresponding amount to the
Administrative Agent and such Non-performing Lender subsequently makes available
its ratable portion of the Borrowing to the Administrative Agent, the
Administrative Agent shall promptly make such loan proceeds available to the
Borrower. The Administrative Agent shall provide written notice to the Borrower
of any Non-performing Lender, provided, however, that provision of such
notification shall not be a condition to the Borrower's obligations under this
Section 2.03(iv).

        If a Non-performing Lender shall repay to the Administrative Agent such
corresponding amount in full (with interest as above provided), then (x) the
Administrative Agent shall apply such corresponding amount and interest to the
repayment of the Administrative Agent and (y) such amount so repaid shall be
deemed to constitute such Non-performing Lender's Advance, made as part of such
Borrowing for purposes of this Agreement as if funded concurrently with the
other Advances comprising part of such Borrowing and such Non-performing Lender
shall forthwith cease to be deemed a Non-performing Lender.

        (v)  The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, and the
Borrower reserves all rights with respect to such Lender for its failure to make
such Advance, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of any
Borrowing.

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        Conversion.    The Borrower may from time to time elect to Convert any
Advance (or portion thereof) of any Type to one or more Advances of the same or
any other Type on the following terms and subject to the following conditions:

        Each such Conversion shall be made as to all Advances comprising a
single Borrowing, on notice given not later than 11:00 A.M. (New York City time)
on the third Business Day prior to the date of the proposed Conversion, in the
case of any such Conversion into LIBOR Rate Advances, or on the Business Day of
the proposed Conversion, in the case of any such Conversion into Base Rate
Advances, by the Borrower to the Administrative Agent, who shall give each
Lender prompt notice thereof. Each such notice of Conversion (a "Notice of
Conversion") shall be in substantially the form of Exhibit 2.03(b)(i),
specifying therein the requested (1) date of such Conversion, (2) Type of, and,
with respect to LIBOR Rate Advances, Interest Period applicable to, the Advances
(or portions thereof) proposed to be Converted, (3) except in the case of a
Conversion described in subsection (iv), below, Type of Advances to which such
Advances (or portions thereof) are proposed to be Converted, (4) in the case of
a Conversion to LIBOR Rate Advances, initial Interest Period to be applicable to
the Advances resulting from such Conversion and (5) aggregate amount of Advances
(or portions thereof) proposed to be Converted. In the case of a proposed
Conversion into LIBOR Rate Advances, the Administrative Agent shall promptly
notify each Lender of the interest rate to be applicable to the Advances
resulting from such Conversion pursuant to Section 2.03(b)(ii) promptly after
determination thereof.

        LIBOR Rate Advances may not be Converted on a date other than the last
day of the Interest Period then applicable thereto, unless (i) the corresponding
amounts, if any, payable to the Lenders pursuant to Section 4.07 are paid
contemporaneously with such Conversion and (ii) such corresponding amounts, if
any, required to be so paid, are paid only from cash contributions to the equity
of the Borrower made for such purpose at such time.

        No Conversion may be requested by the Borrower hereunder unless made in
compliance with this Section 2.03.

        Any selection by the Borrower of a longer or shorter Interest Period to
be applicable to any LIBOR Rate Advance shall be deemed a Conversion pursuant to
this Section 2.03, shall be governed by the terms and conditions hereof and
shall be notified to the Administrative Agent as herein provided. If no Notice
of Conversion in respect of an Advance is received by the Administrative Agent
prior to the end of any Interest Period as provided in subsection (a)(i), above,
such Advance shall be Converted to a Base Rate Advance.

        No Conversion to a LIBOR Rate Advance shall be made (i) so long as an
Borrower Event of Default has occurred and is continuing and the Administrative
Agent has determined that such Conversion is not appropriate or (ii) after the
date that is one month prior to the Maturity Date.

Other Terms Relating to the Making and Conversion of Advances.

        Anything in Section 2.01 or 2.02 to the contrary notwithstanding:

        at no time shall more than four different Interest Periods be in effect
as to outstanding Borrowings hereunder;

        each Borrowing hereunder (whether from the making or Conversion of
Advances hereunder, or both) which is to be comprised of LIBOR Rate Advances
shall be in a minimum aggregate principal amount no less than $1,000,000; and

        no Lender having a Working Capital Commitment shall be obligated to make
a Working Capital Advance if, on and after the first anniversary of the Second
Completion Date, on the date of any such requested Advance, there shall not have
been, during the immediately preceding twelve month period,

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at least one thirty (30) consecutive day period during which no Working Capital
Advances were outstanding.

        Each Notice of Borrowing and Notice of Conversion shall be irrevocable
and binding on the Borrower after delivery thereof. In the case of any Borrowing
which the related Notice of Borrowing or Notice of Conversion specifies is to be
comprised of LIBOR Rate Advances, the Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Borrowing
or Notice of Conversion for such Borrowing the applicable conditions (if any)
set forth in this Article II (other than failure pursuant to the provisions of
Section 2.03(b) or (c)) or in Article V, including any such loss (including loss
of anticipated profits where such failure shall not have been beyond the
reasonable control of the Borrower), cost or expense incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such Lender
to fund the Advance to be made by such Lender as part of such Borrowing when
such Advance, as a result of such failure, is not made on such date.

        So long as any Swap Agreement is in effect with respect to any Advances,
the Borrower shall maintain as LIBOR Rate Advances having Interest Periods
corresponding to the payment dates under such Swap Agreement an aggregate amount
of Advances at least equal to the notional amount then in effect under such Swap
Agreement, except to the extent that the Borrower would be prevented from
complying with this Section 2.03(c)(iii) by operation of Section 2.01,
subsections (i) or (ii) of this Section 2.03(c) or Section 4.02(b).

        Default Interest.    Any principal amounts payable hereunder that are
not paid when due shall (to the fullest extent permitted by law) bear interest,
from the date when due until paid in full, at a rate per annum equal at all
times to the Default Rate.

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THE LETTERS OF CREDIT

        Commitments.    Each Lender irrevocably agrees severally, on the terms
and conditions contained in this Agreement, to participate in each Letter of
Credit and each Drawing thereunder in an aggregate amount not to exceed the
product of (x) such Lender's Percentage and (y) the Aggregate LC Commitment (the
foregoing obligations being hereinafter referred to as each Lender's "LC
Commitment"). Simultaneously with the issuance of each Letter of Credit, the
applicable LC Issuer shall be deemed to have sold and transferred to each
Lender, and each Lender shall be deemed to have purchased and received from the
applicable LC Issuer, in each case irrevocably and without any further action by
any party, an undivided interest and participation in each Letter of Credit and
each Drawing in an amount equal to such Lender's LC Commitment. The
Administrative Agent shall promptly advise each Lender of any change in the
Outstanding Amount, the Stated Amount or the Expiration Date in respect of each
Letter of Credit, the cancellation or other termination of a Letter of Credit
and any Drawing; provided, however, that failure to provide such notice shall
not limit or impair the rights of the applicable LC Issuer hereunder or under
the Loan Documents.

        Amount and Term of Letters of Credit.    (a) On the terms and subject to
the conditions set forth herein (i) the Project LC Issuer hereby agrees to issue
the Project Letters of Credit to support the Development Projects' security and
payment obligations under the Interconnection Agreements and Sithe Fore River's
security obligations under the Related Facilities Agreement, and (ii) the DSR LC
Issuer hereby agrees to issue the DSR Letter of Credit to support the Borrower's
obligation to provide to the Collateral Agent, for the benefit of the Lenders,
with the Debt Service Reserve Requirement upon the Second Completion Date, in
each case in the applicable Stated Amount. The Letters of Credit shall be
effective on the date issued and, unless terminated or early expiring in
accordance with their terms, shall expire on the Expiration Date, as the same
may be extended. The amount available under each Letter of Credit shall be
(i) reduced by the amount of any Drawing thereunder, (ii) reduced by the amount
stated in any Reduction Certificate submitted by the Borrower as permitted
pursuant to such Letter of Credit and (ii) reinstated, in the case of the DSR
Letter of Credit or, prior to issuance of the DSR Letter of Credit, under any
Interconnection Security Letter of Credit, in connection with any repayment of a
LC Loan advanced as a result of a Drawing thereunder, provided that LC Loans
remain available, pursuant to the terms of this Agreement, at the time of such
reinstatement.

        Each Letter of Credit shall be issued on not less than three Business
Days' prior written notice thereof to the Administrative Agent (which shall
promptly distribute copies of such notice to the Lenders) and the applicable LC
Issuer. Each such notice (a "Request for Issuance") shall specify (i) the date
of issuance and the Expiration Date thereof and (ii) such other information as
shall demonstrate compliance of the Letter of Credit with the requirements
specified therefor in this Agreement. Such Request for Issuance shall be
irrevocable unless modified or rescinded by the Borrower by written notice to
the Administrative Agent and the applicable LC Issuer at least two Business Days
prior to the proposed date of issuance specified therein. Not later than
11:00 A.M. (New York City time) on the proposed date of issuance specified in
such Request for Issuance, and upon fulfillment of the applicable conditions
precedent and other requirements set forth herein, the applicable LC Issuer
shall issue such Letter of Credit and provide notice and a copy thereof to the
Administrative Agent.

        Reimbursement of LC Issuer.    (a) Subject to Section 3.03(b), the
Borrower hereby agrees to pay or cause to be paid to the DSR LC Issuer or the
Project LC Issuer, as the case may be, not later than 5:00 P.M. (New York City
time) on the Business Day following each date on which such LC Issuer shall pay
any amount under any Letter of Credit (the "LC Payment Date") issued by such LC
Issuer (but in no event prior to the time of any such payment by such LC Issuer)
without requirement for presentation or demand of any kind whatsoever, a sum
equal to the amount so paid plus interest at the Base Rate until such amount is
reimbursed (including by using the proceeds of an LC Loan); provided, that such
LC Issuer shall, promptly inform the Borrower in writing of the amount so paid.
The

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Borrower's obligation to make payments under this subsection (a), and the right
of such LC Issuer to receive the same, are absolute and unconditional as
provided in Section 3.03, and the Borrower agrees that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever;
provided, that no delay in making any payment shall constitute a default
hereunder so long as the Borrower uses the LC Loans to make such payments
immediately upon becoming available.

        If the DSR LC Issuer or the Project LC Issuer, as the case may be, shall
not have been reimbursed in full for any payment made by such LC Issuer under
any Letter of Credit on any LC Payment Date, the Administrative Agent shall
promptly notify each other Lender. Each such Lender shall, on the day of such
notification, make a loan to the Borrower, by depositing with the Collateral
Agent for the account of such LC Issuer, in immediately available funds, an
amount equal to the amount of such Lender's participation in such Drawing plus
any interest accrued in accordance with clause (a) above. In the event that any
Lender fails to make available to the Collateral Agent for the account of such
LC Issuer the amount of such loan, such LC Issuer shall be entitled to recover
such amount on demand from such Lender together with interest thereon at (i) for
the first three (3) days of nonpayment, the Federal Funds Rate and
(ii) thereafter, the Federal Funds Rate plus 2.00%. Each loan by a Lender
pursuant to this Section 3.03(b) shall be deemed a "LC Loan" under this
Agreement. LC Loans which may be made by each Lender shall be evidenced by a LC
Loan Note of the Borrower in the form of Exhibit 3.03(b), dated the Closing
Date, payable to such Lender for the account of its Lending Office in an
aggregate principal amount equal to its LC Commitment and otherwise duly
completed. At no time shall the aggregate principal amount of all outstanding LC
Loans exceed the Aggregate LC Commitment. The Borrower shall pay interest
pursuant to Section 4.05 of the Depositary Agreement on the unpaid principal
amount of each LC Loan resulting from a Drawing, from the date of such LC Loan
until such principal amount has been repaid in full. Such interest shall be paid
at a rate per annum, at the Borrower's option, either, (1) the rate then
applicable to Base Rate Project Advances plus 0.125% or (2) the rate then
applicable to LIBOR Rate Project Advances plus 0.125%, provided, however, that
interest with respect to LC Loans resulting from drawings under either
Interconnection Payment Letter of Credit, shall be paid at a rate per annum, at
the Borrower's option, either (1) the rate then applicable to Base Rate Project
Advances or (2) the rate then applicable to LIBOR Rate Project Advances. The
Borrower shall repay the principal amount of each LC Loan as, when and to the
extent monies are available for such purpose pursuant to Section 4.05 of the
Depositary Agreement, provided, however, that principal owed in connection with
LC Loans resulting from drawings under either Interconnection Payment Letter of
Credit, shall be payable in installments payable on each Payment Date in
accordance with the repayment schedule set forth on Schedule 2.01(e), with any
remaining principal, interest, fees and costs due in respect of such LC Loans
due and payable on the Maturity Date. All LC Loans shall mature on the Maturity
Date.

        In the event that any LC Loan described in Section 3.03(b) cannot for
any reason be made on the date otherwise required above (including as a result
of the occurrence of an Event of Bankruptcy with respect to the Borrower or any
Project Company), then each Lender shall forthwith purchase (as of the date such
LC Loan would otherwise have been made) from the applicable LC Issuer a
participation in the unreimbursed portion of the Drawing in an amount equal to
the product of such Lender's Percentage of the Aggregate LC Commitment
multiplied by the amount of the unreimbursed portion of such Drawing. Each
Lender's obligation to make each such payment to the applicable LC Issuer shall
be absolute, unconditional and irrevocable and shall not be affected by any
circumstance whatsoever, including the occurrence or continuance of any Borrower
Default, Borrower Event of Default, Project Default or Project Event of Default,
or the failure of any other Lender to make any payment under this 3.03(c), and
each Lender further agrees that each such payment shall be made without any
offset, abatement, withholding, or reduction whatsoever.

        Obligations Absolute.    (a) The payment obligations of the Borrower
under this Agreement in respect of any payment under each Letter of Credit and
any LC Loans made under Section 3.03(b),

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and the right of the LC Issuers to receive the same, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following circumstances:

        any lack of validity or enforceability of any Transaction Document, or
any other agreement or instrument relating thereto, or any allegation of
invalidity or unenforceability or any contest to the validity or enforceability
thereof;

        any amendment or waiver of, or any consent to departure from, any of the
Transaction Documents;

        the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against BECO, or any other beneficiary, or any
transferee, of any Letter of Credit (or any Persons or entities for whom any
such beneficiary or any such transferee may be acting), either LC Issuer, any
advising bank with respect to any Letter of Credit or any other Person or
entity, whether in connection with this Agreement or the transactions
contemplated herein, as the case may be, any of the Transaction Documents or any
unrelated transaction;

        any statement or any other document presented under any Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect;

        payment by either LC Issuer under any Letter of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit;

        the compromise, settlement, release, modification, amendment (whether
material or otherwise) or termination of any or all of the obligations,
conditions, covenants or agreements of any Person in respect of any of the
Transaction Documents;

        the occurrence, or the failure by any Person to give notice to the
Borrower of the occurrence, of any Borrower Default, Borrower Event of Default,
Project Default or Project Event of Default or any default under any of the
Transaction Documents;

        the assignment or pledging or the purported assignment or pledging of
all or any part of the interest of the Borrower of any Collateral or any failure
of title with respect to the interest in the Project in any Collateral;

        the waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements of any Person contained in any
of the Transaction Documents;

        the extension of the time for payment of the principal of or interest on
any of the Advances or any of the other obligations or of the time for
performance of any other obligations, covenants or agreements of any Person
under or arising out of any of the Transaction Documents;

        the taking or the omission of any of the actions referred to in any of
the Transaction Documents;

        the exchange, surrender, substitution or modification of any security
for any of the obligations under the Transaction Documents;

        any failure, omission or delay on the part of any Lender, the Borrower,
or any other Person to enforce, assert or exercise any right, power or remedy
conferred by this Agreement or any other Transaction Document, or any other act
or acts on the part of any Lender, the Borrower or any other Person;

        the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets of, the marshalling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings that affect, the Borrower, any
Project Company or any other party to any of the Transaction Documents;

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        the release or discharge by operation of law of the Borrower from the
performance or observance of any obligation, covenant or agreement contained in
any of the Transaction Documents; and

        any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing.

        Without limiting the effect of subsection (a), above, or any provision
hereof, the Borrower agrees with the LC Issuers that:

        each LC Issuer is authorized to make payments under each Letter of
Credit issued thereby upon the presentation of the documents provided for
therein and, subject to Section 3.04(a)(v), conforming to the requirements
thereof, without regard to whether (1) the Borrower has failed to fulfill any of
its obligations with respect to any Transaction Document or (2) any Borrower
Default, Borrower Event of Default or other default has occurred thereunder or
hereunder;

        each LC Issuer shall be entitled to rely upon any certificate, notice,
demand or other communication (whether by cable, telegram, telex or other
written communication) including any thereof from or purporting to be from any
beneficiary of any Letter of Credit, believed by it in good faith to be genuine
and to have been signed or sent by the proper Person or Persons (and no such
reliance or failure shall place either LC Issuer under any liability to the
Borrower or any Lender or limit or otherwise affect the Borrower or any Lender's
obligations under this Agreement); and

        any action, inaction or omission on the part of either LC Issuer under
or in connection with any Letter of Credit issued thereby or the related
instruments or documents, if taken in good faith and in conformity with such
laws, regulations or customs as each such LC Issuer may reasonably deem to be
applicable, shall be binding upon the Borrower and each Lender (and shall not
place either LC Issuer under any liability to the Borrower or any Lender or
limit or otherwise affect the Borrower's or any Lender's obligations under this
Agreement).

        None of the foregoing provisions of this Section 3.04 and Section 3.05
shall be deemed a waiver of, and the Borrower expressly reserves the right to
bring suit against either LC Issuer for, damages arising out of such LC Issuer's
gross negligence or willful misconduct as determined by a court of competent
jurisdiction.

        Liability of LC Issuers and the Lenders.    The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any of the
Letters of Credit. None of the LC Issuers, the Lenders, the Administrative Agent
nor any of their respective officers or directors shall be liable or responsible
for (a) the use which may be made of any of the Letters of Credit or any acts or
omissions of any beneficiary or transferee thereof in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged or any statement therein proves to
be untrue or inaccurate in any respect whatsoever; (c) payment by either LC
Issuer against presentation of documents which do not comply with the terms of
any of the Letters of Credit issued thereby, including failure of any documents
to bear any reference or adequate reference to such Letter of Credit; or (d) any
other circumstances whatsoever in making or failing to make payment under any of
the Letters of Credit, except that the Borrower and any Lender shall have a
claim against a LC Issuer, and such LC Issuer shall be liable to the Borrower
and any Lender, to the extent, and only to the extent, of any direct, as opposed
to consequential, damages suffered by the Borrower or such Lender as a result of
such LC Issuer's willful misconduct or gross negligence as determined by a court
of competent jurisdiction (provided, that such LC Issuer's willful failure to
pay under any of the Letters of Credit issued thereby shall not constitute gross
negligence or willful misconduct if such LC Issuer reasonably and in good faith
believed itself to be prohibited by law or legal authority from making such
payment). In furtherance and not in limitation of the foregoing, each LC Issuer
may accept sight drafts and accompanying certificates presented under any of the
Letters of Credit issued thereby that appear on

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their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.

        Extension of the Stated Expiration Date.    Thirty (30) days prior to
the Stated Expiration Date of any Standby Letter of Credit, such Stated
Expiration Date shall be extended for a period of one year from such Stated
Expiration Date and shall thereafter be automatically extended in the same
manner for additional one-year periods until the Maturity Date. Each Standby
Letter of Credit shall terminate upon the earliest to occur of (a) the Stated
Expiration Date, as such date may have been extended pursuant to the foregoing
sentence, (b) a drawing or drawings under a Standby Letter of Credit by the
beneficiary thereof equal to, in the aggregate, the then applicable maximum
Stated Amount thereof, which Stated Amount, or any portion thereof, has not been
reinstated in accordance with the provisions of Section 3.02(a), and (c) the
delivery of a notice of termination of such Standby Letter of Credit to each of
the Borrower and the beneficiary of such Standby Letter of Credit by the
applicable LC Issuer. Following receipt by each of the Borrower and the
beneficiary of the notice described in clause (c) of the preceding sentence,
such Standby Letter of Credit shall be terminated on the date specified in such
notice.

PAYMENTS

Payments and Computations.

        The Borrower shall make, or shall direct the Depositary to make, each
payment required to be made by the Borrower hereunder and under the other Loan
Documents without setoff, deduction or counterclaim not later than 12:00 noon
(New York City time) on the day when due in Dollars to the Administrative Agent
in immediately available funds. Funds received by the Administrative Agent after
such time shall be deemed to have been received on the next Business Day.

        All computations of interest based on the Base Rate and of Fees payable
pursuant to Section 4.09 shall be made by the Administrative Agent on the basis
of a year of 365 or 366 days, as the case may be. All other computations of
interest and Fees hereunder (including computations of interest based on the
LIBOR Rate) shall be made by the Administrative Agent on the basis of a year of
360 days. In each such case, such computation shall be made for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest or Fees are payable. Each such determination
by the Administrative Agent shall be conclusive and binding for all purposes,
absent manifest error.

        Whenever any payment hereunder or under any other Loan Document shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest and Fees hereunder;
provided, however, that if such extension would cause payment of interest on or
principal of LIBOR Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day and such
reduction of time shall in such case be included in the computation of payment
of interest hereunder.

Prepayments.

        Optional Prepayments.    The Borrower may, at any time upon at least one
(1) Business Days' notice to the Administrative Agent stating the proposed date
and aggregate principal amount of the prepayment, and if such notice is given
the Borrower shall, prepay the outstanding principal amount of Advances
comprising part of the same Borrowing, in whole or ratably in part, together
with (A) accrued interest to the date of such prepayment on the principal amount
prepaid and (B) the amounts, if any, payable to each Swap Bank as a result of
such prepayment pursuant to any Swap Agreement; provided, however, that (1) each
partial prepayment shall be in an aggregate principal amount, in the case of
LIBOR Rate Advances, not less than $1,000,000 or whole number multiple

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thereof and, in the case of Base Rate Advances, not less than $100,000 or whole
number multiple thereof, (2) no partial payment of LIBOR Rate Advances shall be
permitted unless the remaining principal amount of such Advances having the same
Interest Period shall aggregate at least $10,000,000 or shall have been
concurrently Converted in accordance with Sections 2.03(b) and (c) and (3) no
such prepayment of Advances other than Base Rate Advances shall be permitted
unless the corresponding amounts, if any, payable pursuant to Section 4.07 are
paid contemporaneously with such prepayment.

Mandatory Prepayment.

        Concurrently with receipt by the Borrower from any Project Company of
amounts constituting a mandatory payment under Section 3.02(a) of the Project
Company Guarantee, the same shall be forthwith applied as prepayments in
accordance with clause (iii), below.

        If required pursuant to Section 4.09 of the Depositary Agreement to
apply all or a portion of amounts on deposit in the Distribution Account, such
amounts shall be forthwith applied as prepayments in accordance with
clause (iii) below.

        The proceeds of each prepayment required to be made pursuant to clauses
(i) and (ii) above, shall be applied to prepay Advances in an aggregate
principal amount which, when added to any Swap Claims due in connection with
such prepayment, would equal the amount of such proceeds. Swap Claims, if any,
shall be payable on each such date of prepayment.

        All prepayments of Advances shall be prepaid in inverse order of
maturity of such Advances, provided, however, that any Performance Liquidated
Damages (as defined in the EPC Agreements) applied in accordance with
Section 4.02(b)(i) shall be applied to reduce outstanding Advances pro rata in
accordance with Schedule 2.01(e) attached hereto. The Administrative Agent shall
give prompt notice to each Lender of the amount of each prepayment made by the
Borrower under this Section 4.02.

        Increased Cost and Reduced Return; Additional Interest; Capital
Adequacy.    

        Increased Cost and Reduced Return.    If the adoption of any Requirement
of Law or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) with any request or directive applicable to such Lender (whether
or not having the force of law) of any such Governmental Authority:

        shall subject any Lender (or its Lending Office) to any tax, duty or
other charge with respect to its LIBOR Rate Advances, Notes, Commitments or its
obligation to make LIBOR Rate Advances, or shall cause the withdrawal or
termination of any previously granted exemption with respect to any taxes or
shall change the basis of taxation of, or increase the taxes on, payments to any
Lender (or its Lending Office) of the principal of or interest on its LIBOR Rate
Advances or any other amounts due under this Agreement in respect of its LIBOR
Rate Advances or its obligation to make LIBOR Rate Advances (except for any net
income taxes imposed on the overall net income of any Lender or its Lending
Office by a Governmental Authority in a jurisdiction with which such Lender has
a present or former connection unrelated to the transactions contemplated by the
Transaction Documents) or imposes taxes or reserves in respect of the unutilized
portion of any Lender's Commitment, which in each case occurred as a result of
the execution and delivery of this Agreement by such Lender; or

        shall impose, modify or deem applicable any reserve, liquidity, cash
margin, special deposit, deposit insurance or assessment or other regulatory or
similar requirement (including, without limitation, any such requirement imposed
by the Board of Governors, but excluding, with respect to any LIBOR Rate
Advance, any such requirement included in an applicable LIBOR Reserve
Percentage) against assets of, deposits with or for the account of, or credit
extended by, any Lender (or its Lending Office) or shall impose on any Lender
(or its Lending Office) or on the London interbank market any other condition
affecting its LIBOR Rate Advances, Notes, Commitments or its obligation to make
LIBOR Rate

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Advances, which in each case would not have occurred but for execution and
delivery of this Agreement by such Lender;

and the result of any of the foregoing is to increase the cost to any Lender (or
its Lending Office) of making or maintaining any LIBOR Rate Advance or to reduce
the amount of any sum received or receivable by any Lender (or its Lending
Office) under this Agreement or under its Notes, with respect thereto or to
cause that Lender to make any payment or forego any interest, fees or other
return on, or calculated by reference to any sum received or receivable by that
Lender under this Agreement or Note, as the case may be, by an amount deemed by
any Lender, acting reasonably, to be material, such Lender shall promptly notify
the Borrower and the Administrative Agent of such event and promptly deliver to
the Borrower and the Administrative Agent a certificate setting forth in
reasonable detail the amount of that increased cost actually imposed or assessed
or that reduction, payment or foregone interest, fees or other return and the
basis for the determination of that amount. The determinations of that Lender in
such certificate shall be conclusive and binding for all purposes, absent
manifest error. Within ten (10) days after demand by that Lender (with a copy to
the Borrower and the Administrative Agent), the Borrower shall pay to that
Lender the amount shown as due on any such certificate.

        Additional Interest.    In the event that any Lender shall determine
(which determination shall be conclusive and binding for all purposes, absent
manifest error) at any time that it is required to maintain reserves in respect
of LIBOR Rate Advances during any period during which the principal amount of
any LIBOR Rate Advance is outstanding (each such period, for such Lender, a
"LIBOR Reserve Period"), but only in respect of any period during which any
reserve shall actually be maintained by such Lender for its LIBOR Rate Advances
as a result of a reserve requirement applicable to it pursuant to regulations of
the Board of Governors of the Federal Reserve System in connection with LIBOR
Rate Advances, then such Lender shall promptly give notice to the Borrower and
the Administrative Agent of such determination, and the Borrower shall directly
pay to such Lender additional interest on the unpaid principal amount of such
LIBOR Rate Advance during such LIBOR Reserve Period at a rate per annum which
shall, during each monthly period applicable to such LIBOR Rate Advance, be the
amount by which (x) the LIBOR Rate for such monthly period divided (and rounded
upward, if necessary, to the next whole multiple of 1/100 of 1%) by a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable to such Lender in respect of LIBOR Rate Advances
exceed (y) the LIBOR Rate for such monthly period. Any Lender so requesting
compensation shall furnish along with such notice a certificate setting forth in
reasonable detail the cost actually incurred (or, if such calculation is
impractical, reasonable estimate of such cost) to maintain such reserves and the
basis for the determination of that compensation. The determinations of the
Lender in such certificate shall be binding and conclusive for all purposes,
absent manifest error. Additional interest payable pursuant to the immediately
preceding sentence shall be paid by the Borrower at the time that it is
otherwise required to pay interest in respect of such LIBOR Rate Advance or, if
later demanded by any Lender, within ten (10) days after such demand. Each
Lender agrees that, if it gives notice to the Borrower and the Administrative
Agent of the existence of a LIBOR Reserve Period, it shall promptly notify the
Borrower and the Administrative Agent of any termination thereof, at which time
the Borrower shall cease to be obligated to pay additional interest to such
Lender pursuant to the first sentence of this paragraph until such time, if any,
as a subsequent LIBOR Reserve Period shall occur.

        Capital Adequacy.    If (i) the adoption after the date hereof of any
generally applicable Law regarding capital adequacy (including, without
limitation, a requirement which affects a Lender's (or any Person controlling
such Lender) allocation of capital resources to its obligation in respect of
that Lender's obligations hereunder), (ii) any change after the date hereof in
any such existing law or in the interpretation or administration thereof by any
applicable Governmental Authority charged with the interpretation or
administration thereof or (iii) compliance by any Lender (or any Person
controlling

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such Lender) with any generally applicable request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority has or would have the effect of reducing the rate of
return on any Lender's (or any Person controlling such Lender) capital as a
consequence of any Advance to a level below that which such Lender (or any
Person controlling such Lender) could have achieved but for such adoption,
change or compliance by an amount deemed by such Lender (or any Person
controlling such Lender), acting reasonably, to be material, then within ten
(10) days after delivery by such Lender to the Borrower and the Administrative
Agent of a certificate setting forth in reasonable detail the amount of such
reduced return and the basis for the determination of such amount (which
certificate shall be binding and conclusive for all purposes, absent manifest
error), the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender (or any Person controlling such Lender) for that
amount of reduced return.

        Claims.    Each Lender will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle any Lender to compensation pursuant to this
Section 4.03 and will designate a different Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of such Lender, be otherwise disadvantageous to such
Lender; provided, however, that the Borrower shall not be obligated to
compensate any Lender pursuant to this Section 4.03 for any costs incurred by
such Lender more than 90 days before the date such Lender notifies the Borrower
of such event.

        Illegality.    If any Requirement of Law, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) with
any request, directive or assertion, applicable to such Lender (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency shall make it unlawful or impossible for any Lender (or its
Lending Office) to make, maintain or fund LIBOR Rate Advances and such Lender
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Lenders and the Borrower whereupon
until such Lender notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Lender to make LIBOR Rate Advances, or to convert outstanding Advances into
LIBOR Rate Advances, shall be suspended; provided, that such Lender will
designate a different Lending Office if such designation will permit the making
of LIBOR Rate Advances and will not, in the sole judgment of such Lender, be
otherwise disadvantageous to such Lender. In the event that the making of LIBOR
Rate Advances is suspended, as a result of the circumstances described in this
Section 4.04, the affected Lender agrees to accept, in lieu thereof, the
conversion of the interest rate on such LIBOR Rate Advance to the Base Rate.

        Basis for Determining Interest Rate Inadequate or Unfair.    If on or
prior to the first day of the Interest Period for any LIBOR Rate Advance:

        the Administrative Agent determines, in its reasonable judgment, that
deposits in Dollars (in the applicable amounts) are not being offered for any
reason to the Administrative Agent in the London Interbank market for such
Interest Period, or

        any Lender, in its reasonable judgment, shall advise the Administrative
Agent that the LIBOR Rate as determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Lender of making, funding or
maintaining its LIBOR Rate Advance for such Interest Period,

the Administrative Agent shall forthwith give notice thereof (which notice shall
describe in reasonable detail the basis for such determination) to the Borrower
and each Lender, whereupon until the Administrative Agent notifies the Borrower
and the Lenders that the circumstances giving rise to such suspension no longer
exist, (i) the obligations of the Lenders to make LIBOR Rate Advances, or to

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convert outstanding Advances into LIBOR Rate Advances, shall be suspended and
(ii) each outstanding LIBOR Rate Advance shall be converted into a Base Rate
Advance on the last day of the Interest Period applicable thereto; provided,
that any Lender making a claim pursuant to clause (b) above will designate a
different Lending Office if such designation will permit the making of LIBOR
Rate Advances and will not, in the sole judgment of such Lender, be otherwise
disadvantageous to such Lender.

        Assignment.    If the Borrower so requests from and after notice to the
Borrower of any compensation due to any Lender under Section 4.03 or 4.10 or the
suspension of any Lender from the making of LIBOR Rate Advances under
Section 4.04 or 4.05, the Administrative Agent shall arrange an assignment of
such Lender's proportionate share of the Total Commitments to an assignee
selected by the Borrower (and reasonably acceptable to the Administrative Agent)
subject to the provisions below, and such assigning Lender hereby consents to
any such assignment. Any assignment or transfer made by a Lender pursuant to
this Section 4.06 shall satisfy the following conditions: (i) the Borrower shall
promptly pay when due all reasonable fees and expenses of such Lender incurred
or to be incurred in connection with such transfer or assignment and (ii) any
assignment of all or part of the Total Commitments shall be made without
recourse, representation or warranty (other than the representation or warranty
that the assignor is the legal and beneficial owner of the interest being
assigned, free and clear of any adverse claim), and the Assignee shall pay to
the Administrative Agent for the account of the assigning Lender in immediately
available funds all amounts outstanding or payable under this Agreement and any
other Loan Document to each Lender assigning its interest in the Total
Commitments; provided, however, that assignment documentation in form and
substance as set forth in Exhibit 10.07(a) hereto shall be deemed acceptable.

        Breakage Costs.    If the Borrower for any reason, including without
limitation any prepayment pursuant to Section 4.02 or an acceleration of
maturity of the Advances pursuant to Section 8.01, makes any payment of
principal with respect to any LIBOR Rate Advance on any day other than the last
day of an Interest Period applicable thereto, fails to borrow, prepay or convert
any LIBOR Rate Advance after notice has been given to the Lenders in accordance
with the terms hereof, or fails to make a payment or a prepayment in the manner
and at the time specified in this Agreement, the Borrower shall promptly
reimburse any Lender upon demand for any resulting loss, cost or expense
incurred by it, including, without limitation, any loss, cost or expense
actually incurred in obtaining, liquidating or employing deposits from third
parties. Without limiting the foregoing, the Borrower shall indemnify each
Lender against any direct loss, cost or expense that any Lender may sustain or
incur as a consequence of any event described in the preceding sentence,
including, but not limited to, any interest, premium or penalty paid by any
Lender to lenders of funds borrowed by it or deposited with it for the purpose
of making or maintaining such LIBOR Rate Advance. A certificate as to the amount
of any such loss, cost or expense in reasonable detail (specifying the basis of
such loss or expense) shall be promptly submitted by such Lender to the Borrower
(with copies to the Administrative Agent) and shall be binding and conclusive
for all purposes, absent manifest error.

        Sharing of Payments, etc.    If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Advances owing to it in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders, such
Lender shall transfer such portions of such excess amount to the Administrative
Agent for the account of the other Lenders as shall be necessary to cause all
Lenders to share ratably in such excess amount. As used herein, the terms
ratable and nonratable shall be determined by reference to the respective
Percentages of the Lenders.

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Fees.

        The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a commitment fee on the average daily unused amount of such
Lender's Project Commitment, Working Capital Commitment and LC Commitment from
the Closing Date, in the case of each Lender initially a party hereto, and from
the effective date specified in the Lender Assignment pursuant to which it
became a Lender, in the case of each assignee of such Lender which becomes a
Lender in accordance with the terms of this Agreement, until the Maturity Date
or until such time as the commitment is cancelled at the rate of 0.375% per
annum, payable quarterly in arrears on each Payment Date, commencing on the
first such date to occur following the Closing.

        The Borrower further agrees to pay to the Administrative Agent for the
account of the LC Issuers a letter of credit fee on the aggregate Stated Amount
of all outstanding Letters of Credit (as reduced by drawings thereunder and
scheduled reductions in the amount thereof) from the date of issuance of each
Letter of Credit, until the Expiration Dates thereof at the rate equal to the
then Applicable Margin for LIBOR Rate Advances payable quarterly in arrears on
each Payment Date, commencing on the first such date to occur following the
initial issuance of any Letter of Credit, with final payment on the final
Expiration Date of any Letter of Credit.

        The Borrower further agrees to pay (i) the Lead Arrangers, an
arrangement fee, (ii) the Administrative Agent, an annual administration fee and
(iii) each LC Issuer, a fronting fee, in the amounts and at the times specified
in the Fee Letter.

        The Borrower further agrees to pay for the account of each LC Issuer,
such additional nominal administrative fees and charges (including cable
charges) as are generally associated with letters of credit, in accordance with
such LC Issuer's standard internal charge guidelines.

Taxes.

        Any and all payments to any Lender, each LC Issuer, the Administrative
Agent or the Collateral Agent (each such Lender, LC Issuer, Administrative Agent
or Collateral Agent, a "Payee") by or on behalf of the Borrower hereunder or
under any other Transaction Document shall be made free and clear of and without
reduction or withholding for any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and all interest,
penalties, and other liabilities imposed with respect thereto, imposed by or on
behalf of any Governmental Authority, excluding (x) any net income taxes (or
franchise or similar taxes imposed in lieu of net income taxes) imposed on a
Payee's overall net income, or (y) other taxes imposed by a jurisdiction on such
Payee to the extent such taxes would not have been imposed but for a present or
former connection between such Payee and such jurisdiction unrelated to the
transactions contemplated by the Transaction Documents (all such taxes, duties,
levies, imposts, deductions, charges, fees, withholdings, interest, penalties
and other liabilities, collectively or individually, howsoever imposed and not
excluded under clause (x) or (y) above being hereinafter referred to as "Covered
Taxes"). If the Borrower shall be required by law to withhold or deduct any
Covered Taxes from or in respect of any sum payable hereunder or under any other
Transaction Document to any Payee, (i) the sum payable shall be increased by an
amount as may be necessary so that after making all required withholdings
(including withholdings applicable to additional sums payable under this
Section 4.10), such Payee receives an amount equal to the sum it would have
received had no such reduction or withholding been made, (ii) the Borrower shall
make such reduction or withholding and (iii) the Borrower shall pay the full
amount withheld to the relevant Governmental Authority or other authority in
accordance with Requirement of Law. In addition, the Borrower agrees to pay to
the relevant Governmental Authority or other authority in accordance with
Requirement of Law any present or future stamp, recording or documentary taxes,
or any other excise or property taxes, charges or similar levies that arise
under the laws of any jurisdiction from any payment made hereunder or under any
other Transaction Document or from the execution, delivery,

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registration, performance or otherwise with respect to this Agreement or any
other Transaction Document. Each Lender that is not a United States person
(within the meaning of Section 7701(a)(30) of the Code) (a "Foreign Lender")
shall make reasonable effort to notify the Borrower of any such taxes referred
to in the preceding sentence that are imposed in the jurisdiction in which such
Foreign Lender is organized and, if its lending office (relating to transactions
contemplated by the Transaction Documents) is located outside the United States,
in the jurisdiction in which such lending office is located, to the extent such
Foreign Lender is aware of such taxes.

        The Borrower shall indemnify each relevant Payee, on an after-tax basis,
for the full amount of Covered Taxes paid by such Payee or any liability arising
therefrom or with respect thereto (including, without limitation, reasonable
attorneys' fees and expenses and other fees and expenses), whether or not such
Covered Taxes were correctly or legally asserted by the relevant Governmental
Authority. Each Payee shall give notice to the relevant Borrower of the
assertion of any claim against such Payee relating to such Payee's Covered Taxes
as promptly as is practicable after being notified of such assertion; provided,
that any failure to notify the Borrower promptly of such assertion shall not
relieve the Borrower of its obligation under this Section 4.10, provided,
however, that the Borrower shall not be obligated to make an indemnity payment
to a Payee in respect of penalties, interest and other similar liabilities
attributable to any Covered Taxes (but shall not be relieved of the obligation
to make an indemnity payment for the relevant Covered Taxes) if (i) written
demand therefor has not been made by such Payee within ninety (90) days from the
date on which such Payee received written notice of the imposition of Covered
Taxes by the relevant taxing or Governmental Authority (except in the case where
the ultimate amount of the Covered Taxes could not be determined within such
90-day period), but only to the extent such penalties, interest and other
similar liabilities are attributable to such failure or delay by the Payee in
making such written demand or (ii) such penalties, interest and other
liabilities are solely attributable to the gross negligence or willful
misconduct of the Payee or its Affiliates as determined by a court of competent
jurisdiction. Payments by the Borrower pursuant to this indemnification shall be
made within twenty (20) days after the date the Payee makes written demand
therefor (submitted through the Administrative Agent), which demand shall be
accompanied by a certificate describing in reasonable detail the basis thereof.
A certificate as to the amount of such payment or liability prepared by such
Payee, absent manifest error, shall be final, conclusive and binding for all
purposes.

        As soon as practicable after the date of any payment of Covered Taxes by
the Borrower to the relevant Governmental Authority, the Borrower shall furnish
to the Administrative Agent, who will then forward it to each affected Payee,
the original or a certified copy of a receipt or other certificate issued by
such Governmental Authority (or, if such copy or certificate is not available,
any other evidence of payment reasonably satisfactory to the Agent and such
affected Payee or Payees) evidencing payment thereof and identifying the Covered
Taxes paid. The Borrower shall compensate each Payee for all reasonable losses
and expenses sustained by such Payee as a result of any failure by the Borrower
to so furnish such original or copy of such receipt or certificate.

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        Each Payee shall, (i) on the date such Payee becomes a party to this
Agreement and (ii) before expiration of a previously delivered form,
certification or document, from time to time within 30 days after the reasonable
written request of the relevant Borrower, provide to the Borrower two
(2) copies, appropriately completed, of any form, document or other
certification necessary for such Payee to be exempt from, or entitled to a
reduced rate of, Covered Taxes on payments pursuant to this Agreement or any
other Transaction Document (including, in the case of each Foreign Lender, an
IRS Form W-8BEN or W-8ECI, as applicable, plus, in the case of a Foreign Lender
claiming a portfolio interest exemption, a certificate as to its non-bank status
(in the form attached hereto as Exhibit 4.10(d))) and such additional statements
and forms as may be reasonably requested by the Borrower from time to time;
provided, however, that no Payee shall have any obligation to provide any form,
document or other certification if (i) the Payee is not entitled under
Requirement of Law to provide such form, document or other certification or
(ii) the provision of such form, document or other certification would prejudice
the interests of such Payee or its Affiliates (as reasonably determined by such
Payee in its reasonable judgment).

        Notwithstanding anything to the contrary in this Section 4.10 or any
other provision of this Agreement, the Borrower shall not be required to pay any
Covered Taxes to or on behalf of any Payee to the extent that such Payee shall
fail to comply with the requirements of Section 4.10(d) and, as a result of such
failure, the Borrower is required by law to withhold Covered Taxes from any
payment to be made to or for the benefit of such Payee.

        If a Payee receives a refund of any Covered Tax from the jurisdiction
imposing such tax, for which Covered Tax a payment has been made by the Borrower
pursuant to this Section 4.10 which refund in the reasonable judgment of such
Payee is allocable to such payment by the Borrower made under this Section 4.10,
the amount of such refund, net of all out-of-pocket or other expenses (including
any taxes on a refund or on interest received or credited) such Payee reasonably
determines to have been incurred in connection with obtaining such refund, shall
be paid over to the Borrower; provided, however, that the Borrower, upon the
request of such Payee, agrees to repay the amount paid over to the Borrower
(plus penalties, interest and other charges) to such Payee in the event such
Payee is required to repay such refund with respect to which a payment was made
by such Payee to the Borrower. Notwithstanding anything to the contrary in this
Section 4.10, such Payee shall have no obligation to cooperate with respect to
any contest (or continue to cooperate with respect to any contest), or seek or
claim any refund, if such Payee reasonably determines that its interests would
be adversely affected by so cooperating (or continuing to cooperate) or by
seeking or claiming any such refund.

        If the Borrower is required to pay additional amounts to or for the
account of any Payee pursuant to this Section 4.10, then such Payee shall, at
the request of the Borrower, change the jurisdiction of its applicable lending
office if such change (i) will eliminate or reduce any such Covered Taxes which
may thereafter accrue, and (ii) in such Payee's sole discretion, is determined
not to be otherwise disadvantageous to such Payee, provided, that the fees,
charges, costs and expenses that are related to such change shall be borne by
the Borrower (and the mere existence of such expenses, fees or costs shall not
be deemed to be disadvantageous to the Payee). Further, each Lender will
consider in good faith any reasonable requests by the Borrower to take actions
to reduce or eliminate any Covered Taxes that are indemnifiable hereunder, but
no Lender shall be obligated to take any such action that it determines in its
sole discretion to cause it to bear unindemnified risk or exposure or that is
contrary to the commercial interest of such Lender.

        Nothing contained in this Section 4.10 shall require any Payee to make
available any of its tax or information returns (or any other information that
it deems to be confidential or proprietary).

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        The obligations of the Borrower under this Section 4.10 shall survive
the termination of this Agreement and the repayment of the Obligations and all
amounts due under or in connection with this Agreement or any other Transaction
Document.

CONDITIONS PRECEDENT

        Conditions Precedent to the Closing Date.    The Closing Date is subject
to the satisfaction (or waiver by the Lenders) of each of the conditions listed
below. The satisfaction of the conditions set forth in this Section 5.01,
including any documents required to be delivered hereunder, must be in form and
substance satisfactory to the Lead Arrangers, the Administrative Agent and the
LC Issuers. The Administrative Agent and, in the case of the Notes, each Lender
shall have received, on or before the Closing Date, the following, each dated
such day (except where specified otherwise below), in form and substance
satisfactory to the Lead Arrangers:

        The Notes, to the order of the Lenders, respectively, duly executed by
the Borrower.

        Copies, certified by a Representative of the Borrower, Sithe, Sithe New
England or the relevant Project Company, as the case may be, of each Loan
Document, duly executed by each of the parties thereto.

        Copies, certified by a Representative of the Borrower of each Material
Project Document (together with all amendments, supplements, change orders,
exhibits, annexes and schedules thereto) (other than the Mystic Development
Interconnection Agreement and the Related Facilities Agreement), each of which
(i) shall be in form and substance reasonably satisfactory to the Lead
Arrangers, (ii) shall have been duly authorized, executed and delivered by each
Material Project Participant party thereto and (iii) is in full force and effect
and no default or event of default thereunder shall have occurred and be
continuing.

        Favorable opinions of counsel (set forth on Exhibit 5.01(d)) to the
Borrower, the Project Companies, Sithe, Sithe New England and the Material
Project Participants (other than Exxon Company, U.S.A. and Boston Gas Company)
as to such matters as the Lead Arrangers shall reasonably request.

        Copies, certified by a Representative of the Borrower, of (i) the
resolutions of the Management Committee of the Borrower approving or authorizing
the execution, delivery and performance of this Agreement, the other Transaction
Documents, and all other documents to be delivered hereunder and thereunder to
which the Borrower is a party, (ii) the Borrower's Certificate of Formation and
the LLC Agreement, and all amendments thereto as in effect on such date, and
(iii) all documents evidencing other necessary corporate action, if any, with
respect to the execution, delivery and performance by the Borrower of this
Agreement and the other Transaction Documents.

        Copies, certified by a Representative of Sithe, of (i) the resolutions
of the Board of Directors of Sithe approving or authorizing the execution,
delivery and performance of the Sithe Equity Guarantee and the Sithe
Undertaking, (ii) Sithe's Certificate of Incorporation and bylaws, and all
amendments thereto as in effect on such date, and (iii) all documents evidencing
other necessary corporate action, if any, with respect to the execution,
delivery and performance by Sithe of the Sithe Equity Guarantee and the Sithe
Undertaking.

        Copies, certified by a Representative of Sithe New England, of (i) the
resolutions of the Management Committee of Sithe New England approving or
authorizing the execution, delivery and performance of the Equity Contribution
Agreement and the Distrigas Guaranty, (ii) Sithe New England's Certificate of
Formation and the LLC Agreement, and all amendments thereto as in effect on such
date, and (iii) all documents evidencing other necessary corporate action, if
any, with respect to the execution, delivery and performance by Sithe New
England of the Equity Contribution Agreement and the Distrigas Guaranty.

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          (i)  With respect to Sithe and Sithe New England, audited annual
financial statements for 1999 and quarterly financial statements for the third
quarter of 2000, (ii) with respect to each Project Company and the Borrower, a
pro forma balance sheet of the Borrower as of the Closing Date (consolidating
the pro forma balance sheets for each of the Project Companies), and (iii) with
respect to each of Algonquin, Distrigas, WGI, MHI, Raytheon, Cabot LNG and NSTAR
(if its audited annual financial statements are publicly available) the most
recent audited annual financial statement for such Person. In the case of each
of clauses (i), (ii) and (iii), the financial statements shall be provided
together with a certificate of an Authorized Officer of each such Person in the
form of Exhibit 5.01(h) hereto. The audited financial statements provided by
Sithe and its Affiliates shall have been audited by the Auditor or another
nationally recognized accounting firm satisfactory to the Lead Arrangers. The
financial condition and creditworthiness of each such Person shall be
satisfactory to the Lead Arrangers.

        Copies, certified by the relevant Secretary of State or similar
authority, of the Certificate of Formation of the Borrower, Sithe, Sithe New
England, each Project Company, Sithe Boston Power Services, Sithe New England
Power Services and Sithe Power Marketing.

        Copies of certificates of public officials as to the good standing,
qualification to do business and tax status of (i) the Borrower (in Delaware and
Massachusetts), (ii) Sithe (in Delaware), (iii) Sithe New England (in Delaware
and Massachusetts), (iv) each Project Company (in Delaware and Massachusetts)
and (v) each Material Project Participant (in its jurisdiction of organization
and Massachusetts); but with respect to any of the Material Project Participants
(other than any Sithe Affiliate), its failure to be in good standing, to be
qualified to do business or to have paid all taxes, shall not impair the
satisfaction of this condition precedent.

        Incumbency certificates from a certificate of a Representative of each
of the Borrower, Sithe, Sithe New England and each Project Company.

        The absence of any Material Adverse Effect or Project Material Adverse
Effect (other than as disclosed to and waived by the Lenders) since December 7,
2000 together with a certificate from a Representative of the Borrower dated the
Closing Date to that effect.

        A report of the Independent Engineer with respect to each of the
Projects, as to the following matters:

        Government Approvals;

        technical feasibility of the Projects, including their capability to
conform with all air permit limits;

        reasonableness of construction costs, construction schedules, major
maintenance budgets and payment schedules;

        appropriateness of the Contractors' performance tests and completion
undertakings;

        appropriateness of the Project Budgets for the Mystic 8&9 Project and
the Fore River Project;

        compliance by the Projects with Environmental Laws, including the status
of Governmental Approvals required under Environmental Laws; and

        any Environmental Discharge discovered through reasonable investigation
relating to any Project;

        the reasonableness of the technical and operating and maintenance
assumptions in the Closing Base Case;

        A report regarding the Projects from the Power Market Consultant;

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        A report regarding the fuel arrangements for the Projects from the Fuel
Consultant;

        Evidence of payment of all expenses payable by the Borrower pursuant to
Section 10.04 and all Fees payable hereunder or under the Fee Letter.

        Copies, certified by a Representative of the Borrower and the applicable
Project Company, of each Development Project's Project Budget and Construction
Schedule.

          (i)  A report from the Insurance Consultant stating that all insurance
policies required under this Agreement and the Project Company Guarantee have
been obtained (or, with respect to insurance policies that are to become
effective after the Closing Date, will be obtained when so required), are
adequate for the Borrower and each of the Projects and contain the respective
provisions specified herein or the applicable provisions of the Project Company
Guarantee to be contained therein, together with copies or detailed summaries of
all such policies.

        (ii)  A certificate of each insurer or its authorized representative
certifying to the insurance in effect and that all premium payments on such
insurance are current; and

        (iii)  The insurance certificates required to be delivered pursuant to
each EPC Agreement and each Interconnection Agreement, which certificates shall,
among other things, (x) describe the insurance required to be maintained
pursuant to Article 25 of such EPC Agreement or Section 25 of such
Interconnection Agreement and (y) state that such required insurance has been
obtained and is in full force and effect.

        An American Land Title Association survey map of the Property for each
Project prepared and certified as of a date within forty-five (45) days prior to
the Closing by a professional land surveyor, on which survey there shall be
indicated (i) as to the Mystic Station Project, all buildings, structures and
other improvements located on or over the Property for such Project, (ii) as to
the Mystic 8&9 Project and the Fore River Project which are currently under
construction, the location of all major structures (including any foundations
for any to-be-constructed structures) and improvements located on the property
for each such Project, (iii) all easements, rights of way, roadways, paths and
driveways running across the Property for each Project, (iv) by location and by
reference to deed book and page number, all easements appurtenant to the
Property for each Project necessary to utilize the Property for each Project in
the manner contemplated by the Project Documents, including rights of ingress
and egress and (v) that no part of any of the Projects is located within a
designated Special Flood Hazard Area as identified by the Secretary of the
Department of Housing and Urban Development on the latest available Flood
Insurance Rate Maps published by the Federal Emergency Management Agency.

        A search, made reasonably near the Closing Date, of the Uniform
Commercial Code filing offices or other registers in each jurisdiction in which
the Borrower or any Project Company has an office or in which assets of the
Borrower or any Project Company are located, as certified by an Authorized
Officer of the Borrower, shall have revealed no filings or recordings with
respect to any of the Collateral in favor of any Person other than the
Collateral Agent, except (i) Permitted Liens or (ii) Liens which are released
(or with respect to which release documentation has been executed and is being
held in escrow by counsel to the Arranger for filing pending funding of the
Initial Advance). The Administrative Agent shall have received a copy of the
search reports received as a result of such search.

        Satisfactory releases from the BECO Acquisition Lenders and the Interim
Lenders of their liens on the assets of the Borrower and/or each Project Company
to be held in escrow by counsel to the Lead Arrangers pending funding of the
Initial Advance;

        Evidence that each Project Company has delivered the "Notice to Proceed"
to the Contractor pursuant to and in accordance with its EPC Agreement on or
prior to the Closing Date.

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        Certificates from a Representative of the Borrower and each of the
Project Companies to the effect that (i) there is no injunction, writ,
preliminary restraining order or any order of any nature issued by any
arbitrator, court or other Governmental Authority applicable to Sithe, Sithe New
England, the Borrower or the Project Company, as the case may be, or, to the
knowledge of the Borrower or the Project Company, as the case may be, any other
Material Project Participant, directing that the transactions provided for
herein or in the other Transaction Documents or any of them not be consummated
as herein or therein provided, (ii) except as set forth in Schedule 6.01(k),
there is no litigation, investigation or proceedings of or before any
arbitrator, court or other Governmental Authority pending against the Borrower,
Sithe, Sithe New England, the Project Companies, any of the Projects, or, to the
Borrower's or the Project Company's, as the case may be, knowledge, pending or
threatened against any party to any Transaction Document, in each case with
respect to this Agreement or the Transaction Documents or any of the
transactions contemplated hereby or thereby, and (iii) with respect to the
Borrower, that the operating and technical assumptions included in the Closing
Base Case are reasonable and complete in all material respects.

        Copies, certified by a Representative of the Borrower, of any Swap
Agreement then in effect, duly executed by each of the parties thereto.

        Evidence of establishment of all Accounts under the Depositary
Agreement.

        Delivery of the Risk Management Policy, which shall be in form and
substance satisfactory to the Lead Arrangers.

        Delivery of a Closing Base Case that is in form and substance
satisfactory to the Lenders.

        Evidence that (i) each Project Company has been determined by FERC to
be, or is deemed to be, an "EWG", (ii) each Project is an Eligible Facility,
(iii) each Project Company is not a "holding company" or a "public utility
company" within the meaning of PUHCA and (iv) each Project Company has obtained
from FERC authority to sell power and ancillary services at market-based rates
and all waivers of regulations and blanket authorizations customarily granted by
FERC to a public utility that sells wholesale power and ancillary services at
market-based rates.

        Copies, certified by a Representative of the Borrower, of all material
Governmental Approvals which under Requirement of Law is then required to be
obtained by or on behalf of the Borrower, each Project Company or its Project in
connection with the development, construction, financing, operation or
maintenance of such Project, all of which are in full force and effect. All such
material Governmental Approvals shall not contain any conditions that, in the
reasonable opinion of the Lead Arrangers, are not capable of being satisfied by
the Borrower or the Project Companies, as applicable, and no violation shall
have occurred thereunder which could reasonably be expected to have a Material
Adverse Effect or a Project Material Adverse Effect, as applicable. The Lenders
shall be reasonably satisfied with the status of all other material Governmental
Approvals relating to the Borrower or any Project, including without limitation,
material Governmental Approvals then required under Requirement of Law to be
obtained by Material Project Participants in connection with the execution,
delivery and performance of their respective obligations under the Material
Project Agreements.

        Sithe shall have contributed, or caused to be contributed, at least
$929.5 million of equity to the Borrower.

        Copies, certified by a Representative of Sithe Power Marketing, of
(i) the resolutions of the General Partner of Sithe Power Marketing approving or
authorizing the execution, delivery and performance of the Power Marketing
Agreement, the SPM Security Agreement and the SPM Depositary Agreement and all
other documents to be delivered hereunder and thereunder to which Sithe Power
Marketing is a party, (ii) Sithe Power Marketing's Certificate of Limited
Partnership and charter documents, and all amendments thereto as in effect on
such date, and (iii) all documents evidencing other necessary partnership
action, if any, with respect to the execution, delivery and

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performance by Sithe Power Marketing of the Power Marketing Agreement, the SPM
Security Agreement and the SPM Depositary Agreement.

        Conditions Precedent to the Initial Advance and Issuance of the Letters
of Credit.    The obligation of each Lender to make an Initial Advance and the
Project LC Issuer to issue an initial Letter of Credit shall be subject to the
satisfaction (or waiver by the Lenders) of the conditions precedent set forth
below with respect to the Borrower and the applicable Project Company. The
satisfaction of the conditions set forth in this Section 5.02, including any
documents required to be delivered hereunder, must be in form and substance
reasonably satisfactory to the Lenders. The Administrative Agent shall have
received, on or before the date of such Initial Advance and issuance of such
initial Letter of Credit, the following, each dated such day (except where
specified otherwise below), in form and substance satisfactory to the Lenders:

        acknowledgment copies (or facsimile transmissions thereof), dated on or
before the date of such initial funding, of Financing Statements (Form UCC-1)
satisfactory to the Administrative Agent duly filed under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens relating to the Borrower,
Sithe Power Marketing and each Project Company created by the Security
Documents;

        all certificates (together with stock powers executed in blank)
representing all of the outstanding membership interests in each of the Project
Companies to be pledged to the Collateral Agent pursuant to the terms of the
Borrower Pledge Agreement;

        evidence of the completion of all recordings and filings of the Mortgage
and all other actions, as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens relating to the Borrower,
Sithe Power Marketing and each Project Company created by the Security
Documents. All taxes (including without limitation mortgage recording taxes and
recording fees), fees and other charges payable in connection with the foregoing
shall have been paid in full by the Borrower.

        One or more paid title insurance policies issued by companies acceptable
to the Administrative Agent (with such reinsurance arrangements as are
acceptable to the Administrative Agent) in an aggregate amount equal to 60% of
the Total Commitment insuring in favor of the Collateral Agent, as agent for the
Secured Parties, that each Project Company is the fee owner of the Property for
its respective Project, and is vested with good and marketable title on and to
its respective Project, and that the Mortgage is a first priority mortgage with
respect to such interest, subject only to Permitted Liens and other defects and
exceptions acceptable to the Lenders ("Permitted Exceptions"), and which, with
respect to each Project:

        shall describe the Property in accordance with the survey delivered in
accordance with Section 5.01(s) above;

        shall have attached thereto copies of all instruments that appear as
exceptions therein; and

        shall insure, in a manner acceptable to the Lead Arrangers, against loss
due to any title defect or encumbrance, condition, restriction, covenant,
reservation, easement, interest or claim affecting the relevant Project
Company's fee interest in the Property or its ownership interest in the Project,
other than the Permitted Exceptions;

        shall contain such endorsements as the Administrative Agent shall
reasonably request;

        shall contain no exceptions for filed or unfiled mechanics' or
materialmen's liens and shall provide for affirmative coverage over any such
liens subsequently filed; and

        shall contain no limitations of coverage (beyond those contained in a
standard American Land Title Association mortgagee title policy) unacceptable to
the Lenders.

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        A certificate from a Representative of the Borrower that:

        The representations and warranties contained in Section 6.01 (other than
clause (k) thereof) are true and correct on and as of the date of such Advance
or issuance of any Letter of Credit, before and after giving effect to such
Advance or issuance of such Letter of Credit and to the application of the
proceeds, if any, therefrom, as though made on and as of such date;

        No (A) Borrower Default or (B) Borrower Event of Default has occurred
and is continuing, or would result from the making of such Advance or from the
application of the proceeds thereof; and

        Except as set forth in Schedule 6.01(k), there is no litigation,
investigation or proceedings of or before any arbitrator, court or other
Governmental Authority pending against the Borrower or, to the Borrower's
knowledge, pending or threatened against the Borrower, Sithe, Sithe New England
or any Project Company in connection with the transactions contemplated by the
Loan Documents except where such litigation, investigation or proceedings could
not reasonably be expected to have a Material Adverse Effect.

        A certificate from a Representative of each Project Company that:

        The representations and warranties contained in Section 3.01 of the
Project Company Guarantee (other than clause (i) thereof) with respect to such
Project Company are true and correct on and as of the date of such Advance,
before and after giving effect to such Advance and to the application of the
proceeds, if any, therefrom, as though made on and as of such date;

        No (A) Project Default or Project Event of Default shall have occurred
and be continuing or (B) material default or event of default under any Material
Project Document with respect to such Project Company has occurred and is
continuing, or could result from the making of such Advance or from the
application of the proceeds thereof; and

        Except as set forth in Schedule 3.01(i) of the Project Company
Guarantee, there is no litigation, investigation or proceedings of or before any
arbitrator, court or other Governmental Authority pending against such Project
Company or, to such Project Company's knowledge, pending or threatened against
any party to any Transaction Document with respect to the Project Company
Guarantee or any other Transaction Document with respect to such Project except
where such litigation, investigation or proceedings could not reasonably be
expected to have a Project Material Adverse Effect.

        Since the Closing Date, no Material Adverse Effect or Project Material
Adverse Effect with respect to the Benefiting Project Company shall have
occurred and be continuing.

        Copies of releases (with respect to work performed as to which payment
has been made or is due and is being paid on the date of such Advance) of
mechanics' or materialmen's liens (in substantially the form of Exhibit 5.02(h))
from (and certified by) the Contractor and from all other mechanics and
materialmen in privity with any of the Project Companies and which have
performed work or supplied material to any of the Projects for an aggregate
contract price or invoice price greater than $500,000 during the term of any of
the Project Company's leasehold interest in each of their respective Properties,
together with copies of all receipts for such work and material.

        Copies of all material Governmental Approvals, that were not required to
be obtained by the Project Companies prior to the Closing Date but that are
required to be obtained prior to the date of such Initial Advance, and such
material Governmental Approvals shall have been duly obtained or made and shall
be in full force and effect, and there shall be no challenge of any existing
material Governmental Approval by any Governmental Authority or any other
person. In addition, the Lenders shall be satisfied in their reasonable
discretion, with respect to the status of all material Governmental Approvals
relating to the Projects other than those described in the immediately preceding
sentence,

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including without limitation, material Governmental Approvals then required
under Requirement of Law to be obtained by Material Project Participants in
connection with the execution, delivery and performance of their respective
obligations under the Material Project Agreements.

        A Notice of Borrowing in accordance with the terms of this Agreement.

        A certificate from the Independent Engineer in the form of
Exhibit 5.03(d).

        Conditions Precedent to Each Subsequent Advance.    The obligation of
each Lender or the DSR LC Issuer, as the case may be, to make Advances
subsequent to the Initial Advance or to issue the DSR Letter of Credit (such
advances or issuance, "Subsequent Advances") shall be subject to the conditions
precedent (or waiver by the Required Lenders) with respect to the Borrower and
any Benefiting Project Company that (i) since the date of the financial
statements of the Borrower and the other Persons delivered pursuant to
Section 5.01(h), no Material Adverse Effect shall have occurred, provided,
however, that for purposes of this clause (i) only, events resulting from
changes or developments in the gas, oil or NEPOOL power markets generally
(including changes in market prices) shall not be deemed to have a Material
Adverse Effect, (ii) all equity contributions required to be made on or prior to
the making of such Advance pursuant to the Equity Contribution Agreement shall
have been contributed to the Borrower and (iii) the Administrative Agent shall
have received, on or before the day of the making of such Advance or the
issuance of the DSR Letter of Credit, the following, each dated such day, in
form and substance satisfactory to the Administrative Agent (except that the
Notice of Borrowing shall not be required for the issuance of the DSR Letter of
Credit) (for purposes of this provision the issuance of the DSR Letter of Credit
shall be deemed to benefit all Project Companies):

        A Notice of Borrowing in accordance with the terms of this Agreement.

        Certificates from a Representative of the Borrower and a Representative
of the Benefiting Project Company (the statements contained in which shall be
true and, to the extent the matter to which the certification is made relates to
unaffiliated third parties, may be based on knowledge of the Representative)
that:

        The representations and warranties contained in Section 6.01 of this
Agreement (other than in clause (k) thereof) are correct on and as of the date
of such Advance or issuance of the DSR Letter of Credit, before and after giving
effect to such Advance or issuance of such Letter of Credit and to the
application of the proceeds, if any, therefrom, as though made on and as of such
date (except where failure of such representation or warranty to be true and
correct could not reasonably be expected to have a Material Adverse Effect);

        The representations and warranties contained in Section 3.01 of the
Project Company Guarantee (other than in clause (i) thereof) with respect to the
Benefiting Project Company are correct on and as of the date of such Advance or
issuance of the DSR Letter of Credit, before and after giving effect to such
Advance or issuance of such Letter of Credit and to the application of the
proceeds, if any, therefrom, as though made on and as of such date (except where
failure of such representation or warranty to be true and correct could not
reasonably be expected to have a Project Material Adverse Effect);

        No Project Event of Default with respect to the Benefiting Project
Company, Borrower Event of Default, Material Borrower Default or material
default or event of default under any Material Project Document to which the
Benefiting Project Company is party has occurred and is continuing, or would
result from the making of such Advance or the issuance of the DSR Letter of
Credit or from the application of the proceeds thereof;

        There is no litigation, investigation or proceeding of or before any
arbitrator, court or other Governmental Authority pending against the Borrower,
or, to the Borrower's knowledge, pending

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or threatened against any party to any Transaction Document or with respect to
this Agreement or any of the transactions contemplated therein or herein except
where the failure of such representation or warranty to be true and correct
could not reasonably be expected to have a Material Adverse Effect;

        There is no litigation, investigation or proceeding of or before any
arbitrator, court or other Governmental Authority pending against the Benefiting
Project Company, or any Member of any Benefiting Project Company, or, to the
Borrower's or the Benefiting Project Company's knowledge, pending or threatened
against any party to any Transaction Document or with respect to this Agreement
or any of the transactions contemplated therein or herein except where such
litigation, investigation or proceeding could not reasonably be expected to have
a Project Material Adverse Effect with respect to such Benefiting Project
Company; and

        Copies of all material Governmental Approvals that were not required to
be obtained by the Project Companies or the Borrower prior to the Closing Date
or the Initial Advance or prior Subsequent Advances but that are required to be
obtained prior to the date of such Subsequent Advance, and such material
Governmental Approvals shall have been duly obtained or made and shall be in
full force and effect and there shall be no challenge of any existing material
Governmental Approval by any Governmental Authority or any other person.

        A certificate from the Independent Engineer in the form of
Exhibit 5.03(d) delivered at the same time as the Notice of Borrowing.

        The Administrative Agent and the Independent Engineer have received, not
later three (3) Business Days before the date of the requested Borrowing, a
notice of title continuation or an endorsement to the title insurance policy
from the title company insuring the Borrower's interest in the Benefiting
Project Company's Property updating the title insurance policy to the date of
disbursement of the requested Borrowing, showing no intervening liens or
encumbrances on the Benefiting Project Company's Property and showing that there
has been no change in the state of title and no survey exceptions not
theretofore approved by the Lenders or otherwise permitted pursuant to this
Agreement which endorsement shall have the effect of increasing the coverage of
the title insurance policy by an amount equal to 60% of such loan if the title
insurance policy does not by its terms automatically provide for such coverage.

        The Administrative Agent has received, with respect to the Benefiting
Project Company's Project, sworn statements, affidavits and assurances of
payment by all contractors and materialmen, which shall cover all work, labor
and materials, including without limitation, equipment and fixtures of all
kinds, in the case of the Contractor's subcontractors, each for a value in
excess of $500,000, done, performed or furnished at, for or to the Benefiting
Project Company's Project to the date of the last Project Advance and with
respect to which Borrower has requested Advances.

        The Administrative Agent has received copies of executed Additional
Project Documents.

        Each Additional Project Document is in full force and effect, all
representations and warranties contained therein are true and correct in all
material respects and no default or event of default has occurred and is
continuing thereunder which could reasonably be expected to have a Project
Material Adverse Effect.

        The Technical Committee shall have received a monthly report from the
Borrower regarding the status of the Gas Lateral and any Alternative Plans,
which report shall include a specific representation of the Borrower that it is
in compliance with its obligations under Section 7.01(j).

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REPRESENTATIONS AND WARRANTIES

        Representations and Warranties of the Borrower.    The Borrower
represents and warrants to each Lender, the LC Issuers and the Administrative
Agent as follows (such representations and warranties being made as of the
Closing Date and, to the extent provided herein, on each subsequent date on
which such representations and warranties are made or deemed to be made
hereunder):

        The Borrower is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of formation.

        The Borrower (i) has the power and authority to own its property and
assets and to transact the business in which it is engaged or presently proposes
to engage and (ii) is authorized to do business as a foreign corporation and is
in good standing in each jurisdiction in which it is required to be authorized
to do business.

        The Borrower has full power, authority and legal right to execute and
deliver this Agreement and the other Transaction Documents to which it is a
party and to perform its obligations hereunder and thereunder.

        The Borrower has taken all necessary action to authorize the execution,
delivery, and performance by the Borrower of the Transaction Documents to which
it is a party.

        This Agreement and each other Transaction Document to which the Borrower
is a party has been duly executed and delivered by the Borrower.

        For Federal income tax purposes, the Borrower is not an association
taxable as a corporation.

        This Agreement and each other Transaction Document to which the Borrower
is a party constitutes a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of rights of creditors generally and
except to the extent that enforcement of rights and remedies set forth therein
may be limited by equitable principles (regardless of whether enforcement is
considered in a court of law or a proceeding in equity).

        Set forth as Schedule 6.01(h) hereto is a list of all Project Companies
and, as of the date hereof, a description of their equity interests and the
ownership thereof. The Borrower has no subsidiaries other than the Project
Companies.

        All equity interests listed on Schedule 6.01(h) currently owned,
directly or indirectly, by the Borrower are validly issued, fully paid and
nonassessable and are owned, directly or indirectly, by the Borrower free and
clear of all liens and encumbrances, except to the extent pledged under the
Borrower Pledge Agreement or permitted under Section 7.02(b).

        Neither the execution, delivery or performance by the Borrower of the
Transaction Documents to which it is a party, the compliance by the Borrower
with the terms and provisions thereof, nor the consummation of the transactions
contemplated thereby, will:

        conflict with, contravene, or violate any provision of any Requirement
of Law or any Governmental Approval;

        conflict with, or result in any breach of, any of the material terms and
conditions of, or result in the creation or imposition of (or the obligation to
create or impose), any Lien (except Liens created pursuant to the Security
Documents) upon any of the property or assets of the Borrower pursuant to the
terms of any agreement or instrument to which the Borrower is a party or by
which it or any of its property or assets is bound; or

        conflict with, contravene, or violate any provision of the articles or
certificates of formation limited liability company agreements or other
organizational documents of, or any Loan Document

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or other agreement or instrument binding upon, the Borrower unless such
conflict, contravention or violation could not reasonably be expected to have a
Material Adverse Effect.

        Except as set forth in Schedule 6.01(k), at Closing there is no
litigation, action, suit, investigation or proceeding by or before any
Governmental Authority or arbitrator pending or affecting or involving or, to
the knowledge of the responsible officers of the Borrower, threatened against
the Borrower which in the aggregate represents a potential judgement or involves
injunctive relief that could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth on
Schedule 6.01(k), there is no litigation, action, suit, investigation or
proceeding by or before any Governmental Authority or arbitrator pending or
affecting or involving or, to the knowledge of the responsible officers of the
Borrower, threatened against the Borrower which in the aggregate represents a
potential judgement in excess of $5 million or involves injunctive relief that
could reasonably be expected to have a Material Adverse Effect.

        With respect to the Borrower and its affiliates and, to the Borrower's
knowledge with respect to Material Project Participants, there is no injunction,
writ, preliminary restraining order or any order of any nature issued by an
arbitrator, court or other Governmental Authority directing that any of the
material transactions provided for in any of the Transaction Documents not be
consummated as herein or therein provided.

        The Borrower is not in breach of or in default with respect to any order
of any court, arbitrator, administrative agency or other Governmental Authority
which breach or default could reasonably be expected to have a Material Adverse
Effect.

        The financial statements of the Borrower, the Project Companies, Sithe
and Sithe New England delivered pursuant to Section 5.01(h) (including the
related notes and schedules thereto) were prepared in accordance with GAAP
(subject to customary exceptions in the case of unaudited statements) and fairly
present the financial condition and the results of operations of such Persons on
the dates and for the periods covered thereby, except as disclosed in the notes
thereto and, with respect to interim financial statements, subject to normally
recurring year-end adjustments.

        No part of the proceeds of any Advance will be used by the Borrower to
purchase or carry any Margin Stock (as defined in Regulation U) or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
Neither the making of any Advance nor the use of the proceeds thereof will
violate or be inconsistent with the provisions of Regulations T, U or X.

        No Material Borrower Default or Borrower Event of Default has occurred
and is continuing.

        The Borrower has filed or caused to be filed all material federal,
foreign, state and other tax returns which are required to be filed by it and
has paid (prior to their delinquency dates) all material taxes, fees, charges
and assessments ("Taxes") which have become due pursuant to such returns or
pursuant to any assessment received by it, other than Taxes the payment of which
are subject to a Contest and which are listed on Schedule 6.01(q) hereto.

        The Borrower is not conducting any business other than Permitted
Business.

        The Obligations of the Borrower constitute direct, unconditional and
general obligations of the Borrower which are not subordinated (whether by
contract or otherwise) to the claims of any other creditor of the Borrower,
other than Permitted Liens and subordination effected by operation of any
Requirement of Law.

        The Security Documents create, as security for the Obligations, valid
and enforceable and, following any filings to be made in respect thereof,
perfected first priority Liens on all of the Collateral, in favor of the
Collateral Agent for the ratable benefit of the Secured Parties, subject to no
Liens other than Permitted Liens. All Governmental Approvals, if any, necessary
or desirable to perfect such Liens

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have been duly effected or taken and all fees and expenses required to be paid
in connection with the filing or obtaining of such Governmental Approvals have
been paid.

        The Borrower is not (i) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "public utility
company" within the meaning of PUHCA, or (iii) subject to regulation under the
Federal Power Act of its rates or ability to issue securities.

        The Borrower and the Project Companies are not, and, by reason of
(i) the ownership (direct or indirect) of the Projects or the operation thereof
by the Borrower or the Project Companies, or (ii) any other transaction
contemplated by any Transaction Document, will not be deemed by any Governmental
Authority to be, subject to regulation as an "electric utility," "electric
corporation," "electrical company," "steam company," "steam utility," "public
utility," "public utility company," "public utility holding company," or similar
entity within the meaning of any Requirement of Law except that each Project
Company is and will be a "public utility" under the Federal Power Act with
authority to sell wholesale electric power and ancillary services at
market-based rates and with all waivers of regulations and blanket
authorizations as are customarily granted by FERC to a "public utility" that
sells wholesale power and ancillary services at market-based rates.

        Subject to subsection (x) below, neither the Administrative Agent, the
Collateral Agent nor the Lenders will, solely by reason of (i) the ownership
(direct or indirect), construction, operation and maintenance of the Projects by
the Borrower or the Project Companies as contemplated by the Transaction
Documents, (ii) the making of any of the Commitments, (iii) the securing of the
Obligations by Liens on the Collateral or (iv) any other transaction
contemplated by this Agreement or any other Transaction Document, be deemed by
any Governmental Authority to be, or to be subject to regulation as, an
"electric utility," "electric corporation," "electrical company," "steam
company," "steam utility," "public utility," "public utility company," "public
utility holding company," or similar entity within the meaning of any
Requirement of Law.

        If the Projects are operated as contemplated by the Project Documents,
neither the Administrative Agent, the Collateral Agent nor the Lenders will,
solely by reason of ownership or operation of the Project upon the exercise of
their remedies under the Security Documents, and without regard to any other
activity of the Administrative Agent, the Collateral Agent or any Lender, be
deemed by any Governmental Authority to be subject to regulation as an "electric
utility," "electric corporation," "electrical company," "steam company," "steam
utility," "public utility," "public utility company," "public utility holding
company," or similar entity within the meaning of any Requirement of Law,
provided that the related Project Company maintains its EWG status or is no
longer required under any Requirement of Law to maintain such status in order to
be exempt from PUHCA, except that ownership or operation of the Project may
subject such owner or operator to regulation as a "public utility" under the
Federal Power Act.

        There are no collective bargaining agreements covering the employees of
the Borrower or any Multiemployer Plans which would reasonably be expected to
have a Material Adverse Effect.

        The Borrower does not maintain or contribute to any Plan, which
maintenance or contribution could reasonably be expected to have a Material
Adverse Effect.

        As of the Closing Date, the factual statements made to the Lead
Arrangers in writing and all documentation furnished to the Lead Arrangers by
the Borrower (other than projections and forecasts) taken as a whole including
written updated or supplemented information delivered on or prior to the Closing
Date are, to the Borrower's knowledge true, correct and complete in all material
respects.

        No consent from, authorization by, or registration or filing with, any
Person is required for the due execution, delivery, or performance of, any Loan
Document by the Borrower or any Project Company,

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except (i) those that have already been obtained or made and (ii) filings
necessary to create, perfect or retain the perfection of Liens against the
Collateral.

COVENANTS OF THE BORROWER

        Affirmative Covenants.    So long as any Note shall remain unpaid, the
Letter of Credit shall remain outstanding, any Lender shall have any Commitment
hereunder, or any payment Obligation shall remain unpaid, the Borrower shall,
unless the Required Lenders shall otherwise consent in writing:

        Records.    Keep proper books of record and account in which full, true
and correct entries in conformity with GAAP and all requirements of applicable
Law shall be made of all dealings and transactions in relation to its business
and activities.

        Inspection Rights.    Permit officers and designated representatives of
the Administrative Agent and each Lender (but with respect to each Lender, not
during performance testing) to visit and inspect any of the properties of the
Borrower, and to examine the books and records of the Borrower (including,
without limitation, the books of record and account of the Borrower), and
discuss the affairs, finances and accounts of the Borrower with, and be advised
as to the same by, its and their officers, directors and independent
accountants, all upon reasonable notice and at such reasonable times as the
Administrative Agent may desire. All inspections and visits by the Lenders shall
be coordinated through the Administrative Agent, and the Administrative Agent
shall attempt to consolidate inspections by multiple Lenders.

        [Intentionally Omitted.]

        Preservation of Existence, etc.    Cause to be done, all things
necessary to preserve and keep in full force and effect its limited liability
company existence, its good standing in its jurisdiction of formation, its
qualification to do business in each other jurisdiction where such qualification
is necessary, and, except where failure to maintain the same could not
reasonably be expected to have a Material Adverse Effect, its patents,
trademarks, tradenames, copyrights, franchises and similar rights.

        Maintenance of Properties.    Keep, or cause to be kept, in good working
order and condition, ordinary wear and tear excepted, the properties owned or
leased by it, unless the failure to do so could not reasonably be expected to
have a Material Adverse Effect.

        Good Title.    Except as may be otherwise permitted pursuant to
Section 7.02(c), preserve and maintain good and valid title to, or leasehold
interest in, all of the properties and assets owned or leased by it subject to
no Liens other than Permitted Liens.

        Taxes.    Pay or cause to be paid when due, all Taxes and all charges,
betterments, or other assessments relating to the Collateral, and all other
lawful governmental and non-governmental claims required to be paid by the
Borrower except to the extent any of the same are subject to a Contest.

        Compliance With Laws.    Comply with all applicable Laws and maintain in
full force and effect all Governmental Approvals necessary for the conduct of
its business and the operation of the Projects, except to the extent that the
failure to do so would not reasonably be expected to have a Material Adverse
Effect.

        Compliance with Risk Management Policy; Power Marketing
Agreement.    Comply in all material respects with the terms and conditions of
the Risk Management Policy and if a Default or Event of Default occurs under the
Power Marketing Agreement, pursue, in consultation with the Administrative
Agent, all rights and remedies of the Borrower in respect of such Default or
Event of Default;

        Gas Lateral.    Use its good faith efforts to proceed promptly to
(w) negotiate with Tennessee Gas Company or Algonquin with respect to the
construction of the Gas Lateral, (x) prepare all reports and

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studies required in connection with any Federal, State or local governmental
filings which are required for construction of the Gas Lateral, (y) obtain or
cause to be obtained all real estate rights-of-way necessary for the Gas Lateral
and any other consents from any other Persons necessary in order to construct
the Gas Lateral, (z) submit or cause to be submitted all such requisite
governmental filings to the appropriate Governmental Authority as promptly as
possible, and (aa) take, or cause to be taken, all actions necessary or
desirable in order to cause the associated permits and approvals to be issued by
the applicable Governmental Authority in as expeditious a manner as possible.
The Borrower's obligations under this Section 7.01(j) will terminate, if and
when, the Borrower demonstrates to the Technical Committee, in consultation with
the Independent Fuel Consultant, that alternative arrangements (which
alternative arrangements may consist of satisfactory arrangements with
Distrigas) have been secured which provide Sithe Mystic Development access to
gas supply and transportation in excess of the quantities which Distrigas is
obligated to supply pursuant to the Gas Sales and Purchase Agreement at
commercially reasonable rates and which together with the Distrigas supplied gas
would provide all of Sithe Mystic Development's gas requirements, such
requirements to be consistent with the assumptions used in the Closing Base Case
regarding the quantity of fuel for the Mystic 8&9 Project, the nature of the
transportation services for the Mystic 8&9 Proejct and the operating parameters
of the Mystic 8&9 Project, including those related to availability and dispatch
(any such alternative arrangements, an "Alternative Plan").

        [Intentionally Omitted.]

        Revenue Account.    Transfer and deposit, or cause to be transferred and
deposited, all Project Revenues received by, or on behalf of, the Borrower from
Sithe Power Marketing or otherwise to the Revenue Account.

        Use of Proceeds.    Use or cause to be used the proceeds of the Advances
solely in accordance with Section 2.01(b).

        Interest Rate Hedging.    No later than 10 Business Days after Closing,
execute and deliver Swap Agreements (in a form substantially similar to
Exhibit 1.01G) providing interest rate protection (i) through May 30, 2002, with
respect to not less than 70% of the Notional Basis (as defined below) and
(ii) from May 31, 2002 through the Maturity Date, with respect to not less than
50% of the Notional Basis. The "Notional Basis" shall equal, at any time, the
sum of Project Advances and LC Loans in respect of Drawings under the
Interconnection Payment Letters of Credit projected in accordance with the
Closing Base Case to be outstanding at such time.

        Negative Covenants.    So long as any Note shall remain unpaid, any
Letter of Credit shall remain outstanding, any Lender shall have any Commitment
hereunder, or any payment Obligation shall remain unpaid, the Borrower will not,
without the prior written consent of the Required Lenders:

        Permitted Borrower Debt.    Create, incur, assume, suffer to exist or
otherwise become or remain directly or indirectly liable with respect to any
Debt, other than the following ("Permitted Borrower Debt"):

        liabilities under the Loan Documents to which the Borrower is a party;

        any Debt of the Borrower outstanding on the Closing Date listed on
Schedule 7.02(a) hereto;

        Debt which is pari passu to the Obligations in an amount not to exceed
$120,000,000 in the aggregate incurred to pay Project Costs and Financing Costs
for any Additional Project so long as (A) the property, contracts, permits and
rights that comprise such Additional Project are pledged as collateral for the
Obligations and are reasonably acceptable to the Technical Committee and such
Additional Project executes a guarantee substantially in the form of the Project
Company Guarantee which is reasonably acceptable to the Technical Committee,
(B) after giving effect to the incurrence of such indebtedness, (x) the
debt-to-equity ratio of such Additional Project does

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not exceed 60% and (y) the average projected Debt Service Coverage Ratio for the
period ending on the Maturity Date is not less than the Closing Base Case, as
certified by the Borrower and confirmed by the Technical Committee in
consultation with the Independent Engineer and the Power Market Consultant,
(C) the proceeds of such indebtedness are contributed to the Person that owns
such Additional Project pursuant to a guarantee substantially in the form of the
Project Company Guarantee and (D) a customary intercreditor agreement is
executed by the Collateral Agent and the provider of such Debt in form and
substance reasonably satisfactory to the Technical Committee or appropriate
amendments to the Loan Documents are made, in form and substance reasonably
satisfactory to the Technical Committee (it being understood and agreed that the
Collateral Agent and the Administrative Agent shall be obligated to execute such
intercreditor agreement and any appropriate amendments to the Loan Documents
upon receipt of written approval thereof by the Technical Committee);

        Debt incurred under any interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements, interest rate insurance or other
agreements and arrangements designed to protect against fluctuations in interest
rate (with respect to the interest rate payable on the Project Advances and the
LC Loans resulting from a drawing on the Interconnection Payment Letters of
Credit) entered into by the Borrower other than for speculative purposes;

        surety bonds, performance bonds or similar arrangements with third-party
sureties, indemnitors or similar persons obtained or made in connection with a
good faith contest;

        trade accounts payable and other Debt for the acquisition of goods,
services or rights in the ordinary course of business;

        endorsement of negotiable instruments for collection;

        unsecured Debt incurred in connection with Permitted Hedging
Transactions; and

        unsecured Debt in addition to the foregoing in an amount not to exceed
$50,000,000 at any given time.

        Liens.    Create, incur, assume or suffer to exist any Lien upon its
interests in the Project Companies or other assets, except for (i) Liens for
Taxes not yet delinquent or being contested in good faith with adequate reserves
being maintained therefor, (ii) Liens arising from judgments or awards so long
as an appeal is being prosecuted in good faith with adequate reserves being
maintained therefor and (iii) Liens to secure obligations under Swap Agreements
and Permitted Borrower Debt described under clauses (i), (ii) and (iii) of
Section 7.02(a).

        Mergers, Sales of Assets, Etc.    Merge or consolidate into or with any
Person, or liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), discontinue its business or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or
substantially all of its business or property, (whether in one transaction or a
series of transactions) whether now or hereafter acquired;

        Sale of Interest in Project Companies.    Except as otherwise permitted
in the definition of "Change of Control," sell, lease, dispose of or transfer
any of its interest in any Project Company.

        Acquisitions, Subsidiaries, Etc.    (i) Acquire by purchase or otherwise
any property or assets of, or stock or other evidence of beneficial ownership
of, any Person except pursuant to the Transaction Documents, (ii) enter into any
partnership or joint venture, or (iii) create or acquire any Subsidiary,
provided that the Borrower may create or acquire Subsidiaries in connection with
Additional Projects, so long as such Subsidiaries created or acquired in
connection with the Additional Projects shall not be acquired or created until
the Borrower and each such Subsidiary has executed and delivered to the
Administrative Agent a guarantee in substantially the form of the Project
Company Guarantee, security

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documents and all necessary documents, certificates and instruments reasonably
requested by the Administrative Agent in form and substance substantially
similar to the Loan Documents to which the Borrower and Project Companies are
currently a party; provided, further, that any pre-financing development
activities involving such Additional Projects shall not be undertaken by any
such Subsidiary or if undertaken by any such Subsidiary shall be funded
utilizing cash contributed by Sithe or Sithe New England.

        Dividends; Incentive Fee.    Pay any Incentive Fee (as defined in the
Power Marketing Agreement) to Sithe Power Marketing or declare or pay any
dividends or distributions to its shareholders, or return any capital to its
members, or authorize or make any other distribution, payment or delivery of
property or cash to its shareholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, any stock or other equity interests
of the Borrower now or hereafter outstanding (or any options or warrants issued
with respect thereto), or set aside any funds for any of the foregoing purposes,
except the following ("Permitted Dividends"):

        the Borrower may make, or cause to be made on the date of the Initial
Advance, (A) a payment (by way of distribution, reimbursement or otherwise) to
Sithe (or any Affiliate thereof) which will be used to repay the BECO
Acquisition Loan in an amount equal to $116,561,970.91 (together with accrued
interest from February 1, 2001 until the date repaid), (B) a reimbursement to
Sithe (or any Affiliate thereof) in respect of certain Pre-Closing Project Costs
in an amount equal to $317,298,521.59;

        the Borrower may make all payments required to be made in connection
with the Tax Sharing Agreement, provided, that the conditions set forth in
Section 4.05(k) of the Depositary Agreement shall have been satisfied;

        within forty-five (45) days of each Distribution Calculation Date (a
"Distribution Date"), the Borrower may pay dividends or distributions to its
equity holders, and/or any Incentive Fee to Sithe Power Marketing from the cash
on deposit in the Distribution Account so long as:

        (A)  the Debt Service Coverage Ratio for each of (x) the twelve month
period before the Distribution Calculation Date, calculated on an actual basis
(or three months in the case of the first Distribution Calculation Date, or six
months in the case of the second Distribution Calculation Date, or nine months
in the case of the third Distribution Calculation Date) and (y) the twelve month
period after the Distribution Calculation Date (calculated on a projected basis
in accordance with Section 7.03(d)) shall be at least 1.50 to 1.00 for a 50%
distribution, and at least 1.75 to 1.00 for a 100% distribution, as certified by
the Borrower; and

        (B)  the Second Completion Date shall have occurred and either (I) the
Gas Lateral shall have been constructed and be fully operational and all
governmental approvals required for the operation of the Gas Lateral shall have
been obtained or (II) an Alternative Plan shall be in full force and effect,
provided that Permitted Dividends may not be paid as described in subclauses
(ii) or (iii) of this clause (f) at any time when (w) a Borrower Event of
Default or a Material Borrower Default has occurred and is continuing, (x) there
exist any unpaid LC Loans in respect of drawings under any Standby Letter of
Credit, (y) the Debt Service Reserve Requirement is not satisfied by any
combination of (1) cash or cash equivalent, or (2) Acceptable Credit Support,
(z) the Major Maintenance/Forced Outage Reserve Requirement is not satisfied by
any combination of (1) cash or cash equivalent, or (2) Acceptable Credit Support
or (aa) there has occurred and is continuing any event or circumstance described
in Section 4.3(i) of the Power Marketing Agreement, regardless of whether the
cure period described therein has lapsed. The Borrower shall be required to have
certified to the Lenders as to matters set forth in (w), (x), (y), (z) and (aa)
on such Distribution Date; provided, further, that if on any Distribution
Calculation Date occurring in December, 2004, March 2005, June 2005 and
September 2005, the Borrower shall have failed

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to receive an Investment Grade Rating from two Rating Agencies, one of which
shall be S&P or Moody's, (a) Permitted Dividends otherwise permitted above in
respect of such Distribution Calculation Date shall be reduced by 50% and
(b) 50% of amount on deposit in the Distribution Account as of such Distribution
Calculation Date (prior to giving effect to any Permitted Dividends) shall be
applied to prepay the Advances in accordance with Section 4.02(b)(ii); provided,
further, that if on any Distribution Calculation Date occurring in December,
2005 or thereafter, the Borrower shall have failed to receive an Investment
Grade Rating from two Rating Agencies, one of which shall be S&P or Moody's,
(a) no Permitted Dividends shall be permitted and (b) 100% of amount on deposit
in the Distribution Account as of such Distribution Calculation Date shall be
applied to prepay the Advances in accordance with Section 4.02(b)(ii).

        The Borrower may pay dividends or distributions to its equity holders
from all Mystic Station Net Revenues received prior to the Second Completion
Date provided, that Mystic Station Net Revenues may not be paid as described in
this clause (iv) at any time when a Borrower Event of Default or a Material
Borrower Default has occurred and is continuing and shall instead be retained in
the Mystic Station Revenue Account to be applied in accordance with the terms of
the Depositary Agreement.

        Investments in Other Persons.    Lend money or credit or make advances
or contributions to any Person, or directly or indirectly purchase or acquire
any stock, obligations or securities of, or any other interest in, or make any
capital contribution to any Person or make any investments, except:

        short-term bank deposits, government obligations, money market funds and
other similar short-term investments;

        maintenance of the Accounts and the Permitted Investments of the funds
on deposit therein;

        Permitted Investments; and

        investments by the Borrower in any Project Company that are permitted or
contemplated by the Loan Documents.

        Transactions with Affiliates.    Enter into any transaction or series of
related transactions with any Affiliate other than (i) the Transaction Documents
and the transactions pursuant to the Transaction Documents in effect on the
Closing Date; (ii) the reimbursement of Pre-Closing Project Costs, (iii) the
incurrence and repayment of Permitted Borrower Debt and the grant of security
interests in connection therewith; (iv) Permitted Dividends; (v) arm's-length
transactions in the ordinary course, (vi) transactions that are not material to
the transactions contemplated by the Loan Documents, (vii) transactions approved
by the Technical Committee, which approval shall not be unreasonably withheld,
(viii) transactions pursuant to the Power Marketing Agreement, and
(ix) transactions in which the only parties are two or more of the Borrower and
the Project Companies or Subsidiaries to the extent the provisions of
Section 7.02(e)(iii) hereof have been satisfied. The Borrower shall not, without
the consent of the Technical Committee, communicate its satisfaction with any
evidence provided by Sithe Power Marketing in accordance with Section 4.3(j)(y)
of the Power Marketing Agreement.

        Business.    Enter into or engage in any business other than (a) the
ownership (directly and indirectly) and development, construction, operation,
expansion, management and financing of the Projects and activities reasonably
incidental thereto including the sale of energy and (b) the ownership (directly
and indirectly) and construction, operation, expansion, management and financing
of any Additional Project (such activities shall expressly exclude pre-financing
development activities relating to Additional Projects unless funded through
equity contributions from Sithe or Sithe New England).

        Additional Agreements.    Enter into any agreement (other than the Loan
Documents as in effect on the Closing Date) which restricts the ability of the
Borrower to (i) enter into amendments or modifications of the Transaction
Documents, (ii) enter into waivers of material Transaction Documents

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(ii) sell, transfer or otherwise dispose of its assets, (iii) create, incur,
assume or suffer to exist any Lien upon any of its property, and (iv) create,
incur, assume, suffer to exist or otherwise become liable with respect to any
Debt.

        Compliance with ERISA.    With respect to any Plan, (i) fail to satisfy
the minimum funding requirements of ERISA or the Code; (ii) take any action, or
omit to take any action which would give rise to a nonexempt prohibited
transaction (as such term is defined in Section 4975 of the Code or Section 406
of ERISA) that is reasonably likely to subject the Lenders to any material tax
or penalty under Section 4975 of the Code or Section 502(i) of ERISA; or
(iii) engage in any transactions prohibited by ERISA or have any liabilities, in
each case, which would reasonably expected to have a Material Adverse Effect.

Project Company Guarantee; Risk Management Policy; Power Marketing Agreement;
SPM Security Documents.

        Cancel or terminate, or agree to or permit any amendment or modification
of, the Project Company Guarantee, or grant consents with respect to any
obligation thereunder, or waive timely performance or observance by any Person
of its obligations under the Project Company Guarantee. The Borrower shall not,
nor shall it permit any Project Company to, make any material waiver,
modification or amendment to, or permit any material amendment, waiver or
modification of, the Risk Management Policy or utilize insurance to cover the
First Contingency (as defined therein) without the consent of the Technical
Committee; provided, without limitation, that for purposes of this sentence, any
waiver, modification or amendment to the stated limits or methodology in the
Risk Management Policy shall be deemed material; provided, further, that without
the consent of the Technical Committee, the Borrower may increase the historical
period utilized for calculation of "value-at-risk" and may, on a one-time basis,
convert its "value-at-risk" calculation methodology to a "Monte Carlo"
simulation model; provided, further, that if the use of a specified type of
insurance to cover the First Contingency (as defined in the Risk Management
Policy) is approved by the Technical Committee in accordance with this
clause (l), the continuing or subsequent use of such type of insurance shall not
be subject to further Technical Committee approval; provided, further, that
notwithstanding any of the foregoing, the Borrower shall promptly inform the
Administrative Agent in writing of any proposed waiver, modification or
amendment to the Risk Management Policy. For one-time waivers of stated limits
in the Risk Management Policies, the Technical Committee will endeavor to reply
within two (2) Business Days of confirmed receipt of such request. If the
requested waiver relates to an exceedance of 10% or less of the applicable
limit, Technical Committee approval shall be deemed to have been given if the
Technical Committee fails to reply within such two Business Day period. For
permanent amendments of stated limits contained in, or all other provisions of,
the Risk Management Policies, the Technical Committee will endeavor to reply
within 10 Business Days of confirmed receipt of such request.

        cancel, waive or terminate, or agree to or permit any amendment,
assignment or modification of, the Power Marketing Agreement, unless such
amendment, waiver, modification, cancellation, termination or assignment would
not reasonably be expected to have a Material Adverse Effect or the Borrower
obtains prior written consent of the Technical Committee to such amendment,
waiver, modification, cancellation, termination or assignment.

        cancel, waive or terminate or agree to or permit any amendment,
assignment or modification of, or grant any consent (including the consent
required pursuant to Section 6.07 of the SPM Depositary Agreement) under any SPM
Security Document, provided, however, that execution of any Joinder Agreement
contemplated by the SPM Depositary Agreement shall not constitute an amendment
or modification thereof and provided, further, that if any amendment or
modification to Appendix C (Attribution Protocol) to the Power Marketing
Agreement has been approved by the Technical Committee in accordance with
clause (ii) of this Section 7.02(l), such consent shall also constitute approval
of such amendment or modification for purposes of the SPM Depositary Agreement.

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        Profits, Management, Etc.    Enter into any partnership, profit-sharing,
royalty agreement or other similar arrangement whereby the Borrower's income or
profits are, or might be, shared with any other Person (other than Sithe Power
Marketing, Sithe Boston Power Services, Sithe New England Power Services and
Sithe), or enter into any management contract or similar arrangement whereby its
business or operations are managed by any other Person (other than Sithe Power
Marketing, Sithe Boston Power Services, Sithe New England Power Services and
Sithe).

        Organizational Documents.    Amend or modify, in any material fashion,
its certificate of formation or limited liability company agreement.

        Guaranty Obligations.    Create, incur, assume, guarantee or remain
liable on any Guaranty Obligations except:

        to the extent any such Guaranty Obligation constitutes Borrower
Permitted Debt or Debt allowed under this Agreement;

        in the ordinary course of business and not in connection with the
borrowing of money; or

        to the extent such Guaranty Obligation is in favor of the Lenders
pursuant to the Loan Documents.

        Margin Stock.    Use any proceeds of the Advances to purchase or carry
any margin stock.

        Name Change.    Change its name or location without 15 days' prior
written notice to the Administrative Agent.

        Bank Accounts.    Maintain bank accounts other than the Accounts (each
of which shall be maintained with the Collateral Agent) and the Permitted
Borrower Account.

        Reporting Obligations.    So long as any Note shall remain unpaid, any
Letter of Credit shall remain outstanding, any Lender shall have any Commitment
hereunder or any payment Obligation shall remain unpaid, the Borrower shall,
unless the Required Lenders shall otherwise consent in writing, furnish to the
Administrative Agent:

        Borrower Financial Statements.    (i) Promptly upon completion thereof
and in any event within 120 days after the end of each fiscal year of the
Borrower, an audited annual financial statement certified by a firm of
independent public accountants of recognized international standing, and
(ii) promptly upon completion thereof and in any event within 60 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, an unaudited quarterly financial statement.

        [Intentionally omitted.]

        Officer's Certificates.    At the time of the delivery of the financial
statements under clause (a) above, a certificate of an Authorized Officer of the
Borrower which certifies (i) that such financial statements fairly present the
financial condition and the results of operations of the Borrower on the dates
and for the periods indicated in accordance with GAAP, subject, in the case of
interim financial statements, to normally recurring year-end adjustments and
lack of notes, and (ii) that such Authorized Officer has reviewed the terms of
the Loan Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the business and financial
condition of the Borrower during the accounting period covered by such financial
statements, and that as a result of such review such Authorized Officer has
concluded that no Borrower Event of Default or Material Borrower Default, has
occurred during the period commencing at the beginning of the accounting period
covered by the financial statements accompanied by such certificate and ending
on the date of such certificate or, if any, Borrower Event of Default or
Material Borrower Default has occurred, specifying the nature and extent thereof
and, if continuing, the action the Borrower proposes to take in respect thereof.

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        Updated Projections.    At the request of the Administrative Agent,
which request may be no more frequent than annually, updated market projections
(which, inter alia, shall forecast variable Operating Expenses for the Projects)
for the following twelve month period, together with a certificate of the Power
Market Consultant and the Fuel Consultant as to the reasonableness of such
forecast and its methodology. If such updated market projections are requested
by the Administrative Agent, the Borrower shall use such updated projections in
determining whether the conditions to Distribution have been satisfied with
respect to the next quarter (the "First Quarter") and shall use the methodology
adopted by such updated projections in determining whether the conditions to
Distribution have been satisfied in each of the three quarters following the
First Quarter.

        Certain Events.    Promptly after the Borrower obtains knowledge
thereof, written notice of:

        the occurrence of any Borrower Default or Borrower Event of Default
specifying the nature thereof and the action which the Borrower is taking and
proposes to take with respect to the same;

        any pending or threatened litigation, action, suit, investigation,
proceedings by or before any Governmental Authority or arbitrator involving the
Borrower involving (A) an amount in dispute in excess of (i) $5,000,000 in
respect of any one such proceeding or (ii) $10,000,000 in respect of all such
proceedings; or (B) any injunctive or equitable relief;

        the occurrence of any Casualty Event affecting any Project in excess of
$5,000,000;

        any cancellation of or material change in the terms, coverage or amounts
of the insurance for the Borrower or the Project Companies or a change in the
commercial availability of any such insurance that could reasonably be expected
to have a Material Adverse Effect; and

        any change in or transfer of ownership interests in the Borrower or the
Borrower's interests in any Project Company.

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        Other information from time to time, such other information or documents
(financial or otherwise) as the Administrative Agent may reasonably request.

BORROWER EVENTS OF DEFAULT

        Borrower Events of Default.    If any of the following events (each of
which shall be a "Borrower Event of Default") shall occur and be continuing
after the expiration of the grace period, if any, applicable thereto:

        Failure to Make Payments.    The Borrower shall (i) fail to pay or
prepay any principal of any Note within five (5) Business Days after the same
comes due and payable, whether by scheduled maturity or required prepayment or
by acceleration or otherwise or (ii) fail to pay any interest on any Note or any
Fees, or any other amount payable under any Swap Agreement with any Swap Bank or
under the other Loan Documents within five (5) Business days after the same
shall become due and payable;

        Breach of Representation or Warranty.    Any representation or warranty
made or deemed made by the Borrower in any Loan Document or in any certificate
delivered pursuant thereto shall prove to be false or misleading when made or
deemed made if as a result of such falsity or misrepresentation, a Material
Adverse Effect occurs or could reasonably be expected to occur and such Material
Adverse Effect is not cured or vitiated prior to the 45th day after the date on
which such misrepresentation occurred;

        Breach of Loan Document Covenants and Obligations by Borrower.    Other
than as described in clause (a) above, the Borrower shall fail to perform or
observe any covenant or obligation arising under any Loan Document, provided,
that in the case of (1) Borrower Affirmative Covenants (other than covenants set
forth in Sections 7.01(d) (existence), (f) (title) (only with respect to
material properties and assets), (i) (risk management policy), (l) (Revenue
Account) and (m) (use of proceeds)), and (2) Section 7.03 (i) (notice of
default)), such failure has not been cured or remedied within 30 days after the
Borrower becomes aware of such breach, or if such failure is not susceptible of
being remedied within 30 days, such longer period as may be necessary (not to
exceed 90 additional days), provided, that as to such extension, the Borrower
shall at all times be diligently attempting to remedy such failure and such
extension of time could not reasonably be expected to have a Material Adverse
Effect, provided, that the Lenders' remedies in connection with a breach by the
Borrower of its obligations pursuant to Section 7.01(j) shall be limited to
those remedies provided in Section 7.02(f)(iii) and 8.01(h);

        Default Under Other Agreements.    The Borrower shall default in the
(i) payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing or (ii) in performance or
observance of any other obligation or condition, in each case, with respect to
any secured Debt (other than the Obligations) in the aggregate principal amount
of $25,000,000 or more; or the Borrower shall default in the (i) payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) of any amount owing or (ii) in performance or observance of any other
obligation or condition, or any other event shall occur or condition exist, if
the effect of such default, event or condition is to accelerate the maturity of
any Debt (other than the Obligations) in an aggregate principal amount of
$10,000,000 or more or any such Debt shall become or be declared to be due and
payable prior to its stated maturity other than as a result of a regularly
scheduled payment;

        Bankruptcy, Etc.    An Event of Bankruptcy shall occur with respect to
the Borrower, Sithe Power Marketing or Sithe;

        Change in Control.    A Change of Control shall have occurred;

        Clean Up Requirement.    The Clean Up Requirement shall not have been
satisfied;

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        Gas Lateral.    If by May 30, 2003 neither of the following shall have
occurred: (i) the Gas Lateral has been constructed and is fully operational, and
all governmental approvals required for the operation of the Gas Lateral have
been obtained, or (ii) an Alternative Plan is in full force and effect.

        Dissolution.    Any order, judgment, or decree shall be entered against
the Borrower, Sithe Power Marketing or Sithe decreeing its involuntary
dissolution or split up and such order shall remain undischarged and unstayed
for a period in excess of thirty (30) days from the date of entry thereof; or
the Borrower, Sithe Power Marketing or Sithe shall otherwise dissolve or cease
to exist;

        Judgments.    One or more judgments or decrees shall be entered by a
court of competent jurisdiction against the Borrower in an aggregate amount in
excess of $75,000,000 and not stayed, satisfied or discharged within sixty
(60) days from the date of entry thereof;

        Security Documents.    Any of the Security Documents shall for any
reason cease to be in full force and effect, or shall cease to give the
Collateral Agent the Liens, rights, powers and privileges purported to be
created thereby on any material Collateral (unless such failure has been cured
or remedied within ten (10) days from the date of such cessation);

        Compliance with ERISA.    The Borrower shall fail to perform or observe
the covenants set forth in 7.02(k) and such failure would reasonably be expected
to have a Material Adverse Effect;

        Project Event of Default.    (I) A Material Project Event of Default
shall have occurred or (ii) a Project Event of Default not constituting a
Material Project Event of Default shall have occurred which Project Event of
Default could reasonably be expected to have a Material Adverse Effect;

        Second Completion Date.    The Second Completion Date shall not have
occurred on or before the Date Certain;

        Breach of Negative Pledge.    Sithe New England shall have pledged all
or any portion of its membership interests in the Borrower;

        Equity Contributions.    So long as Sithe New England continues to have
an obligation to fund Contingent Equity Contributions under the Equity
Contribution Agreement (and such obligation is not currently cash collateralized
or backed by Acceptable Credit Support) and/or Sithe has any remaining payment
obligations under the Sithe Equity Guaranty:

        Sithe New England shall fail to perform or observe the terms and
conditions of the Equity Contribution Agreement, after giving effect to all
grace periods provided therein;

        The Sithe Equity Guaranty shall cease to be valid and binding and in
full force and effect;

        Sithe shall fail to perform or observe the terms or conditions of the
Sithe Equity Guaranty, provided, however, in the case of a breach of any
Original Financial Covenant or New Financial Covenant (defined therein)
(X) prior to the making of all Contingent Equity Contributions (a) any cure
periods applicable to such breach provided for in the Revolving Credit Facility
or the New Revolving Credit Facility, as applicable, shall have expired, (b) the
waiver of any such default by the lenders to the Revolving Credit Facility or
the New Revolving Credit Facility shall be deemed to cure such default, in the
case of any Original Unincorporated Financial Covenant or New Unincorporated
Financial Covenant, respectively (as defined in the Sithe Equity Guaranty), and
(c) such default hereunder shall be deemed cured if within 15 days following the
occurrence of such default Sithe provides Acceptable Credit Support with respect
to all remaining obligations of Sithe under the Sithe Equity Guaranty and
(Y) thereafter, (a) any cure periods applicable to such breach provided for in
the Revolving Credit Facility or the New Revolving Credit Facility, as
applicable, shall have expired, (b) the waiver of any such default by the
lenders to the Revolving Credit Facility or the New Revolving Credit Facility
shall be deemed to cure such default, (c) such default hereunder shall be deemed
cured if

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within 15 days following the occurrence of such default Sithe provides
Acceptable Credit Support with respect to all remaining obligations of Sithe
under the Sithe Equity Guaranty, and (d) if Sithe shall have received and
continues to maintain an Investment Grade Rating from two Rating Agencies, one
of which shall be S&P or Moody's, then, notwithstanding any provision of any
Loan Document to the contrary, such default shall not constitute a Borrower
Event of Default hereunder.

        Sithe Undertaking.    The Sithe Undertaking shall cease to be valid and
binding and in full force and effect or Sithe shall fail to perform or observe
the terms or conditions thereof, after giving effect to all grace periods
provided therein.

        Sithe New England.    For so long as the Distrigas Guaranty shall
contain a net worth covenant with respect to Sithe New England and/or a covenant
restricting certain asset dispositions by Sithe New England, (I) Sithe New
England's net worth (as determined in accordance with GAAP) shall be less than
$300 million or (ii) Sithe New England shall have pledged, transferred,
assigned, mortgaged, leased, sold or hypothecated the Generating Assets (as
defined in the Distrigas Guaranty) in a manner that could have a material
adverse impact on Sithe New England's ability to perform fully its obligations
under the Distrigas Guaranty (other than to the extent expressly consented to by
Distrigas in writing); provided, in the case of clause (ii), that such pledge,
transfer, assignment, mortgage, lease, sale or hypothecation (A) could
reasonably be expected to have a Borrower Material Adverse Effect and (B) such
Default remains unremedied for a period of 150 days.

Then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Required Lenders, upon notice to the Borrower
(I) declare the Commitments and the obligation of each Lender to make Advances
and of the LC Issuers to issue, extend, or reinstate any amounts under, the
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, (ii) declare the Notes, all accrued interest thereon and the Swap
Claims, if any, and all other amounts payable under this Agreement and the other
Loan Documents to be forthwith due and payable, whereupon the Notes and all such
interest and other amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower, (iii) demand that the Borrower
immediately pay to the Collateral Agent an amount equal to the remaining amount
that can be drawn under all Letters of Credit, whereupon the Borrower shall
immediately make such payment to the Collateral Agent, which shall hold such
payment as collateral for any amounts then owed or which may become due to the
LC Issuers under the Loan Documents, (iv) direct the Collateral Agent to apply
any and all amounts on deposit in the Accounts to repayment of the Obligations
in accordance with the Depositary Agreement and (v) direct the Collateral Agent
to exercise in respect of the Collateral, in addition to the other rights and
remedies provided for herein and in the Security Documents or otherwise
available to the Administrative Agent, the Collateral Agent, or the Lenders, any
or all the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York and in effect in any other
jurisdiction in which Collateral is located at that time; provided, however,
that in the event of an actual or deemed entry of an order for relief with
respect to the Borrower under the Federal Bankruptcy Code, (A) the Commitments
and the obligation of each Lender to make Advances and of the LC Issuers to
issue, or to extend the Expiration Date or otherwise amend or modify, or
reinstate any amounts under, the Letters of Credit shall automatically be
terminated and (B) the Notes, all such accrued interest and all such other
amounts described in clauses (ii) and (iii) above shall automatically become and
be due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower. Notwithstanding
anything to the contrary contained herein, no notice given or declaration made
by the Administrative Agent pursuant to this Section 8.01 shall affect the
obligation of the LC Issuers to make any payment under any Letter of Credit
issued by the LC Issuers in accordance with the terms of such Letter of Credit.

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THE ADMINISTRATIVE AGENT AND THE TECHNICAL COMMITTEE

        Authorization and Action.    Each Lender hereby appoints and authorizes
the Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by any Loan
Document (including enforcement thereof or collection thereunder), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders or, if required by the terms hereof, all Lenders, and such
instructions shall be binding upon all Lenders and the LC Issuers; provided,
however, that the Administrative Agent shall not be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement or applicable Law. The Administrative Agent agrees to
deliver promptly to each Lender notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement or by any Project Company under
the terms of the Project Company Guarantee.

        Agent's Reliance, etc.    Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with any Loan
Document, except for its or their own gross negligence or willful misconduct as
found by a court of competent jurisdiction. Without limitation of the generality
of the foregoing, the Administrative Agent: (a) may treat the payee of any Note
as the holder thereof until the Administrative Agent receives and accepts a
Lender Assignment or other assignment or transfer documentation entered into by
the Lender which is the payee of such Note, as assignor or transferor, and an
assignee, as assignee or transferee, as provided in Section 10.07; (b) may
consult with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with any Loan
Document; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of the Borrower or to inspect the Project or any other
property (including the books and records) of the Borrower; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Transaction Document or
any other instrument or document furnished pursuant hereto or thereto; (f) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties and (g) shall not be charged with having
knowledge of any Borrower Default, Borrower Event of Default, Project Default or
Project Event of Default unless provided with written notice thereof.

        BNP PARIBAS and Affiliates.    With respect to its Commitments and the
Notes issued to it, BNP PARIBAS shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include BNP PARIBAS in its individual capacity.
BNP PARIBAS and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of and generally engage in any kind of business with,
the Borrower, each Member, any of their respective Affiliates and any Person who
may do business with or own securities of the Borrower, a Member or any
Affiliate of the Borrower or of a Member, all as if BNP PARIBAS were not the
Administrative Agent and without any duty to account therefor to the Lenders.

        Lender Credit Decision.    Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial information

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referred to in Section 6.01(n) and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.

        Indemnification.    The Lenders agree to indemnify the Administrative
Agent (to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Notes and the interests in the Letters of
Credit then held by each of them (or if no Notes or Letters of Credit are at the
time outstanding, ratably according to the respective Percentages of the
Lenders), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any action taken or omitted by the Administrative Agent
under this Agreement; provided, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct as found by a
court of competent jurisdiction. Without limitation of the foregoing, each
Lender agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement to the extent that
the Administrative Agent is entitled to reimbursement for such expenses pursuant
to Section 10.04 but is not reimbursed for such expenses by the Borrower, as the
case may be.

        Successor Administrative Agent.    The Administrative Agent may resign
at any time by giving written notice thereof to the Lenders and the Borrower and
may be removed at any time with or without cause by the Required Lenders, with
any such resignation or removal to become effective only upon the appointment of
a successor Administrative Agent pursuant to this Section 9.06. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Administrative Agent, which shall be a Lender or shall be another
commercial bank, trust company or insurance company reasonably acceptable to the
Borrower. If no successor Administrative Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Administrative Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a Lender or shall be another commercial
bank or trust company reasonably acceptable to the Borrower. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent and the execution and delivery by the Borrower and the
successor Administrative Agent of an agreement relating to the annual
administration fees to be paid to the successor Administrative Agent as
contemplated by Section 4.09(a) in connection with its acting as Administrative
Agent hereunder, such successor Administrative Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article IX shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

        Technical Committee.    Each Lender hereby appoints and authorizes each
of the Lead Arrangers, Credit Lyonnais, The Bank of Nova Scotia and CoBank to
act as its technical committee hereunder and under the other Loan Documents (the
"Technical Committee") with such powers as are expressly delegated to the
Technical Committee by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto and the
power to appoint each of its additional members. The Technical Committee shall
not have any duties or responsibilities except those expressly set forth in this
Agreement or in any other Loan Document, or be a trustee or a

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fiduciary for any Lender. Notwithstanding anything to the contrary contained
herein the Technical Committee shall not be required to take any action which is
contrary to this Agreement or any other Loan Documents or any Requirement of Law
or exposes the Technical Committee to any liability. All decisions and
determinations to be made by the Technical Committee hereunder and under the
other Loan Documents shall be made by consent of four of its five members.
Borrower and each Lender hereby agrees that the protective provisions set forth
in Sections 9.02 through 9.05 shall apply to and protect, mutatis mutandis, each
member of the Technical Committee and all determinations, decisions, actions or
inactions taken or omitted to be taken by the Technical Committee. In the event
that any member of the Technical Committee at any time reduces its Commitment to
less than $20,000,000, either the Borrower or the Administrative Agent may
request the remaining members of the Technical Committee to have such Lender
removed. In the event that any member of the Technical Committee at any time
ceases to be a Lender hereunder, is removed pursuant to the immediately
preceding sentence or otherwise resigns from the Technical Committee, then the
Administrative Agent in consultation with the Borrower, shall appoint a Lender
as a successor member to the Technical Committee; provided (I) such Lender shall
be a Lender with one of the ten largest Commitments at such time among the
Lenders who are not then members of the Technical Committee and (ii) Borrower
does not disapprove of such Lender within five (5) Business Days of receipt of
notice of such Lender's appointment to the Technical Committee.

MISCELLANEOUS

        Amendments, etc.    No amendment or waiver of any provision of any Loan
Document, nor any consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Required Lenders (unless the terms of this Agreement or any other Loan Document
shall expressly provide that the Technical Committee or the Administrative Agent
alone be empowered to approve or otherwise effect such amendment, waiver or
consent), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following: (a) reduce the principal of,
or interest on, the Notes, any Applicable Margin, any payment obligations of the
Borrower under Article III or any Fees or other amounts payable hereunder,
(b) postpone any date fixed for any payment of principal of, or interest on, the
Notes, any payment obligations of the Borrower under Article III or any Fees or
other amounts payable hereunder, (c) change the Percentage of the Commitments or
of the aggregate unpaid principal amount of the Notes, or the percentage of the
outstanding Advances held by Lenders which, in any case, shall be required for
the Required Lenders or Required Lenders to take any action hereunder, (d) amend
any Loan Document or consent to any amendment of a Project Document in a manner
intended to prefer one or more Lenders over any other Lenders, (e) amend this
Section 10.01, (f) extend the Date Certain, (g) extend any availability period
hereunder, or (h) release any material Collateral (except as expressly provided
in any Loan Document) or change any provision of any Security Document providing
for the release of Collateral or (I) release any guarantee; and provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by (I) the Administrative Agent in addition to the Lenders required above
to take such action, affect the rights or duties of the Administrative Agent
under this Agreement or any Loan Document and (ii) the LC Issuers in addition to
the Lenders required above to take such action, affect the rights and duties of
the LC Issuers under any Loan Document.

        Notices, etc.    All notices and other communications provided for
hereunder and under the other Loan Documents shall be in writing (including
facsimile communication) and mailed, telecopied, or delivered (I) if to the
Borrower, at its address at 335 Madison Avenue, New York, New York 10017,
Attention: Treasurer; (ii) if to any Lender, at its address specified under its
name on the signature pages hereto, or at the address specified in the Lender
Assignment or other transfer or assignment documentation pursuant to which it
became a Lender; (iii) if to either LC Issuer, at its respective

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address specified under its name on the signature pages hereto; and (iv) if to
the Administrative Agent, at its address specified under its name on the
signature pages hereto; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall be effective when telecopied, provided, that
the telecopy is followed by a duplicate mailed within 24 hours of such telecopy,
and all notices and communications shall be effective five (5) days after when
deposited in the mails, except that notices and communications to the
Administrative Agent pursuant to Article II or VIII shall not be effective until
received by the Administrative Agent. To the greatest extent possible and for
the parties' convenience, the parties hereto will deliver ordinary course
notices or other documents required to be delivered hereunder by electronic
mail.

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

Costs, Expenses and Indemnification.

        All statements, reports, certificates, opinions and other documents or
information required to be furnished by the Borrower to any Secured Party under
this Agreement or any other Loan Document shall be supplied without cost to any
Secured Party. The Borrower shall pay, on demand (I) all reasonable
out-of-pocket costs and expenses, including all reasonable pre-closing costs, of
the Administrative Agent, the Lenders and the LC Issuers (including the
reasonable fees and disbursements of (A) Dewey Ballantine LLP, special counsel
to the Administrative Agent, the Lenders and the LC Issuers and (B) special
Massachusetts counsel to the Administrative Agent, the Lenders and the LC
Issuers), incurred in connection with (1) the negotiation, preparation,
execution and delivery of the Transaction Documents or any waiver or amendment
of, or supplement or modification to, the Transaction Documents and (2) the
review of any of the other agreements, instruments or documents referred to in
this Agreement or relating to the transactions contemplated hereby; (ii) the
reasonable fees and disbursements of the Independent Engineer, the Power Market
Consultant, the Fuel Consultant and the Insurance Consultant for their services
rendered to the Secured Parties from time to time payable under their respective
engagement letters approved in writing by the Borrower, subject to maximum
reimbursement amounts set forth therein; (iii) all reasonable out-of-pocket
costs and expenses of the Administrative Agent incurred in connection with the
ongoing administration of the transactions contemplated hereby; (iv) all
reasonable out-of-pocket costs and expenses of the members of the Technical
Committee which are incidental to the performance of their duties and
responsibilities hereunder; (v) all reasonable costs and expenses of any of the
Collateral Agent, the Depositary, the Administrative Agent and members of the
Technical Committee or, with respect to clause (4) below, any Secured Party
(including reasonable fees and disbursements of their legal counsel) incident to
(1) the collection of the Obligations or protection or enforcement of the
Obligations during the occurrence and continuation of any Borrower Event of
Default, (2) the investigation, or any action in connection therewith, of any
Project Default, Borrower Default, Project Event of Default or Borrower Event of
Default, (3) the enforcement, collection, protection or preservation of any
right or claim under the Transaction Documents (whether through negotiations,
legal proceedings or otherwise), or (4) any workout or restructuring of the
transactions contemplated by the Loan Documents; (v) the reasonable expenses
payable to the Lead Arrangers under any fee letter executed by it and the
Borrower; and (vi) any reasonable costs or expenses incurred by the Lead
Arrangers, any co-arranger or any Affiliate of either thereof in connection with
the syndication of the loans made pursuant hereto.

        The Borrower hereby agrees to indemnify and hold each Lender, the LC
Issuers, the Administrative Agent, the Collateral Agent, the Lead Arrangers,
each member of the Technical

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Committee and their respective officers, directors, employees, professional
advisors and Affiliates (each an "Indemnified Person") harmless from and against
any and all claims, damages, losses, liabilities, costs or expenses (including
reasonable attorneys' fees and expenses) which any of them may incur or which
may be claimed against any of them by any Person by reason of or in connection
with consummation of the transactions contemplated by the Commitment Letter
dated December 7, 2000 among Sithe and the Lead Arrangers, the Loan Documents or
any investigation, litigation or other proceeding relating to the foregoing or
any Project (each, a "Project Matter" and, collectively, the "Project Matters"),
initiated by a Person other than the parties hereto, other than as a result of
the Indemnified Person's gross negligence or willful misconduct as found by a
court of competent jurisdiction.

        Without limiting the generality of subsection (b), above, the Borrower
further agrees to indemnify and hold harmless each Indemnified Person from and
against any and all claims, losses, liabilities, suits, obligations, fines,
damages, judgments, penalties, charges, costs and expenses (including reasonable
attorneys' fees and disbursements) (whether civil or criminal, arising under a
theory of negligence or strict liability, or otherwise) which may be imposed on,
incurred or paid by or asserted against such Indemnified Person in connection
with or resulting from any Environmental Discharge relating to any Project
(each, an "Environmental Matter" and collectively, the "Environmental Matters")
(I) at, upon or under any property of the Borrower or any of its Affiliates or
any Project Party by or on behalf of any Person or (ii) by or on behalf of the
Borrower or any of its Affiliates or any Project Party at any time and in any
place.

        The agreements of the Borrower in subsections (b) and (c), above, shall
be in addition to any liabilities that the Borrower may otherwise have and shall
apply whether or not a Secured Party or any other Indemnified Person is a formal
party to any lawsuit, claim or other proceeding. Solely for purposes of
enforcing the agreements set forth in subsections (b) and (c), above, the
Borrower hereby consents, to the extent permitted by Law, to personal
jurisdiction, service and venue in any court in which any claim or proceeding
that relates to a Project Matter or an Environmental Matter is brought against
an Indemnified Person.

        The Borrower's obligations under this Section 10.04 shall survive the
repayment of all amounts owing to the Lenders under the Notes and the
termination of the Commitments. If and to the extent that the obligations of the
Borrower under this Section 10.04 are unenforceable for any reason, the Borrower
agrees to make the maximum contribution to the payment and satisfaction thereof
which is permissible under applicable law.

        The Lenders agree to indemnify and hold harmless the LC Issuers, the
Administrative Agent, the Collateral Agent, the Lead Arrangers and each member
of the Technical Committee and their respective officers, directors, employees,
professional advisors and Affiliates, in their respective capacities as such (to
the extent not reimbursed by the Borrower and without limiting the obligation,
if any, of the Borrower to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against the Administrative Agent, any Lead
Arranger or any member of the Technical Committee in its capacity as such in any
way relating to or arising out of this Agreement or any Loan Document, or the
performance of its duties and responsibilities hereunder or any action taken or
omitted to be taken by the Administrative Agent, any Lead Arranger or any member
of the Technical Committee in its capacity as such under or in connection with
any of the foregoing; provided, that the Lenders shall not be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent that any of the foregoing result in such Person's gross negligence or
willful misconduct as determined by a court of competent jurisdiction. The
agreements in this Section 10.04(f) shall survive the payment or satisfaction in
full of the Obligations.

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Right of Set-off.

        Upon (I) the occurrence and during the continuance of any Borrower Event
of Default and (ii) the granting of the request or consent specified by
Section 8.01 to authorize the Administrative Agent to declare the Notes or
amounts under the Letter of Credit due and payable pursuant to the provisions of
Section 8.01, each Lender and the LC Issuers is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
or the LC Issuers to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing under
this Agreement and the Notes held by such Lender or under the Letter of Credit,
irrespective of whether or not such Lender or the LC Issuers shall have made any
demand under this Agreement or such Notes or under the Letter of Credit and
although such obligations may be unmatured; provided, however, that any amounts
obtained by any Lender through its right of set-off shall be shared, ratably, by
the Lenders. Each Lender each LC Issuer agrees promptly to notify the Borrower
after any such set-off and application made by such Lender or either LC Issuer,
provided, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender and the LC Issuers under
this Section 10.05 are in addition to other rights and remedies (including other
rights of set-off) which such Lender and the LC Issuers may have.

        The Borrower agrees that, to the extent permitted by applicable Law, it
shall have no right of set-off or deduction in respect of its obligations
hereunder, and that the obligations of the Lenders hereunder are several and not
joint. Nothing contained herein shall constitute a relinquishment or waiver of
the Borrower's rights to any independent claim that the Borrower may have
against the Administrative Agent or any Lender for the Administrative Agent's or
such Lender's, as the case may be, breach of this Agreement, gross negligence or
willful misconduct as determined by a court of competent jurisdiction, but no
Lender shall be liable for the conduct of the Administrative Agent or any other
Lender, and the Administrative Agent shall not be liable for the conduct of any
Lender.

        Binding Effect.    This Agreement shall become effective when it shall
have been executed by the Borrower, the LC Issuers, the Administrative Agent and
each Lender whose name appears on the signature pages hereto and thereafter
shall be binding upon and inure to the benefit of the Borrower, the
Administrative Agent, each Lender and the LC Issuers and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of all of the Lenders.

Assignments and Participations.

        Assignments.    Each Lender, with the consent of the Borrower (unless a
Borrower Event of Default or a Material Borrower Default has occurred and is
continuing) and the consent of the Administrative Agent (which consents shall
not be unreasonably withheld); may assign to one or more banks, financial
institutions, or other entities all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including all or a portion of
its Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that (A) each such assignment shall be of a constant, and not
a varying, percentage of all of the assigning Lender's rights and obligations
under this Agreement, (B) the amount of the Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date of
the Lender Assignment with respect to such assignment) shall in no event be less
than the lesser of (x) the amount of such Lender's then remaining Commitment and
(y) $10,000,000 (except in the case of assignments between Lenders at the time
already parties hereto), and (C) each assignee Lender shall comply with and be
subject to the requirements of Section 4.10, including submission of the forms
required under Section 4.10(d), and (D) the parties to each such assignment
shall execute and deliver to the Administrative Agent a duly completed Lender
Assignment, together with any Note or Notes subject to such assignment.

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Notwithstanding the foregoing, any Lender in the ordinary course of its business
and in accordance with Requirements of Law, may at any time assign to any
Affiliate thereof without consent of the Borrower or the Administrative Agent.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Lender Assignment, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Lender Assignment, shall have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Lender Assignment, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of a Lender
Assignment covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

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

        Upon its receipt of a Lender Assignment executed by an assigning Lender
and an assignee, together with any Note or Notes subject to such assignment, the
Administrative Agent shall, if such Lender Assignment has been completed and is
in substantially the form of Exhibit 10.07(a), (I) accept such Lender Assignment
and (ii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower shall execute and deliver to the
Administrative Agent in exchange for each surrendered Note a new Note to such
assignee in an amount equal to the Commitment assumed by it pursuant to such
Lender Assignment and, if the assigning Lender has retained a Commitment
hereunder, a new Note or Notes to the assigning Lender in an aggregate amount
equal to the Commitment retained by it hereunder. The aggregate principal amount
of the new Note or Notes delivered to the assignee and the assigning Lender
shall be equal to the aggregate principal amount of such surrendered Note or
Notes.

        Participations.    Each Lender may sell participations to one or more
banks, financial institutions, or other entities in all or a portion of its
rights and obligations under the Loan Documents (including all or a portion of
its Commitment, the Advances owing to it and the Note or Notes held by it);
provided, however, that (I) such Lender's obligations under this Agreement
(including its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall remain the holder

49

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of any such Note for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) the participating banks, financial
institutions or other entities shall be entitled to the cost protection
provisions contained in Sections 4.03(a), 4.03(c) and 4.06 only if the Lender
from which such participant acquired its participation would have been entitled
to such cost protection provisions had such Lender not sold such participation
hereunder, (vi) the participating banks, financial institutions or other
entities shall not have any right to approve any amendment or waiver of any
provision of any Loan Document or to consent to the departure by the Borrower
therefrom, unless the approval of all the Lenders is required for such
amendment, waiver or consent, (viii) such participations shall in no event be
less than the lesser of (x) the amount of such Lender's then remaining
Commitment and (y) $5,000,000 (except in the case of assignments between Lenders
at the time already parties hereto) and (ix) such Lender shall provide notice of
such participation promptly thereafter.

        Disclosure.    Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 10.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided, that prior to any such disclosure the
assignee or participant or proposed assignee or participant shall agree, in
accordance with the terms of Section 10.08, to preserve the confidentiality of
any Confidential Information received by it from such Lender.

        Notwithstanding anything to the contrary contained herein, any Lender (a
"Granting Lender") may grant to a special purpose funding vehicle (a "SPC"),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Advance that such Granting Lender would otherwise be
obligated to make to the Borrower pursuant to this Agreement; provided, that
(I) nothing herein shall constitute a commitment by any SPC to make any Advance,
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Advance, the Granting Lender shall be obligated to make
such Advance pursuant to the terms hereof. The making of a Advance by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Advance were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this
Section 10.07(d), any SPC may (I) with notice to, but without the prior written
consent of, the Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interest on any Advances
to the Granting Lender or to any financial institutions (consented to by the
Borrower and Administrative Agent) providing liquidity and/or credit support to
or for the account of such SPC to support the funding or maintenance of Advances
and (ii) disclose on a confidential basis any non-public information relating to
its Advances to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC. This
Section 10.07(d) may not be amended or modified without the written consent of
the SPC, which consent may not be unreasonably withheld.

        Anything in this Section 10.07 to the contrary notwithstanding, any
Lender may assign and pledge all or any portion of its Loans and its Notes to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating

50

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Circular issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.

Confidentiality; Use of Name.

        In connection with the negotiation and administration of this Agreement
and the other Loan Documents, the Borrower has furnished and will from time to
time furnish to the Administrative Agent and the Lenders (each, a "Recipient")
written information which is confidential (such information, other than any such
information which (I) was publicly available, or known to the Recipient
otherwise than through other information previously provided by or on behalf of
the Borrower and identified as being confidential, at the time of disclosure,
(ii) subsequently becomes publicly available other than through any act or
omission by the Recipient or (iii) otherwise subsequently becomes known to the
Recipient other than through a Person whom the Recipient knows to be acting in
confidence (or in violation of his or its obligations to the Borrower), being
hereinafter referred to as "Confidential Information"). The Recipient will
maintain the confidentiality of any Confidential Information in accordance with
such procedures as the Recipient applies generally to information of that
nature. It is understood, however, that the foregoing will not restrict the
Recipient's ability to freely exchange such Confidential Information with
current or prospective participants in or assignees of the Recipient's position
herein, but the Recipient's ability to so exchange Confidential Information
shall be conditioned upon any such prospective participant's or assignee's
entering into an agreement for the benefit of the Borrower as to confidentiality
substantially identical to this provision. It is further understood that the
foregoing will not prohibit the disclosure of any or all Confidential
Information if and to the extent that such disclosure may be required or
requested (I) by a regulatory agency or otherwise in connection with an
examination of the Recipient's records by appropriate authorities, (ii) pursuant
to court order, subpoena or other legal process or in connection with any
pending or threatened litigation, (iii) otherwise as required by law or (iv) in
order to protect its interests or its rights or remedies hereunder or under the
other Loan Documents. In the event of any required disclosure under clause (ii)
or (iii), above, the Recipient agrees to use reasonable efforts to inform the
Borrower as promptly as practicable before such disclosure so that the Borrower
may make such disclosure on behalf of any Lender or potential Lender, the
Administrative Agent, any Secured Party, the Collateral Agent or any participant
(to the extent that the Borrower is not prohibited from doing so by Law) or seek
a protective order or other appropriate remedy. To the extent that the Borrower
does not make such disclosure on behalf of the Person required to make such
disclosure, the Person making such disclosure shall furnish only that portion of
Confidential Information that it reasonably determines to be required by Law to
be furnished and will exercise its reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded such Confidential
Information.

        The Borrower shall not use the name of the Administrative Agent, the
Collateral Agent, the LC Issuers, the Depositary or any Secured Party in any
advertisement without the express written consent of such party, nor shall the
Administrative Agent, the Collateral Agent, the Depositary or any Secured Party
use the name of the Borrower in any advertisement (other than any advertisement
concerning the transactions contemplated by this Agreement) without the express
written consent of the Borrower.

        WAIVER OF JURY TRIAL; Limitation of Liability.    (a) THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OTHER INSTRUMENT
OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

        (b)  No claim shall be made by the Borrower or any Affilitate thereof
against any Secured Party, or any of their Affiliates, directors, employees,
attorneys, or agents for any special, indirect, consequential, or punitive
damages in respect of any breach or wrongful conduct (whether or not the

51

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

claim therefor is based on contract, tort, or duty imposed by law), in
connection with, arising out of, or in any way related to the transactions
contemplated by this Agreement or the other Loan Documents or any act or
omission or event occurring in connection therewith; and the Borrower and each
Affiliate thereof hereby waives, releases, and agrees not to sue upon any such
claim for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.

        Additional Collateral.    The Lenders agree that any Collateral taken or
received by or on behalf of the Lenders as security for the Borrower's
obligations under the Loan Documents will be held by the respective holder of
such security not only for the benefit of the Lenders but also for the benefit
of the other Secured Parties, and that the proceeds of any such security
(whether before, during or after the pendency of any proceeding against the
Borrower under the Federal Bankruptcy Code) shall be applied in accordance with
the terms of the Depositary Agreement, it being understood that the Lenders may
release or obtain reimbursement or other payments under the Loan Documents from
all or any of such Collateral at any time or from time to time without any
consent of, notice to or payment to or for the account of, any Lender or the
holder of any Note.

        GOVERNING LAW, ETC.    THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE BORROWER, EACH LENDER
AND THE ADMINISTRATIVE AGENT EACH (I) IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN, THE CITY OF NEW YORK IN ANY ACTION ARISING OUT OF ANY LOAN
DOCUMENT, (II) AGREES THAT ALL CLAIMS IN SUCH ACTION MAY BE DECIDED IN SUCH
COURT, (III) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM AND (IV) CONSENTS TO THE SERVICE OF PROCESS BY MAIL. A
FINAL JUDGMENT IN ANY SUCH ACTION SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR AFFECT ITS RIGHT TO BRING ANY
ACTION IN ANY OTHER COURT.

        Relation of the Parties; No Beneficiary.    No term, provision or
requirement, whether express or implied, of any Loan Document, or actions taken
or to be taken by any party thereunder, shall be construed to create a
partnership, association, or joint venture between such parties or any of them.
No term or provision of the Loan Documents shall be construed to confer a
benefit upon, or grant a right or privilege to, any Person other than the
parties thereto.

        No Recourse to Affiliates.    Anything herein to the contrary
notwithstanding, and except as expressly provided to the contrary in any Loan
Document, the payment of the Obligations by the Borrower and the performance of
all other obligations of the Borrower and the Project Companies under this
Agreement and the other Loan Documents, and any certificate, notice, instrument
or document delivered pursuant hereto or thereto are special obligations of the
Borrower or the Project Companies, as the case may be, and, except for Sithe New
England's obligation in respect of the Equity Contribution Agreement, Sithe's
obligations under the Equity Guarantee, the Sithe Undertaking and the
Administrative Services Agreements, Sithe Power Marketing's obligations under
the Power Marketing Agreement, the SPM Security Agreement and SPM Depositary
Agreement, Sithe New England Power Services under the Sithe Mystic Station O&M
Agreement and Sithe Boston Power Services' obligations under the Mystic
Development O&M Agreement and the Fore River O&M Agreement, do not constitute a
debt or obligation of (and no recourse shall be had with respect thereto to) its
members or any of its or their Affiliates, or any shareholder, partner, officer,
director, employee, agent, attorney, consultant or controlling person of any
such member or Affiliate; except to the extent

52

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

relating to such member's or such Affiliate's express obligations under any
Transaction Document, no action shall be brought against members or any
Affiliates of the Borrower or its members, or any shareholder, partner, officer,
director, employee, agent, attorney, consultant or controlling person of any
thereof as such, and any judicial proceedings a Lender, the Administrative
Agent, the Collateral Agent or the LC Issuers may institute against the Borrower
shall be limited to seeking the preservation, enforcement, foreclosure or other
sale or disposition of the Liens and security interests now or at any time
hereafter securing the repayment of the Advances and performance by the Borrower
of its other covenants and obligations hereunder and under the other Loan
Documents; and, except to the extent relating to any member's or such
Affiliate's express obligations under any Transaction Document, no judgment for
any deficiency upon the obligations hereunder, or under the other Loan
Documents, shall be obtainable by the Administrative Agent, the Collateral
Agent, the LC Issuers or any Lender against any of the members or their
Affiliates or the Borrower's Affiliates or any shareholder, partner, officer or
director of any thereof. Nothing in this Section 10.14 shall be construed so as
to prevent the Administrative Agent, the Collateral Agent, the LC Issuers or any
Lender from commencing any action, suit or proceeding with respect to the
Borrower or causing legal papers to be served upon any member to the extent
required to obtain jurisdiction over the Borrower.

        Subject to Section 4.12 of the Depositary Agreement, each payment and
transfer to any Affiliate permitted under any Loan Document or Project Document,
each Permitted Dividend and each other payment or distribution by the Borrower
or any Project Company that is not made in breach of its obligations under the
Loan Documents shall be received by the Borrower's and the Project Companies'
Members, shareholders and Affiliates free and clear from all Liens granted to
the Collateral Agent and all other rights, claims, Liens and interests of any or
all of the Lenders and other holders of Obligations or other claims arising from
any of the Loan Documents, including any and all avoidance and recovery rights
and other claims of any type or description arising in favor of any or all of
the Lenders and any such other holders pursuant to any applicable law, all of
which are hereby expressly and forever waived and released.

        Execution in Counterparts.    This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.

53

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

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

    THE BORROWER
 
 
 
 
 
 
      SITHE BOSTON GENERATING, LLC
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
335 Madison Avenue
New York, New York 10017     Attention:   Treasurer     Telephone:  
(212) 351-0061     Telecopier:   (212) 351-0813

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

    THE LENDERS
 
 
 
 
 
 
      BNP PARIBAS
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
787 Seventh Avenue, 31st Floor
New York, New York 10019     Attention:   Project Finance—Portfolio
Administration
Greg Miller/Sean Finnegan     Telephone:   (212) 841-2131/2310     Telecopier:  
(212) 841-3219/2203
 
 
 
 
 
 
      Domestic Lending Office:
 
 
919 Third Avenue, 3rd Floor
New York, New York 10022     Attention:   Tecla Hurley     Telephone:  
(212) 471-6651     Telecopier:   (212) 471-6697
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      919 Third Avenue, 3rd Floor
New York, New York 10022     Attention:   Tecla Hurley     Telephone:  
(212) 471-6651     Telecopier:   (212) 471-6697

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

    CREDIT SUISSE FIRST BOSTON
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
Eleven Madison Avenue
New York, New York 10010     Attention:   Brian Caldwell     Telephone:  
(212) 325-0029     Telecopier:   (212) 325-8321
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      Eleven Madison Avenue
New York, New York 10010     Attention:   David Dodd     Telephone:  
(212) 325-5541     Telecopier:   (212) 325-8321
 
 
 
 
 
 
      5 World Trade Center, 8th Floor
New York, New York 10277     Attention:   Jenaro Sarasola     Telephone:  
(212) 322-1384     Telecopier:   (212) 335-0593
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      Eleven Madison Avenue
New York, New York 10010     Attention:   David Dodd     Telephone:  
(212) 325-5541     Telecopier:   (212) 325-8321
 
 
 
 
 
 
      5 World Trade Center, 8th Floor
New York, New York 10277     Attention:   Jenaro Sarasola     Telephone:  
(212) 322-1384     Telecopier:   (212) 335-0593

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

    CREDIT LYONNAIS
 
 
 
 
 
 
 
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
 
 
 
1301 Avenue of the Americas
New York, New York 10019     Attention:   Michael Pepe/Georges Romano    
Telephone:   (212) 261-7889/7398     Telecopier:   (212) 261-3421
 
 
 
 
 
 
      Domestic Lending Office:
 
 
1301 Avenue of the Americas
New York, New York 10019     Attention:   Justine Ventrelli     Telephone:  
(212) 261-7886     Telecopier:   (212) 261-3421
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
1301 Avenue of the Americas
New York, New York 10019     Attention:   Justine Ventrelli     Telephone:  
(212) 261-7886     Telecopier:   (212) 261-3421

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

    THE BANK OF NOVA SCOTIA
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      One Liberty Plaza, 26th Floor
New York, New York 10006     Attention:   Pamela McDougall/Scott Heyer    
Telephone:   (212) 225-5073/5622     Telecopier:   (212) 225-5090
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      One Liberty Plaza, 26th Floor
New York, New York 10006     Attention:   Hazel Young     Telephone:  
(212) 225-5413     Telecopier:   (212) 225-5145
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      One Liberty Plaza, 26th Floor
New York, New York 10006     Attention:   Hazel Young     Telephone:  
(212) 225-5413     Telecopier:   (212) 225-5145

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

    ABBEY NATIONAL TREASURY SERVICES plc
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      26-28 Dorset Square
London, NW1 6QG
United Kingdom     Attention:   Chris Bassindale/Scott Barnett     Telephone:  
(011-44-20) 7612-3346/3454     Telecopier:   (011-44-20) 7487-0543
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      26-28 Dorset Square
London, NW1 6QG
United Kingdom     Attention:   Sue Hawkins/Sarah Tapping     Telephone:  
(011-44-20) 7612-3264/3409     Telecopier:   (011-44-20) 7487-0547
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      26-28 Dorset Square
London, NW1 6QG
United Kingdom     Attention:   Sue Hawkins/Sarah Tapping     Telephone:  
(011-44-20) 7612-3264/3409     Telecopier:   (011-44-20) 7487-0547

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

    AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      1177 Avenue of the Americas
New York, New York 10036-2798     Attention:   Jowie De La Merced     Telephone:
  (212) 801-9778     Telecopier:   (212) 556-4877
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      1177 Avenue of the Americas
New York, New York 10036-2798     Attention:   Tessie Amante/Doreen Klingenbeck
    Telephone:   (212) 801-9744/9726     Telecopier:   (212) 801-9859
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      1177 Avenue of the Americas
New York, New York 10036-2798     Attention:   Tessie Amante/Doreen Klingenbeck
    Telephone:   (212) 801-9744/9726     Telecopier:   (212) 801-9859

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

    BAYERISCHE HYPO-UND VEREINSBANK AG NEW YORK BRANCH
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      150 East 42nd Street
New York, New York 10017     Attention:   Paul Colatrella     Telephone:  
(212) 672-3776     Telecopier:   (212) 672-5516
 
 
(By Mail Only)
Am Tucherpark 1
80311 Munchen
Germany     Attention:   Hilde Lehner
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      150 East 42nd Street
New York, New York 10017     Attention:   Gilda Andrews/Milagros Carillo    
Telephone:   (212) 672-5742/5568     Telecopier:   (212) 672-5516/6003
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
150 East 42nd Street
New York, New York 10017     Attention:   Gilda Andrews/Milagros Carillo    
Telephone:   (212) 672-5742/5568     Telecopier:   (212) 672-5516/6003

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

    BAYERISCHE LANDESBANK, CAYMAN ISLANDS BRANCH
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      560 Lexington Avenue
New York, New York 10022     Attention:   Jim King/Chris Stolarski    
Telephone:   (212) 230-9101/9931     Telecopier:   (212) 230-9117
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      560 Lexington Avenue
New York, New York 10022     Attention:   Pat Sanchez     Telephone:  
(212) 310-9810     Telecopier:   (212) 310-9930
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      560 Lexington Avenue
New York, New York 10022     Attention:   Pat Sanchez     Telephone:  
(212) 310-9810     Telecopier:   (212) 310-9930

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

    CoBANK, ACB
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      5500 South Quebec Street
Greenwood Village, Colorado 80111-1914     Attention:   Gail Nofsinger/Cantleen
Reed     Telephone:   (303) 694-5986/740-4101     Telecopier:  
(303) 224-2672/224-2590
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      5500 South Quebec Street
Greenwood Village, Colorado 80111-1914     Attention:   April Like/Ed Welty    
Telephone:   (303) 740-4173/4074     Telecopier:   (303) 740-4021
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      5500 South Quebec Street
Greenwood Village, Colorado 80111-1914     Attention:   April Like/Ed Welty    
Telephone:   (303) 740-4173/4074     Telecopier:   (303) 740-4021

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

    DG BANK DEUTSCHE GENOSSENSCHAFTSBANK AG
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      609 Fifth Avenue
New York, New York 10017     Attention:   Daria A. Pishko/Ya-Rou Yang    
Telephone:   (212) 745-1545/1568     Telecopier:   (212) 745-1552
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      609 Fifth Avenue
New York, New York 10017     Attention:   John O'Shea     Telephone:  
(212) 745-1544     Telecopier:   (212) 745-1422
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
609 Fifth Avenue
New York, New York 10017     Attention:   John O'Shea     Telephone:  
(212) 745-1544     Telecopier:   (212) 745-1422

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

    FORTIS CAPITAL CORP.
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      3 Stamford Plaza
301 Tresser Boulevard, 9th Floor
Stamford, Connecticut 06901-3239     Attention:   Mohammed Alam/Hendrik Vroege  
  Telephone:   (203) 705-5830/5745     Telecopier:   (203) 705-5919
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      3 Stamford Plaza
301 Tresser Boulevard, 9th Floor
Stamford, Connecticut 06901-3239     Attention:   Marlene Ellis/Peter Testa    
Telephone:   (203) 705-5863/5755     Telecopier:   (203) 705-5888
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      3 Stamford Plaza
301 Tresser Boulevard, 9th Floor
Stamford, Connecticut 06901-3239     Attention:   Marlene Ellis/Peter Testa    
Telephone:   (203) 705-5863/5755     Telecopier:   (203) 705-5888

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

    GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      Bank of Scotland
565 Fifth Avenue
New York, New York 10017     Attention:   Steven Gray     Telephone:  
(212) 450-0812     Telecopier:   (212) 883-6612
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      Bank of Scotland
Loans Administration
Orchard Brae House
30 Queensferry Road
Edinburgh EH3 2UG
United Kingdom     Attention:   Lesley Ross     Telephone:   (011-44-131)
343-7077     Telecopier:   (011-44-131) 343-7080
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      Bank of Scotland
Loans Administration
Orchard Brae House
30 Queensferry Road
Edinburgh EH3 2UG
United Kingdom     Attention:   Lesley Ross     Telephone:   (011-44-131)
343-7077     Telecopier:   (011-44-131) 343-7080

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

    TORONTO DOMINION (TEXAS), INC.
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      909 Fannin Street, 17th Floor
Houston, Texas 77010     Attention:   Carol Brandt     Telephone:  
(713) 653-8204     Telecopier:   (713) 951-9921
 
 
 
 
 
 
      31 West 52nd Street, 18th Floor
New York, New York 10019     Attention:   Frank DeLaney/Betty Chang    
Telephone:   (212) 827-7771/     Telecopier:   (212) 827-
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      909 Fannin Street, 17th Floor
Houston, Texas 77010     Attention:   Carol Brandt     Telephone:  
(713) 653-8204     Telecopier:   (713) 951-9921
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      909 Fannin Street, 17th Floor
Houston, Texas 77010     Attention:   Carol Brandt     Telephone:  
(713) 653-8204     Telecopier:   (713) 951-9921

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

    THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      1251 Avenue of the Americas, 10th Floor
New York, New York 10020     Attention:   Anthony Meo     Telephone:  
(212) 782-4355     Telecopier:   (212) 782-6442
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      1251 Avenue of the Americas, 10th Floor
New York, New York 10020     Attention:   Rolando Uv     Telephone:  
(201) 413-8570     Telecopier:   (201) 521-2304/2305
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      1251 Avenue of the Americas
New York, New York 10020-1104     Attention:         Telephone:   (212)     
Telecopier:   (212)

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

    NIB CAPITAL BANK N.V.
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      4, Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands     Attention:   Mr. B.W.H. Kolenburg     Telephone:  
(011-31-70) 342-5924     Telecopier:   (011-31-70) 360-7423
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      4, Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands     Attention:   Matthijs van Nes     Telephone:   (011-31-70)
342-5237     Telecopier:   (011-31-70) 342-5366
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      4, Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands     Attention:   Matthijs van Nes     Telephone:   (011-31-70)
342-5237     Telecopier:   (011-31-70) 342-5366

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

    THE SUMITOMO BANK, LIMITED
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      277 Park Avenue
New York, New York 10172     Attention:   Paul Rudewick     Telephone:  
(212) 224-4311     Telecopier:   (212) 224-4880
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      277 Park Avenue
New York, New York 10172     Attention:   Connie Tsoi     Telephone:  
(212) 224-4048     Telecopier:   (212) 224-4391
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      277 Park Avenue
New York, New York 10172     Attention:   Connie Tsoi     Telephone:  
(212) 224-4048     Telecopier:   (212) 224-4391

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

    RABOBANK IRELAND plc
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      George's Dock House
International Financial Services Centre
Dublin 1
Ireland     Attention:   Suzanne Whelan     Telephone:   (011-353-1) 607-6147  
  Telecopier:   (011-353-1) 670-1724
 
 
 
 
 
 
      Domestic Lending Office:
 
 
 
 
 
 
      George's Dock House
International Financial Services Centre
Dublin 1
Ireland         Attention:   Lavinia Sweeney     Telephone:   (011-353-1)
607-6143     Telecopier:   (011-353-1) 670-1724
 
 
 
 
 
 
      LIBOR Lending Office:
 
 
 
 
 
 
      George's Dock House
International Financial Services Centre
Dublin 1
Ireland     Attention:   Lavinia Sweeney     Telephone:   (011-353-1) 607-6143  
  Telecopier:   (011-353-1) 670-1724

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

    THE DSR LC ISSUER
 
 
 
 
 
 
      BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      560 Lexington Avenue
New York, New York 10022     Attention:   Jim King/Chris Stolarski    
Telephone:   (212) 230-9101/9931     Telecopier:   (212) 230-9117

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

    THE PROJECT LC ISSUER
 
 
 
 
 
 
      BNP PARIBAS
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      787 Seventh Avenue, 31st Floor
New York, New York 10019     Attention:   Letter of Credit Department
Anthony Reardon     Telephone:   (212) 841-2290     Telecopier:   (212) 841-2146
 
 
 
 
 
 
      787 Seventh Avenue, 31st Floor
New York, New York 10019     Attention:   Project Finance—Portfolio
Administration
Greg Miller/Sean Finnegan     Telephone:   (212) 841-2131/2310     Telecopier:  
(212) 841-3219/2203

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

    THE ADMINISTRATIVE AGENT
 
 
 
 
 
 
      BNP PARIBAS, as Administrative Agent
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      By       

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

        Name:             Title:    
 
 
 
 
 
 
      Address for Notices:
 
 
 
 
 
 
      787 Seventh Avenue, 31st Floor
New York, New York 10019     Attention:   Project Finance—Portfolio
Administration
Greg Miller/Sean Finnegan     Telephone:   (212) 841-2131/2310     Telecopier:  
(212) 841-3219/2203

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

EXECUTION VERSION

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

CREDIT AND REIMBURSEMENT AGREEMENT

Dated as of January 31, 2001

Among

SITHE BOSTON GENERATING, LLC,

as Borrower,

THE LENDERS NAMED HEREIN,

BAYERISCHE LANDESBANK GIROZENTRALE,

as DSR LC Issuer,

BNP PARIBAS,

as Project LC Issuer

and

BNP PARIBAS,

as Administrative Agent

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

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

TABLE OF CONTENTS

 
   
   
  Page

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

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS   2
 
 
Section 1.01.
 
Certain Defined Terms
 
2     Section 1.02.   Computation of Time Periods   2     Section 1.03.  
Accounting Principles and Terms   2     Section 1.04.   Rules of Construction  
2
ARTICLE II. THE LOAN FACILITIES
 
2
 
 
Section 2.01.
 
Project Advances
 
2     Section 2.02.   Working Capital Advances   4     Section 2.03.  
Provisions Relating to All Advances   5
ARTICLE III. THE LETTERS OF CREDIT
 
9
 
 
Section 3.01.
 
Commitments
 
9     Section 3.02.   Amount and Term of Letters of Credit   9     Section 3.03.
  Reimbursement of LC Issuer   9     Section 3.04.   Obligations Absolute   10  
  Section 3.05.   Liability of LC Issuers and the Lenders   12     Section 3.06.
  Extension of the Stated Expiration Date   13
ARTICLE IV. PAYMENTS
 
13
 
 
Section 4.01.
 
Payments and Computations
 
13     Section 4.02.   Prepayments   13     Section 4.03.   Increased Cost and
Reduced Return; Additional Interest; Capital Adequacy   14     Section 4.04.  
Illegality   16     Section 4.05.   Basis for Determining Interest Rate
Inadequate or Unfair   16     Section 4.06.   Assignment   17     Section 4.07.
  Breakage Costs   17     Section 4.08.   Sharing of Payments, etc.   17    
Section 4.09.   Fees   18     Section 4.10.   Taxes   18
ARTICLE V. CONDITIONS PRECEDENT
 
21
 
 
Section 5.01.
 
Conditions Precedent to the Closing Date
 
21     Section 5.02.   Conditions Precedent to the Initial Advance and Issuance
of the Letters of Credit   25     Section 5.03.   Conditions Precedent to Each
Subsequent Advance   27
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
 
29
 
 
Section 6.01.
 
Representations and Warranties of the Borrower
 
29
ARTICLE VII. COVENANTS OF THE BORROWER
 
32
 
 
Section 7.01.
 
Affirmative Covenants
 
32     Section 7.02.   Negative Covenants   33     Section 7.03.   Reporting
Obligations   38
ARTICLE VIII. BORROWER EVENTS OF DEFAULT
 
40
 
 
Section 8.01.
 
Borrower Events of Default
 
40
ARTICLE IX. THE ADMINISTRATIVE AGENT AND THE TECHNICAL COMMITTEE
 
43
 
 
Section 9.01.
 
Authorization and Action
 
43

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

    Section 9.02.   Agent's Reliance, etc.   43     Section 9.03.   BNP PARIBAS
and Affiliates   43     Section 9.04.   Lender Credit Decision   43     Section
9.05.   Indemnification   44     Section 9.06.   Successor Administrative Agent
  44     Section 9.07.   Technical Committee   44
ARTICLE X. MISCELLANEOUS
 
45
 
 
Section 10.01.
 
Amendments, etc.
 
45     Section 10.02.   Notices, etc.   45     Section 10.03.   No Waiver of
Remedies   46     Section 10.04.   Costs, Expenses and Indemnification   46    
Section 10.05.   Right of Set-off   48     Section 10.06.   Binding Effect   48
    Section 10.07.   Assignments and Participations   48     Section 10.08.  
Confidentiality; Use of Name   51     Section 10.09.   WAIVER OF JURY TRIAL;
Limitation of Liability   51     Section 10.10.   Additional Collateral   52    
Section 10.11.   GOVERNING LAW, ETC.   52     Section 10.12.   Relation of the
Parties; No Beneficiary   52     Section 10.13.   No Recourse to Affiliates   52
    Section 10.14.   Execution in Counterparts   53
Annex A
 
Definitions
 
 

ii

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

SCHEDULES
 
 
Schedule 1
 
Project Commitment Schedule 2   Working Capital Commitment Schedule 3   Letters
of Credit Commitment Schedule 4   Change Orders to EPC Agreements Schedule
2.01(e)   Repayment Schedule Schedule 6.01(h)   List of Project Companies and
Ownership of Equity Interests in Project Companies Schedule 6.01(k)   Litigation
Schedule 6.01(q)   Taxes Schedule 7.02(a)   Existing Debt
EXHIBITS
 
 
Exhibit 1.01A
 
Form of Project Company Guarantee Exhibit 1.01B   Form of Security Agreement
Exhibit 1.01C   Form of Consent Exhibit 1.01D   Form of DSR Letter of Credit
Exhibit 1.01E   Form of Interconnection Security Letter of Credit Exhibit 1.01F
  Form of Interconnection Payment Letter of Credit Exhibit 1.01G   Form of Swap
Agreement Exhibit 2.01(b)   Form of Reallocation Certificate Exhibit 2.01(c)  
Form of Notice of Borrowing Exhibit 2.01(f)   Form of Project Note Exhibit
2.02(d)   Form of Notice of Working Capital Borrowing Exhibit 2.02(g)   Form of
Working Capital Note Exhibit 2.03(b)(i)   Form of Notice of Conversion Exhibit
3.03(b)   Form of LC Loan Note Exhibit 4.10(d)   Form of Exemption Certificate
Exhibit 5.01(d)   Forms of Opinions of Counsel to the Borrower, the Project
Companies, Sithe, Sithe New England and the Material Project Participants
Exhibit 5.01(h)   Form of Authorized Officer's Certificate Exhibit 5.02(h)  
Form of Release of Liens Exhibit 5.03(d)   Form of Independent Engineer's
Certificate Exhibit 10.07(a)   Form of Lender's Assignment

iii

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

ANNEX A

DEFINITIONS

        "Acceptable Credit Support" means any one or more of (1) the DSR Letter
of Credit, (2) an irrevocable letter of credit issued by a bank or other
financial institution with a rating of at least A3 by Moody's or at least A- by
S&P naming Sithe or any affiliate thereof (other than the Borrower or a Project
Company) as the account party, and (3) a guarantee from Sithe or an affiliate
thereof (other than the Borrower or a Project Company) that is rated at least
Baa3 by Moody's and at least BBB- by S&P and is reasonably acceptable to the
Administrative Agent.

        "Accounts" has the meaning set forth in the Depositary Agreement.

        "Additional Project" means (1) the Medway Project or (2) with the
approval of the Technical Committee, any other electric generating facility
developed by Borrower or an affiliate of the Borrower after the Closing Date, in
each case together with all real property rights, contracts, Governmental
Approvals and other property and rights associated with such facility.

        "Additional Project Documents" means, in respect of any Project, any
Project Document entered into by or on behalf of the related Project Company
after the Closing Date (excluding agreements entered into by Sithe Power
Marketing, Sithe New England Power Services, Sithe Boston Power Services or
Sithe under the Power Marketing Agreement, the O&M Agreements or the
Administrative Services Agreements, as the case may be); provided, that
"Additional Project Document" shall not include agreements entered into (i) for
a term of less than 6 months, or (ii) with an annual cost or value of less than
$5,000,000 (for the avoidance of doubt, power and fuel agreements meeting the
foregoing specifications shall be deemed not to be Additional Project
Documents).

        "Administrative Agent" means BNP PARIBAS.

        "Administrative Services Agreements" means collectively, the Sithe
Mystic Administrative Services Agreement, the Mystic Development Administrative
Services Agreement and Fore River Administrative Services Agreement.

        "Advance" means, as the context requires, a Project Advance, a Working
Capital Loan or an LC Loan, and refers to a Base Rate Advance or a LIBOR Rate
Advance (each of which shall be a "Type" of Advance).

        "Affiliate" means, with respect to any Person, any Subsidiary of such
Person or any other Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with such Person including, in each such
case, any director or officer of such Person. A Person shall be deemed to
control a corporation, limited liability company, or partnership if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, limited liability company or
partnership, whether through the ownership of voting securities, by contract or
otherwise.

        "Aggregate Payment LC Commitment" means an amount equal to $59,550,000,
which amount equals the aggregate Stated Amount of the Interconnection Payment
Letters of Credit.

        "Aggregate LC Commitment" means an amount equal to $62,000,000 plus the
Aggregate Payment LC Commitment.

        "Aggregate Project Commitment" means an amount equal to $1,088,450,000.

        "Aggregate Working Capital Commitment" means an amount equal to
$40,000,000.

        "Algonquin" means Algonquin Gas Transmission Company.

        "Algonquin Guaranty" means the Guaranty dated as of September 28, 1999,
by Sithe in favor of Algonquin.

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

        "Algonquin Service Agreement" means collectively, the Service Agreement
dated as of September 28, 1999, between Algonquin and Sithe Fore River and the
Letter Agreement dated September 28, 1999 between Algonquin and Sithe Fore
River.

        "Alternative Plan" shall have the meaning set forth in Section 7.01(j)
of the Credit Agreement.

        "Applicable Margin" means, on any date, for a Base Rate Advance or a
LIBOR Rate Advance (i) the percentage per annum set forth below in Column "A
Base" or Column "A LIBOR", respectively, if the Borrower shall have received an
Investment Grade Rating from two Rating Agencies, one of which is either S&P or
Moody's or (ii) the percentage per annum set forth below in Column "B Base" or
Column "B LIBOR", respectively, if the Borrower shall be unrated or rated below
Investment Grade Rating in accordance with (i) above, opposite the period in
which such date occurs:

Periods

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

  A
LIBOR

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

  A
Base

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

  B
LIBOR

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

  B
Base

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

Prior to the second anniversary of Closing   1.375   0.625   1.375   0.625
On and following the second anniversary of Closing But prior to the fourth
anniversary of Closing
 
1.450
 
0.70
 
1.650
 
0.90
Thereafter
 
1.750
 
1.00
 
2.00
 
1.250

        "Applicable Rate" means (i) the sum of the Base Rate plus the Applicable
Margin or (ii) the sum of the LIBOR Rate plus the Applicable Margin, as the case
may be.

        "Approved Capital Expenditures" means, for any period capital
expenditures which have been approved in accordance with Section 3.02(bb) of the
Project Company Guarantee and which are payable pursuant to clause second of
Section 4.05 of the Depositary Agreement.

        "Auditors" means, with respect to Sithe, Sithe Fore River, Sithe Mystic,
Sithe Mystic Development, Sithe New England and Sithe Power Marketing,
Deloitte & Touche LLP, or any other "Big Five" accounting firm selected by such
Persons should Deloitte & Touche LLP cease to be the Auditors for any reason.

        "Authorized Officer" means as to any Person (except as otherwise
provided), the president, the treasurer, any vice president or the secretary of
such Person, or if such Person is a partnership, the president, the treasurer,
any vice president or the secretary of a general partner of such Person, or, if
such Person is a limited liability company, any management committee member, or,
with respect to financial matters, the chief financial officer or treasurer of
such Person, or if such Person is a partnership, the chief financial officer or
treasurer of a general partner of such Person or, if such Person is a limited
liability company, any management committee member having primary responsibility
for financial and accounting matters for such limited liability company.

        "Base Fee" has the meaning set forth in the Power Marketing Agreement.

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

        (a)  the rate of interest announced publicly by BNP PARIBAS or its
successor as Administrative Agent, from time to time, as its "base rate" or
"prime rate" for Dollar loans (which rate may not necessarily be its lowest
rate) in effect at its New York Branch; or

        (b)  the sum of the Federal Funds Rate plus 0.50% per annum.

        "Base Rate Advance" means an Advance by a Lender which is designated as
such in a Notice of Interest Rate Election, or which is deemed to be such
pursuant to the terms of the Credit Agreement.

        "BECO" means Boston Edison Company and its successors.

2

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

        "BECO Acquisition Loan" means the loan or loans made by the BECO
Acquisition Lenders pursuant to the BECO Acquisition Credit Agreement.

        "BECO Acquisition Credit Agreement" means the Credit Agreement dated as
of May 15, 1998, among Sithe New England, as borrower, the BECO Acquisition
Lenders and Bank of Montreal as Agent, as amended, restated, supplemented or
otherwise modified from time to time.

        "BECO Acquisition Lenders" means Bank of Montreal and each other
financial institution party as a "Lender" to the BECO Acquisition Credit
Agreement as set forth on Appendix I thereto

        "Benefiting Project" means the Project owned by the Benefiting Project
Company.

        "Benefiting Project Company" means the Development Project Company to
which Project Advances are contributed or with respect to which proceeds of
Project Advances are used or for which Project Letters of Credit are issued.

        "Borrower" means Sithe Boston Generating, LLC, a Delaware limited
liability company.

        "Borrower Default" means any event or condition which upon the giving of
notice, the lapse of time or both would constitute a Borrower Event of Default.

        "Borrower Event of Default" has the meaning set forth in Section 8.01 of
the Credit Agreement.

        "Borrower Permitted Debt" means any Debt permitted by Section 7.02(a) of
the Credit Agreement.

        "Borrower Permitted Liens" means those Liens permitted by
Section 7.02(b) of the Credit Agreement.

        "Borrower Pledge Agreement" means the Pledge Agreement dated as of
January 31, 2001, between the Borrower and the Collateral Agent.

        "Borrowing" means, as the context requires, a Project Borrowing or a
Working Capital Borrowing.

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

        "Cabot" means Cabot LNG LLC, a Delaware limited liability company.

        "Cabot Guaranty" means the Guaranty dated as of January 15, 2000, by
Cabot in favor of Sithe Mystic Development and Sithe Power Marketing.

        "Calendar Quarter" means each three (3) calendar month period ended
March 31, June 30, September 30 and December 31.

        "Capitalized Lease Liabilities" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance with GAAP,
would be classified as capitalized leases, and, for purposes of this Agreement
and each other Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.

        "Cash Flow" means, with respect to the Borrower, for any period, the
excess, if any, computed on a cash basis, of (i) the amount of all Project
Revenues during such period over (ii) all Operating Expenses and Approved
Capital Expenditures, without duplication, to the extent paid pursuant to
paragraph second of Section 4.05 of the Depositary Agreement during such period.

        "Casualty Event" means, in respect of any Project, any single event of
damage or destruction of all or any portion of such Project.

        "Change of Control" means, as to any Project Company, Sithe (or its
parent) shall collectively cease to own, directly or indirectly through one or
more subsidiaries, at least 50% of the outstanding

3

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

membership interests in such Project Company; provided, that such event shall
not be deemed a "Change of Control" if such event is approved by the Required
Lenders; provided, further, that in any event 100% of the outstanding membership
interests in such Project Company shall continue to be subject to a pledge in
favor of the Collateral Agent.

        "Change Order" has the meaning set forth in the EPC Agreements.

        "Clawback Limit" means, as of the date calculated, an amount equal to
the lesser of (a) the aggregate amount of Mystic Station Net Revenues
distributed to Sithe New England (or any other Sithe Affiliate) from the
Clawback Trigger Date through and including such calculation date, and
(b) $10,000,000 (i) minus the positive difference if any, between $50,600,000
and the aggregate amount of Contingent Equity Contributions applied toward
Project Costs and/or Financing Costs as of such calculation date and (ii) plus
any Cost Overruns.

        "Clawback Trigger Date" means the first date upon which the Remaining
Contingent Equity Commitment (as defined in the Equity Contribution Agreement)
shall equal $10,000,000 or less.

        "Clean Up Requirement" has the meaning set forth in Section 2.02(f) of
the Credit Agreement.

        "Closing" means the day upon which each of the conditions precedent
enumerated in Section 5.01 the Credit Agreement shall be fulfilled or waived.
All transactions contemplated by the Closing shall take place on a Business Day
at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York,
New York 10019, as the parties hereto may mutually agree.

        "Closing Base Case" means the updated Term Sheet Base Case delivered at
Closing, which shall be in form and substance satisfactory to the Lenders.

        "Closing Date" means the date on which the Closing occurs.

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

        "Collateral" means all of the collateral purported to be governed by any
or all of the Security Documents.

        "Collateral Agent" has the meaning set forth in the Depositary
Agreement.

        "Commitment" means, with respect to each Lender, its Project Commitment,
Working Capital Commitment or, to the extent provided in Section 3.02 of the
Credit Agreement, its commitment to make Advances to the Borrower in respect of
the Letters of Credit.

        "Completion Date" means, as to any Development Project, the date upon
which Project Completion shall have occurred with respect to such Project.

        "Confidential Information" has the meaning set forth in Section 10.09 of
the Credit Agreement.

        "Consents" means the Acknowledgments and Consents with respect to each
Material Project Document and any additional separate Acknowledgments and
Consents that shall be entered into from time to time with respect to Additional
Project Documents, in substantially the form attached as Exhibit 1.01A to the
Credit Agreement or otherwise in form and substance reasonably satisfactory to
the Administrative Agent, between the Collateral Agent and each Person party to
any of the Material Project Documents for the related Project.

        "Construction Schedule" means the construction schedules for each of the
Development Projects under the EPC Agreements, copies of which are attached as
Exhibit B to the Project Company Guarantee.

        "Contest" means, with respect to the payment of Taxes or any other
claims or liabilities, the satisfaction of each of the following conditions:
(i) the validity or amount thereof is being diligently contested in good faith
by the Borrower or any Project Company, as the case may be, by appropriate

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proceedings timely instituted, (ii) the Borrower or any Project Company has
established adequate cash reserves with respect to the contested items,
(iii) during the period of such contest, the enforcement of any contested item
is effectively stayed, and (iv) such failure to so pay or discharge during the
period of such contest would not reasonably be expected to result in a Material
Adverse Effect.

        "Contingent Equity Account" has the meaning set forth in the Depositary
Agreement.

        "Contingent Equity Amount" has the meaning set forth in the Equity
Contribution Agreement.

        "Contingent Equity Contributions" has the meaning set forth in the
Equity Contribution Agreement.

        "Contractor" means WGI and its successors.

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

        "Conversion", "Convert" or "Converted" each refers to a conversion of
Advances pursuant to Section 2.03 of the Credit Agreement, including any
selection of a longer or shorter Interest Period to be applicable thereto or any
continuation of an Advance as described in Section 2.03(b) of the Credit
Agreement.

        "Cost Overruns" means, as of any date, all Project Costs as of such
date, in excess of all Project Costs set forth in the Closing Base Case
(including contingency of $50,600,000).

        "Covered Taxes" has the meaning set forth in Section 4.09(a) of the
Credit Agreement.

        "Credit Agreement" means the Credit and Reimbursement Agreement, dated
as of January 31, 2001, by and among the Borrower, the Lenders, the
Administrative Agent and the LC Issuers.

        "CSFB" means Credit Suisse First Boston.

        "Date Certain" means the date which is 28 months after the Closing Date.

        "Debt" means, with respect to any Person, (i) indebtedness for borrowed
money, including obligations evidenced by bonds, debentures, notes or other
similar instruments, (ii) obligations to pay the deferred purchase price of
property or services (excluding obligations under agreements for the purchase of
goods and services in the normal course of business, which exclusion is intended
to encompass the Project Documents, which are not more than 90 days past due and
obligations being contested in good faith by appropriate proceedings, unless by
such contest (A) the Liens evidenced by the Security Documents could reasonably
be expected to be endangered or (B) any portion of a Project could reasonably be
expected to be lost to a third party or forfeited), (iii) Capitalized Lease
Liabilities, (iv) obligations (contingent or otherwise) under reimbursement or
similar agreements with respect to the issuance of letters of credit,
(v) obligations under "swaps", "caps", "floors", "collars", or other interest
rate hedging contracts or similar arrangements and (vi) obligations under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of another Person of the kinds
referred to in clauses (i) through (v), above (such as obligations to pay for
property or services irrespective of whether such property is tendered or
transferred or such services are performed).

        "Debt Service Account" has the meaning set forth in the Depositary
Agreement.

        "Debt Service Coverage Ratio" means for any period, the ratio of (1) the
aggregate of all of the Borrower's Cash Flow for such period (which amount shall
exclude all casualty proceeds, eminent domain proceeds and performance
liquidated damages, but shall include any business interruption proceeds) to
(2) Scheduled Debt Service for such period, each as determined on a cash basis.

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        "Debt Service Reserve Account" has the meaning set forth in the
Depositary Agreement.

        "Debt Service Reserve Requirement" means, for any period, the amount
which is estimated by the Borrower, and certified to the Administrative Agent to
be the Scheduled Debt Service for the immediately succeeding two (2) Calendar
Quarter periods.

        "Default Rate" means a rate per annum equal at all times to 2% per annum
above the Applicable Rate in effect from time to time.

        "Deferred Project Approval" has the meaning set forth in Section 3.01(o)
of the Project Company Guarantee.

        "Depositary" has the meaning set forth in the Depositary Agreement and
the SPM Depositary Agreement, as applicable.

        "Depositary Agreement" means the Collateral Agency and Depositary
Agreement dated as of January 31, 2001, by and among the Borrower, the Project
Companies, the Depositary, the Collateral Agent and the Administrative Agent.

        "Development Project" means the Mystic 8&9 Project or the Fore River
Project, and collectively, the "Development Projects".

        "Development Project Company" means each of Sithe Mystic Development and
Sithe Fore River and collectively, the "Development Project Companies".

        "Distribution Calculation Date" means the last date of each Calendar
Quarter.

        "Distribution Conditions" means each of the conditions to the making of
Permitted Dividends, set forth in Section 7.02(f)(iii) of the Credit Agreement,
including in the provisos thereto.

        "Distribution Date" has the meaning set forth in Section 7.02(f)(iii) of
the Credit Agreement.

        "Distrigas" means Distrigas of Massachusetts Corporation and its
successors.

        "Distrigas Guaranty" means the Guaranty dated as of January 15, 2000, by
Sithe New England in favor of Distrigas.

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

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

        "Drawing" means a drawing under a Letter of Credit.

        "DSR LC Issuer" means Bayerische Landesbank Girozentrale.

        "DSR Letter of Credit" means a letter of credit, in substantially the
form of Exhibit 1.01D, to be issued by the DSR LC Issuer pursuant to
Section 3.01 of the Credit Agreement.

        "Eligible Facility" means an "eligible facility," as that term is
defined in Section 32(a)(2) of PUHCA.

        "Environmental Discharge" means (a) the presence of any Hazardous
Substance at any location, including any location where any Hazardous Substances
generated, used, stored, treated or disposed by or on behalf of the Borrower or
any of its Affiliates have come to be located, in quantities or concentrations
that (i) are reasonably likely to constitute or result in a violation of
applicable Environmental Law, (ii) are reportable to any Governmental Authority
or (iii) are reasonably likely to give rise to any investigation or remedial
response obligation, and with respect to each of (i), (ii) and

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(iii) above, would reasonably be expected to have a Material Adverse Effect, and
(b) any action or condition in violation of any applicable Environmental Law or
that could create a liability under any applicable Environmental Law which could
reasonably be expected to have a Material Adverse Effect.

        "Environmental Law" means any Law relating to the environment, natural
resources, safety or health of humans (as it relates to Hazardous Substances),
including laws relating to noise or to Releases, or threatened Releases of
Hazardous Substances into the indoor or outdoor environment or otherwise
relating to the presence of Hazardous Substances at any location, and laws
relating to threatened or endangered species of living organisms.

        "Environmental Matter" has the meaning set forth in Section 10.04(c) of
the Credit Agreement.

        "Environmental Notice" shall mean any written complaint, order,
citation, notice, request for information or communication actually received by
the Borrower or any Project Company from any Person (a) with respect to any
violation or alleged violation of any Environmental Law, (b) relating to
liability for Environmental Discharges or (c) relating to liability for the
presence of Hazardous Substances on or off Property, and related to Project
operations that, with respect to each of (a), (b) and (c) above, could
reasonably be expected to result in a Material Adverse Effect or Project
Material Adverse Effect, as applicable.

        "EPC Agreements" means collectively, the Mystic Development EPC
Agreement and the Fore River EPC Agreement, and each an "EPC Agreement".

        "Equity Contribution Agreement" means the Equity Contribution Agreement
dated as of January 31, 2001, between Sithe New England, the Borrower and the
Collateral Agent.

        "Equity Contribution Account" has the meaning set forth in the
Depositary Agreement.

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

        "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is a member of a controlled group of corporations or other
entities and which are under common control with Borrower within the meaning of
the regulations under Section 414 of the Code.

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

        "Event of Bankruptcy" means, with respect to any Person, the occurrence
of any of the following events:

        (1)  the commencement by such Person of a voluntary case concerning
itself as debtor under the Federal Bankruptcy Code or similar Law;

        (2)  an involuntary case is commenced against such Person as debtor and
the petition is not dismissed within 90 days, after commencement of the case;

        (3)  a custodian (as defined in the Federal Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
such Person or such Person commences any other proceedings under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar Law of any jurisdiction whether now or
hereafter in effect relating to such Person or there is commenced against such
Person any such proceeding which remains undismissed for a period of 90 days;

        (4)  the entry of any order of relief or other order approving any such
case or proceeding involving such Person;

        (5)  such Person is adjudicated insolvent or bankrupt;

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        (6)  such Person suffers any appointment or any custodian or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of 90 days;

        (7)  such Person makes a general assignment for the benefit of
creditors;

        (8)  such Person shall state that it is unable to pay its debts
generally as they become due;

        (9)  such Person shall by any act or failure to act, consent to, approve
of or acquiesce in any of the foregoing; or

        (10) any limited liability company, partnership or corporate action, as
the case may be, is taken by such Person for the purpose of effecting any of the
foregoing.

        "EWG" means an "exempt wholesale generator," as that term is defined in
Section 32 (a)(1) of PUHCA.

        "Expiration Date" means, with respect to any Letter of Credit, the
meaning set forth in such Letter of Credit.

        "Federal Bankruptcy Code" means the United States Bankruptcy Code of
1978.

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

        "Federal Power Act" means the Federal Power Act of 1920.

        "Fee Letters" means collectively, the fee letter agreements dated as of
January 31, 2001, entered into among (a) the Borrower and the Project LC Issuer,
and (b) the Borrower and the DSR LC Issuer.

        "Fees" means, collectively, each of the fees set forth in Section 4.09
of the Credit Agreement.

        "FERC" means the Federal Energy Regulatory Commission or any federal
agency successor thereto.

        "Financing Costs" means, (x) as to the Borrower, all interest during
construction, commitment fees, letter of credit fees and other fees and expenses
(including legal expenses) incurred in connection with the financing of the
Projects, (y) as to any Project, all interest during construction, commitment
fees, letter of credit fees and other fees and expenses (including legal
expenses) incurred in connection with the financing of such Project, and (z) as
to any Additional Project, all interest during construction, commitment fees,
letter of credit fees and other fees and expenses (including legal expenses)
incurred in connection with the financing of such Additional Project.

        "Firm Vapor Service Agreement" means the Service Agreement for Firm
Vapor Service dated as of January 15, 2000, between Distrigas and Sithe Power
Marketing.

        "First Completion Date" means the earlier of (i) Project Completion for
the Mystic 8&9 Project and (ii) Project Completion for the Fore River Project.

        "First Distrigas Payment Date" means the 25th day of the month following
the month in which the Commencement Date (as defined in the Gas Sales and
Purchase Agreement) shall have occurred.

        "Fore River Administrative Services Agreement" means the Administrative
Services Agreement dated as of January 31, 2001, between Sithe Fore River and
Sithe.

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        "Fore River EPC Agreement" means the Engineering, Procurement and
Construction Agreement dated as of May 8, 2000, between Sithe Fore River and WGI
(as successor to Raytheon Engineers & Constructors, Inc.), including any Change
Orders thereto listed on Schedule 4 to the Credit Agreement.

        "Fore River Interconnection Agreement" means the Interconnection
Agreement dated as of October 23, 2000, between BECO and Sithe Fore River.

        "Fore River Long Term Service Agreement" means the Long Term Service
Agreement dated as of December 8, 2000, between Sithe Fore River and MHIA.

        "Fore River O&M Agreement" means the Operation and Maintenance Agreement
dated as of January 31, 2001, between Sithe Fore River and Sithe Boston Power
Services.

        "Fore River Project" means an 800 MW combined-cycle electric generating
facility under construction in Weymouth, Massachusetts and owned by Sithe Fore
River.

        "Fore River Terminalling Agreement" means the Terminalling Agreement
dated as of July 27, 2000, between Sithe Edgar and Sprague Energy Corp., as
assigned to Sithe Fore River pursuant to that certain Assignment Agreement dated
as of the date hereof between Sithe Edgar and Sithe Fore River.

        "Fore River TIF Agreement" means the Tax Increment Financing Agreement,
dated as of November 22, 1999 between the Town of Weymouth, Massachusetts and
Sithe Edgar.

        "FPA" means Federal Power Act of 1920, as amended.

        "Fuel Consultant" means Benjamin Schlesinger and Associates, Inc. or,
after the Closing Date, any other fuel consulting firm that is mutually
acceptable to the Administrative Agent and the Borrower.

        "GAAP" means generally accepted accounting principles in the United
States as in effect and as may be modified from time to time.

        "Gas Lateral" means a 24" lateral gas pipeline, which, if constructed,
will connect the Mystic 8&9 Facility and the existing pipeline of either
Algonquin or Tennessee Gas Company.

        "Gas Sales and Purchase Agreement" means the Gas Sales and Purchase
Agreement dated as of January 15, 2000, between Distrigas and Sithe Mystic
Development.

        "Governmental Approval" means any authorization, consent or approval, or
any license, franchise, lease, ruling, determination, tariff, rate, permit,
certificate or exemption of, or acceptance for filing with, any Governmental
Authority required in connection with any of (i) the execution, delivery or
performance of any Transaction Document by any Project Company or Material
Project Participant, (ii) the grant and perfection of any Lien contemplated by
the Security Documents, or (iii) the ownership, development, construction,
completion, operation or maintenance of any Project (including the sale of power
or the purchase or transportation of fuel in connection therewith).

        "Governmental Authority" means any nation or the federal government or
any state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any other governmental entity with authority over
any aspect of construction or operation of any Project.

        "Granting Lender" has the meaning specified in Section 10.07(d) of the
Credit Agreement.

        "Guaranty Obligations" means obligations of any Person of the type
described in clause (vi) of the definition of "Debt" herein.

        "Hazardous Substances" means any substances (including products) that
are subject to any prohibition, limitation, management guideline or criterion,
standard, regulation or restriction contained in, or the presence of which could
result in the imposition of liability under, any applicable Environmental Law,
and specifically including polychlorinated biphenyls, petroleum or hydrocarbon-

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based products or derivatives, natural gas-based products or derivatives, and
any substances defined as or fulfilling the characteristics of a hazardous waste
or a hazardous substance under any applicable Environmental Law.

        "HubLine Precedent Agreement" means the HubLine Precedent Agreement
dated as of August 2, 2000, between Algonquin and Sithe Power Marketing.

        "HubLine Service Agreement" means, collectively, the HubLine Service
Agreement dated as of August 2, 2000, between Algonquin and Sithe Power
Marketing and the HubLine Letter Agreement dated April 2, 2000, between
Algonquin and Sithe Power Marketing.

        "ICAP" means "Installed Capability", as such term is defined in the
definitions section of "New England Power Pool FERC Schedule No. 6—Market Rules
and Procedures" in effect from time to time.

        "Indemnified Person" has the meaning set forth in Section 10.04(b) of
the Credit Agreement.

        "Independent Engineer" means Black & Veatch Corporation or, after the
Closing Date, any other independent consulting engineer of recognized expertise
that is mutually acceptable to the Administrative Agent and the Borrower.

        "Initial Advance" means the first Advance made pursuant to the terms of
the Credit Agreement.

        "Insurance Consultant" means Marsh USA, Inc. or, after the Closing Date,
any other insurance consultant that is mutually acceptable to the Administrative
Agent and the Borrower.

        "Interconnection Agreements" means collectively the Mystic Development
Interconnection Agreement and the Fore River Interconnection Agreement, and each
an "Interconnection Agreement".

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        "Interconnection Payment Letters of Credit" means the letters of credit
issued by the Project LC Issuer for delivery to BECO pursuant to Section 5 of
the respective Interconnection Agreements.

        "Interconnection Security Letters of Credit" means (a) the letters of
credit issued by the Project LC Issuer for delivery to BECO pursuant to
Section 6 of the respective Interconnection Agreements and (b) a letter of
credit which may be issued by the Project LC Issuer for delivery to National
Grid USA pursuant to Section 1 of the Related Facilities Agreement.

        "Interest Period" means, for each Advance (or portion thereof), the
period from the date on which such Advance (or portion thereof) was most
recently Converted or, if not previously Converted, on which such Advance was
made, to (and including) a date selected by the Borrower in accordance with this
definition and Article II of the Credit Agreement.

        All Advances comprising part of the same Borrowing shall have the same
Interest Period. The duration of each Interest Period for any LIBOR Rate Advance
shall be 1, 2, 3 or 6 months, and if available, 9 or 12 months, in each case as
the Borrower may select in the relevant Notice of Borrowing or Notice of
Conversion, in accordance with the terms of Section 2.01 or Section 2.03 of the
Credit Agreement, as applicable; provided, however, that:

          (i)  the Borrower may not select any Interest Period for any LIBOR
Rate Advance which ends after any Payment Date unless, after giving effect to
such selection, the sum of the aggregate principal amount of LIBOR Rate Advances
that mature after such Payment Date shall be equal to or less than the aggregate
principal amount of the Advances permitted to be outstanding after such Payment
Date pursuant to Section 2.01 of the Credit Agreement;

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

        (iii)  in the case of LIBOR Rate Advances, any Interest Period that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day at the end of such Interest Period) shall
end on the last Business Day of a calendar month.

        "Interim Credit Agreement" means the Interim Credit Agreement dated as
of December 12, 2000, among Sithe New England, as borrower, the Interim Lenders,
The Sumitomo Bank, as Documentation Agent, Bayerische Hypo-und Vereinsbank, AG,
New York Branch, as Syndication Agent, Australia and New Zealand Banking Group
Limited, as Agent for the Lenders, as amended, restated, supplemented or
otherwise modified from time to time.

        "Interim Lenders" means the financial institutions from time to time
party to the Interim Credit Agreement as "Lenders".

        "Interim Loan" means the loan or loans made by the Interim Lenders
pursuant to the Interim Credit Agreement.

        "Investment Grade Rating" means a rating from Moody's of at least Baa3,
or S&P, of at least BBB- (or the equivalent from another Rating Agency).

        "Law" means any foreign (with respect to regulation of the Lenders),
federal, state, local or other statute, law, rule, regulation, ordinance, order,
code or binding rule of common law, now or hereafter in effect, and any binding
judicial or administrative interpretation thereof by a Governmental Authority,
including any judicial or administrative order, consent decree or judgment.

        "LC Commitment" has the meaning set forth in Section 3.01 of the Credit
Agreement.

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        "LC Issuers" means, collectively, the DSR LC Issuer and the Project LC
Issuer, and each individually, a "LC Issuer".

        "LC Loan" has the meaning set forth in Section 3.03(b) of the Credit
Agreement.

        "LC Payment Date" has the meaning set forth in Section 3.03(a) of the
Credit Agreement.

        "Lead Arrangers" means BNP PARIBAS and CSFB, and each individually, a
"Lead Arranger".

        "Lender Assignment" means an assignment and agreement entered into by a
Lender and an assignee in accordance with the terms and subject to the
conditions set forth in Section 10.07 of the Credit Agreement, and accepted by
the Administrative Agent, in substantially the form of Exhibit 10.07(a) of the
Credit Agreement.

        "Lenders" has the meaning set forth in the introductory paragraph to the
Credit Agreement.

        "Lending Office" means, with respect to any Lender's Base Rate Advances,
such Lender's Domestic Lending Office, and, with respect to any Lender's LIBOR
Rate Advances, such Lender's LIBOR Lending Office.

        "Letters of Credit" means, collectively, the DSR Letter of Credit, the
Interconnection Security Letters of Credit and the Interconnection Payment
Letters of Credit.

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

        "LIBOR Rate" means, for the Interest Period for each LIBOR Rate Advance
comprising part of the same Borrowing, an interest rate per annum, as set forth
on the Telerate Screen Page 3750, equal to the average (rounded upward to the
nearest whole multiple of 1/100 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in U.S. dollars are offered by
first class banks in London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two (2) Business Days before the first day of
such Interest Period in an amount substantially equal to such LIBOR Rate Advance
comprising part of such Borrowing and for a period equal to such Interest
Period. In the event that no such rate is posted on the Telerate Screen, the
LIBOR Rate for the Interest Period for each LIBOR Rate Advance comprising part
of the same Borrowing shall be the rate per annum equal to the average (rounded
upward to the nearest whole multiple of 1/100 of 1% per annum, if such average
is not such a multiple) of the respective rates furnished to and received by the
Administrative Agent from not less than three first class banks in the London
interbank market two (2) Business Days before the first day of such Interest
Period.

        "LIBOR Rate Advance" means an Advance which is designated as such in a
Notice of Interest Rate Election or a Notice of Conversion.

        "LIBOR Reserve Percentage" of any Lender for the Interest Period for any
LIBOR Rate Advance means the reserve percentage applicable to such Lender during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor thereto) for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) then applicable to such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities having a term equal
to such Interest Period.

        "Lien" means any mortgage, charge, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien, (statutory or otherwise), preference, priority

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right or interest or other security arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the Uniform Commercial Code (other than any such financing statement filed for
informational purposes only) or comparable law of any jurisdiction to evidence
any of the foregoing.

        "LLC Agreement" means the Limited Liability Company Agreement of the
Borrower dated as of August 10, 2000.

        "Loan Documents" means, collectively, the Credit Agreement, the Project
Company Guarantee, the Sithe Undertaking, the Sithe Equity Guaranty, the Equity
Contribution Agreement, the Security Documents, the Fee Letter, the Notes and
any Swap Agreement.

        "LTSAs" means collectively, the Fore River Long Term Service Agreement
and the Mystic Development Long Term Service Agreement, and each a "LTSA".

        "Major Maintenance/Forced Outage Reserve Account" has the meaning set
forth in the Depositary Agreement.

        "Major Maintenance/Forced Outage Reserve Requirement" means
(a) $60 million for the period commencing on the Second Completion Date through
the date upon which all combustion turbines in each of the Development Projects
have undergone a single SCR Overhaul, and (b) $30 million, thereafter; provided,
that subject to the foregoing $30 million minimum requirement, the Major
Maintenance/Forced Outage Reserve Requirement shall be reduced by the actual
amount of funds expended following each SCR Overhaul.

        "Material Adverse Effect" means with respect to the Borrower, an event
or occurrence that has a material adverse effect on the business, operations,
property, assets, or financial condition of the Borrower or the ability of the
Borrower to pay its debts or perform and comply with its material obligations
under the Loan Documents or Security Documents to which it is a party, or the
validity or priority of the Lenders' security interest in the Collateral.

        "Material Borrower Default" means a default by the Borrower under
Section 8.01 of the Credit Agreement, in respect of subsections (a) (payments),
(b) (representation and warranty), (d) (cross default), (e) (bankruptcy),
(i) (dissolution), (j) (judgements), (k) (security documents), (m) (Project
Event of Default), (o) (negative pledge), (p) (Equity Contributions), (q) (Sithe
Undertaking) or (u) (Sithe New England).

        "Material Project Documents" means collectively, the Material Project
Documents (Fore River), Material Project Documents (Mystic Development) and the
Material Project Documents (Mystic) and any Additional Project Documents which
may be entered into from time to time by the Project Company in respect of its
related Project.

        "Material Project Documents (Fore River)" means collectively, the Fore
River EPC Agreement, the Fore River Interconnection Agreement, the Fore River
Terminalling Agreement, the Fore River Long Term Service Agreement, the Power
Marketing Agreement, the Fore River O&M Agreement, the Precedent Agreement, the
Algonquin Service Agreement, the Fore River Administrative Services Agreement,
the Raytheon/Fore River Guaranty, and the MHI/Fore River Guaranty and the Fore
River TIF Agreement, provided, however, that upon the commencement of firm gas
transportation services under the HubLine Service Agreement between Algonquin
and Sithe Fore River, the Precedent Agreement and the Algonquin Service
Agreement shall cease to be Material Project Documents (Fore River) and the
HubLine Service Agreement shall thereafter constitute a Material Project
Document (Fore River).

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        "Material Project Documents (Mystic)" means collectively, the Sithe
Mystic Interconnection Agreement, the Sithe Mystic Terminalling Agreement, the
Power Marketing Agreement, the Sithe Mystic O&M Agreement and the Sithe Mystic
Administrative Services Agreement.

        "Material Project Documents (Mystic Development)" means collectively,
the Mystic Development EPC Agreement, the Mystic Development Interconnection
Agreement, the Firm Vapor Service Agreement, the Gas Sales and Purchase
Agreement, the Mystic Development Long Term Service Agreement, the Power
Marketing Agreement, the Mystic Development O&M Agreement, the Mystic
Development Administrative Services Agreement, the Raytheon/Mystic Development
Guaranty, the Cabot Guaranty, the MHI/Mystic Development Guaranty, the Distrigas
Guaranty, the Mystic Development TIF Agreement, and the Mystic Development PILOT
Agreement.

        "Material Project Event of Default" means, all Project Events of Default
by a Project Company under Section 4.01 of the Project Company Guarantee, except
Section 4.01 (a) (payment), (c) (with respect to covenant defaults where a cure
period is permitted), (j)(ii) (with respect to Material Project Documents other
than the Power Marketing Agreement, the Raytheon guarantees, the agreements with
Distrigas, the Long Term Service Agreements and the MHI guaranties), (l) (ERISA)
and (q) (Date Certain).

        "Material Project Participants" means Sithe Power Marketing, Sithe,
Sithe New England Power Services, Sithe Boston Power Service, WGI (through the
expiration of all warranties under each of the EPC Agreements), Algonquin, BECO,
Boston Gas Company, Distrigas, Raytheon Company (through the expiration of all
warranties under each of the EPC Agreements), MHIA, MHI, Cabot, Sprague Energy
Corp. and Exxon Company, U.S.A.

        "Maturity Date" means December 31, 2007.

        "Medway Project" means a nominal 540 MW simple cycle generating facility
under development in Medway, Massachusetts.

        "Member" means any Person who holds membership interests in a Project
Company.

        "MHI" means Mitsubishi Heavy Industries, Ltd. and its successors.

        "MHIA" means Mitsubishi Heavy Industries America, Inc. and its
successors.

        "MHI/Fore River Guaranty" means the Guaranty dated as of December 8,
2000, by MHI in favor of Sithe Fore River, guaranteeing the obligations of MHIA
under the Fore River Long Term Service Agreement.

        "MHI/Mystic Development Guaranty" means the Guaranty dated as of
November 6, 2000, by MHI in favor of Sithe Mystic Development, guaranteeing the
obligations of MHIA under the Mystic Development Long Term Service Agreement.

        "Minimum Notice Period" means, (i) with respect to LIBOR Rate Advances,
a period of least three (3) Business Days prior to a proposed Borrowing,
(ii) with respect to Base Rate Advances, a period of at least (1) Business Day
prior to a proposed Borrowing, (iii) with respect to a Conversion of a LIBOR
Rate Advance into a Base Rate Advance, a period of at least one (1) Business Day
prior to such Conversion and (iv) with respect to a Conversion of a Base Rate
Advance into a LIBOR Rate Advance, a period of at least three (3) Business Days
prior to such Conversion.

        "Monthly Payment Date" means, with respect to each calendar month,
(a) the last day of such calendar month, or if any such date is not a Business
Day, the Business Day immediately preceding such day and (b) any other one
(1) day of such month as may be selected by the Borrower, provided that the
Collateral Agent has received written notice of such date at least one Business
Day in advance thereof.

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

        "Mortgage" means the Mortgage and Security Agreement dated as of
January 31, 2001, by Sithe Mystic, Sithe Mystic Development and Sithe Fore River
in favor of the Collateral Agent.

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

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

        "MW" means megawatt(s) or one million watts.

        "Mystic 8&9 Project" means a 2 × 800 MW combined-cycle electric
generating facility under construction in Everett, Massachusetts.

        "Mystic Development Administrative Services Agreement" means the
Administrative Services Agreement dated as of January 31, 2001, between Sithe
Mystic Development and Sithe.

        "Mystic Development EPC Agreement" means the Engineering, Procurement
and Construction Agreement dated as of December 31, 1999, between Sithe Mystic
Development and WGI (as successor to Raytheon Engineers & Constructors, Inc.),
including any Change Orders thereto listed on Schedule 4 to the Credit
Agreement.

        "Mystic Development Interconnection Agreement" means the Interconnection
Agreement, between BECO and Sithe Mystic Development filed with FERC under
Docket No. ER01-89C as finally executed.

        "Mystic Development Long Term Service Agreement" means the Long Term
Service Agreement dated as of November 6, 2000, between Sithe Mystic Development
and MHIA.

        "Mystic Development O&M Agreement" means the Operation and Maintenance
Agreement dated as of January 31, 2001, between Sithe Mystic Development and
Sithe Boston Power Services.

        "Mystic Development PILOT Agreement" means the Agreement For Payment In
Lieu of Taxes, dated as of December 10, 1999 between the City of Everett,
Massachusetts and Sithe Mystic, as assigned to Sithe Mystic Development.

        "Mystic Development TIF Agreement" means the Tax Increment Financing
Agreement, dated as of December 10, 1999 between the City of Everett,
Massachusetts and Sithe Mystic, as assigned to Sithe Mystic Development.

        "Mystic Station Net Revenue" means, with respect to any period, the
revenues received from Mystic Station Project during such period less Operating
Expenses and Approved Capital Expenditures, without duplication, incurred in
respect of the Mystic Station Project during such period.

        "Mystic Station Project" means a 1,005 MW electric generating facility
in operation in Everett, Massachusetts and owned by Sithe Mystic.

        "Net Consolidated Usage" shall have occurred, as of a given date, if on
such date the aggregate amount reallocated from the contingency line item of
either Project Budget exceeds the aggregate amount of demonstrated savings, if
any, from completed line items in either Project Budget for which a Reallocation
Certificate (in the form of Exhibit 2.01(b) to the Credit Agreement) has been
provided.

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        "Non-performing Lender" has the meaning set forth in
Section 2.03(a)(iv) of the Credit Agreement.

        "Non-Variable Operating Expenses" means all items included in any
Operating Budget other than variable fuel expenses, costs associated with the
purchase of emissions credits and fuel transportation costs.

        "Note" means a Project Note, Working Capital Note or a LC Loan Note.

        "Notice of Borrowing" has the meaning set forth in
Section 2.01(c)(ii) of the Credit Agreement.

        "Notice of Conversion" has the meaning set forth in
Section 2.03(b)(i) of the Credit Agreement.

        "Notice of Working Capital Borrowing" has the meaning set forth in
Section 2.02(d) of the Credit Agreement.

        "O&M Agreements" means collectively, the Sithe Mystic Station O&M
Agreement, the Mystic Development O&M Agreement and Fore River O&M Agreement.

        "Obligations" means (a) each and every obligation, covenant and
agreement of the Borrower now or hereafter existing contained in the Credit
Agreement or any other Loan Document to which the Borrower is a party, whether
for principal, interest, premium, Fees, Swap Claims, expenses or otherwise, and
any amendments or supplements thereto, extensions or renewals thereof or
replacements therefor, (b) all sums advanced in accordance with the Security
Documents to which the Borrower or any Project Company is a party by or on
behalf of any Secured Party to protect any of the Collateral purported to be
covered thereby, (c) any amounts paid by any Indemnified Person as to which such
Indemnified Person has a right to reimbursement against the Borrower and
(d) amounts paid by any Secured Party in preservation of such Secured Party's
rights or interests in the Collateral, together with interest on the amounts
referred to in clauses (a) through (d), above, in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or unliquidated,
now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and
including all Debt of the Borrower under any instrument now or hereafter
evidencing or securing any of the foregoing.

        "Operator" means, in the case of the Mystic Development O&M Agreement
and the Fore River O&M Agreement, Sithe Boston Power Services, and in the case
of the Sithe Mystic Station O&M Agreement, Sithe New England Power Services.

        "Operating Budget" shall have the meaning set forth in Section 3.02(bb)
of the Project Company Guarantee.

        "Operating Expenses" means, with respect to the Borrower, for any
period, the aggregate of all operating and maintenance expenses for all Projects
during such period, including: (a) insurance premiums; (b) franchise, licensing,
property and other taxes (other than income taxes) payable by the Borrower and
any Project Company; (c) labor and personnel costs; (d) costs incurred under any
Project Document (other than the Base Fee or the Incentive Fee payable under the
Power Marketing Agreement or any payments due under the Tax Sharing Agreement);
(e) fuel and fuel transportation and storage costs; (f) utilities, supplies and
other services required for the ownership, operation and maintenance of any
Project; (g) maintenance expenses not funded from amounts withdrawn from the
Major Maintenance/Forced Outage Reserve Account (but excluding Approved Capital
Expenditures); (h) general and administrative and management costs with regard
to the Borrower and each Project; and (i) agency, consulting, professional and
other fees. "Operating Expenses" when used with respect to any Project Company,
shall mean each of the types of expenses referred to above which have been
incurred only by, or on behalf of, such Project Company.

        "Outstanding Amount" means any outstanding LC Loan and other amounts
owing to the respective Lender under a Letter of Credit.

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        "Payment Date" means each March 31, June 30, September 30 and
December 31.

        "Payment LC Commitment" means, with respect to a Lender, the product of
(x) such Lender's Percentage and (y) the Aggregate Payment LC Commitment.

        "Percentage" means, in respect of any Lender, the percentage set forth
next to such Lender's name under the column entitled "Lender Percentage" on
Schedules 1, 2 and 3 to the Credit Agreement.

        "Permitted Borrower Account" means an account established in the name of
the Borrower, which shall not be subject to a Lien in favor of any Lenders and
the cash or securities deposited therein shall not constitute Collateral.

        "Permitted Borrower Debt" has the meaning set forth in Section 7.02(a)
of the Credit Agreement.

        "Permitted Business" means, as to the Borrower and any Project Company,
the financing, development, permitting, construction, management, expansion,
operation, maintenance and improvement of the Projects (or Project Company's
respective Project, as the case may be) and the procurement, marketing and sale
of supplies and parts, capacity, energy, ancillary services, fuel and emissions
credits in connection with such Project (including Permitted Hedging
Transactions), and all activities reasonably related or incidental thereto,
including those contemplated in the related EPC Agreement and the other Project
Documents and those otherwise permitted under the Credit Agreement and the
Project Company Guarantee, as the case may be. "Permitted Business" may also
include the financing, permitting, construction, management, expansion,
operation, maintenance and improvement of Additional Projects, but shall
expressly exclude any pre-financing development activities of any Additional
Project.

        "Permitted Dividends" has the meaning set forth in Section 7.02(f) of
the Credit Agreement.

        "Permitted Exceptions" has the meaning set forth in Section 5.02(d) of
the Credit Agreement.

        "Permitted Hedging Transactions" means physical or financial
transactions entered for the forward or future purchase or sale of fuel, fuel
transportation, capacity, energy, ancillary services, emissions credits or
related products, entered into in accordance with the Risk Management Policy.

        "Permitted Investments" means:

          (i)  direct obligations of the United States of America or obligations
fully guaranteed as to principal and interest by the United States of America,
not maturing not later than 90 days (or if a Borrower Event of Default shall
have occurred and be continuing, 30 days) from the date of acquisition thereof;

        (ii)  certificates of deposit issued by, bankers' acceptances created
by, or time deposits with any bank or trust company which is organized under the
laws of the United States of America or any state thereof, and having capital,
surplus and undivided profits of at least $500,000,000 and that is rated "A" or
better by S&P or "A2" by Moody's maturing not later than 90 days (or if a
Borrower Event of Default shall have occurred and be continuing, 30 days) from
the date of acquisition thereof;

        (iii)  commercial paper rated (on the date of acquisition thereof) A-1
and P-1 or better by S&P and Moody's, respectively, maturing not more than
90 days (or in the event of a Borrower Event of Default shall occur and be
continuing, 30 days) from the date of acquisition thereof;

        (iv)  repurchase obligations with a term of not more than 90 days (or if
a Borrower Event of Default shall have occurred and be continuing, 30 days) for
underlying securities of the types described in clauses (i) or (ii) above,
entered into with any financial institution meeting the qualifications specified
in clause (iii) above;

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        (v)  money market funds (including, without limitation, deposits in the
VISTA Money Market Funds and any other fund for which the Collateral Agent or
any Affiliate thereof serves as an investment advisor, administrator,
shareholder servicing agent and/or custodian or subcustodian), so long as such
funds are rated AAA by Moody's or Aaa by S&P; and

        (vi)  any other investment designated by the Borrower and approved in
writing by the Technical Committee;

provided, however, that, notwithstanding the foregoing, the Borrower may invest
up to 50% of the funds in the Major Maintenance/Forced Outage Reserve Account in
investments described in clauses (i) through (v), above, which mature no later
than 360 days from the date of acquisition thereof.

        "Permitted Liens" means Borrower Permitted Liens and Project Company
Permitted Liens.

        "Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, including any
Government Authority.

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

        "Power Market Consultant" means Pace Global Energy Services, LLC or,
after the Closing Date, any other consulting firm that is mutually acceptable to
the Lead Arrangers and the Borrower.

        "Power Marketing Agreement" means the Marketing and Procurement
Agreement dated as of January 31, 2001, by and among Sithe Power Marketing, the
Borrower, Sithe Mystic, Sithe Mystic Development and Sithe Fore River.

        "Precedent Agreement" means the Precedent Agreement dated as of
September 28, 1999, between Algonquin and Sithe Power Marketing.

        "presence", when used in connection with any Environmental Discharge or
Hazardous Substances, shall mean and include presence, generation, manufacture,
processing, distribution, installation, treatment, use, storage, handling,
repair, encapsulation, transportation, handling, Release and threatened Release,
where such presence is either regulated by applicable Environmental Law or may
serve as the basis for liability.

        "Pre-Closing Project Costs" means, as to each Project Company and its
Project, the aggregate amount of all Project Costs and Financing Costs for such
Project as confirmed by the Independent Engineer, whether constituting
out-of-pocket costs or internal costs (including, without limitation,
capitalized interest) and including all costs of employees and internal
resources and all other internal direct and allocated costs at a fair valuation
together with a reasonable allowance for overhead and administrative costs,
incurred by such Project Company or any affiliate of such Project Company at any
time on or before the Closing Date.

        "Pre-Completion Operating Expenses" means with respect to any
Development Project, Operating Expenses incurred by (or allocable to) such
Development Project prior to Project Completion thereof, provided such expenses
are not included in the Project Budget for such Development Project.

        "Pre-Completion Revenues" means with respect to any Development Project,
Project Revenues earned by (or allocable to) such Development Project, prior to
Project Completion thereof.

        "Project" means, as the context requires, the Mystic Station Project,
the Mystic 8&9 Project or the Fore River Project.

        "Project Advance" means an advance by a Lender to the Borrower pursuant
to Section 2.01(a) of the Credit Agreement.

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        "Project Borrowing" means a borrowing consisting of Project Advances
made of, or Converted into, the same Type and Interest Period made on the same
day by the Lenders. Project Borrowings consisting of Project Advances of the
same Type and Interest Period on the same day shall be deemed a single Borrowing
hereunder until repaid in full or next Converted.

        "Project Budget" means, as to each Development Project, the budget of
Project Costs (including Pre-Closing Project Costs) and Financing Costs prepared
by or on behalf of the applicable Project Company, reviewed by the Independent
Engineer and approved on or before the Closing Date by the Lead Arrangers.

        "Project Commitment" has the meaning set forth in Section 2.01(a)(i) of
the Credit Agreement.

        "Project Company" means, each of, Sithe Mystic, Sithe Mystic Development
and Sithe Fore River (and collectively, the Project Companies).

        "Project Company Guarantee" means the Project Company Guarantee dated as
of January 31, 2001, by and among each Project Company and the Collateral Agent.

        "Project Company Permitted Debt" means any Debt permitted by
Section 3.04(a) of the Project Company Guarantee.

        "Project Company Permitted Liens" means Liens permitted by
Section 3.04(b) of the Project Company Guarantee.

        "Project Completion" means, with respect to a Development Project,
satisfaction of the following conditions and requirements:

        (1)  satisfaction by the Contractor of the requirements of Section 17.3
of the related EPC Agreement, with the exception of (i) punch list items as long
as, with respect to such punch list items, set-asides satisfactory to the
Administrative Agent have been agreed between the related Project Company and
the Contractor, (ii) delivery of the certificate referred to in Section 17.3 of
the related EPC Agreement and (iii) in the event that a determination shall have
been made pursuant to the terms of the related EPC Agreement that liquidated
damages will be paid pursuant to Section 20.1 of the related EPC Agreement for
such Project Company, either such damages have been paid or arrangements
satisfactory to the Administrative Agent for the payment thereof have been made;

        (2)  Final releases of mechanics' and materialmen's liens (in
substantially the form of Exhibit C of the Project Company Guarantee) from (and
certified by) the Contractor and from all other mechanics and materialmen in
privity with the related Project Company, which have performed work or supplied
material to the related Project for an aggregate contract price or invoice price
greater than $100,000 since the delivery of the last such releases pursuant to
the Project Company Guarantee (other than in respect of any "punch list" items
agreed to by (i) the Contractor and the related Project Company pursuant to the
related EPC Agreement and (ii) all other mechanics and materialmen in privity
with the related Project Company (other than those specifically excluded above),
and approved by the Independent Engineer), together with copies of all receipts
for such work and material;

        (3)  An unmodified CLTA Endorsement No. 100 to the title policies
covering the Property, together with such other endorsements as the
Administrative Agent may reasonably request, and with evidence satisfactory to
the Administrative Agent that the title companies are in a position to issue to
the Administrative Agent, as Administrative Agent for the Secured Parties, their
ALTA rewrite policies of title insurance without exception for mechanics' or
materialmen's liens;

        (4)  Evidence that the insurance required by Section 3.02(aa) of the
Project Company Guarantee is in full force and effect;

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        (5)  Final certificates of occupancy for such Development Project, if
required by applicable Law, issued by the appropriate Governmental Authority,
containing such conditions, if any, as shall be acceptable to the Required
Lenders, together with such other assurances as may be requested by the
Administrative Agent that such Development Project and the occupancy and
operation thereof comply in all material respects with all applicable
Requirements of Law and comply with all Governmental Approvals;

        (6)  All material Governmental Approvals then required to be obtained by
the Borrower and the relevant Project Company shall have been duly obtained and
be in full force and effect, final and nonappealable, and there shall be no
challenge to any existing material Governmental Approval;

        (7)  Delivery and approval of the Operating Budgets for such Project;

        (8)  Receipt of a certificate from the Independent Engineer regarding
performance tests made in accordance with Section 3.03(c) of the Project Company
Guarantee; and

        (9)  Satisfaction of all requirements for the construction of all
interconnection facilities, including, without limitation, the provision of gas,
water and electricity, to allow for commercial operation of the applicable
Project;

provided, that any and all conditions above may be waived with the approval of
the Required Lenders.

        "Project Costs" means,

        (x)  as to any Project, all costs incurred for design, development, site
acquisition, site preparation, permitting, manufacturing, construction,
acquisition, project management, installation, testing, startup and initial
operation of such Project, or any facilities related thereto, including spare
parts and fuel handling facilities and fuel, electrical, water and sewer
interconnection equipment and facilities and the initial working capital of the
business to be conducted and all other costs and expenditures in any respect
related thereto, and specifically includes all Pre-Closing Project Costs for
such Project, all pre-completion operating and maintenance costs for such
Project (including, with respect to Mystic Station, all operation and
maintenance costs for such Project prior to the Second Completion Date), all
amounts payable under the related EPC Agreement or other Project Documents for
such Project and all property, sales and use taxes, and insurance, management,
consultant, legal and other costs and expenditures that accrue or become payable
prior to the Project Completion for such Project, but excludes all
Pre-Completion Operating Costs for such Project, and

        (y)  as to any Additional Project, all costs incurred for design,
development, site acquisition, site preparation, permitting, manufacturing,
construction, acquisition, project management, installation, testing, startup
and initial operation of such Additional Project, or any facilities related
thereto, including spare parts and fuel handling facilities and fuel,
electrical, water and sewer interconnection equipment and facilities and the
initial working capital of the business to be conducted and all other costs and
expenditures in any respect related thereto, and specifically includes any
pre-closing Project Costs for such Additional Project, all pre-completion
operation and maintenance costs for such Additional Project, all amounts payable
under the related EPC Agreement or other Project Documents for such Additional
Project and all property, sales and use taxes, and insurance, management,
consultant, legal and other costs and expenditures that accrue or become payable
prior to the project completion date for such Additional Project.

        "Project Default" means any event or condition which upon the giving of
notice, the lapse of time or both would constitute a Project Event of Default.

        "Project Documents" means, with respect to any Project, the Material
Project Documents for such Project and all agreements providing for the
development, construction, operation and maintenance of such Project, including,
without limitation, construction contracts, spare parts agreements, power sales
agreements, power transmission agreements, marketing and procurement agreements,
interconnection agreements, fuel supply agreements, fuel transportation
agreements, operation and maintenance agreements, administrative services
agreements, long-term service agreements, shared use agreements, tax abatement
agreements, tax sharing agreements, construction management agreements,
development agreements and any combination of any of the foregoing.

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        "Project Event of Default" has the meaning set forth in Article IV of
the Project Company Guarantee.

        "Project LC Issuer" means BNP PARIBAS.

        "Project Letters of Credit" means, collectively, the Interconnection
Security Letters of Credit and the Interconnection Payment Letters of Credit.

        "Project Material Adverse Effect" means with respect to a Project
Company, an event or occurrence that has a material adverse effect on the
business, operations, property, assets, or financial condition of such Project
Company or the ability of such Project Company to pay its debts or perform and
comply with its material obligations under the Loan Documents to which such
Project Company is a party, or the validity or priority of the Lenders' security
interest in such Project Company's interest in the Collateral.

        "Project Matter" has the meaning set forth in Section 10.04(b) of the
Credit Agreement.

        "Project Note" means a promissory note of the Borrower payable to the
order of each Lender, evidencing the aggregate indebtedness of the Borrower to
such Lender resulting from the Project Advances made by such Lender.

        "Project Revenues" means, for any period, the sum of the following
received by the Borrower or credited to the account of the Borrower as described
in clause (ii) below on a cash basis during such period: (i) all revenues and
income received from any source, including revenues derived from and in
connection with the sale of electricity generated by any Project, fuel, emission
credits, ancillary services, ICAP and any other revenue, including trading
revenues and fuel sale; (ii) investment earnings on amounts in the Accounts, but
only to the extent such investment earnings have been transferred to the Revenue
Account; and (iii) the proceeds of any business interruption insurance, delay in
start-up insurance or delay liquidated damages received after the Second
Completion Date.

        "Projects" means, collectively, Mystic Station Project, Mystic 8&9
Project and Fore River Project.

        "Property" means, with respect to each Project, the applicable site
description attached to the Mortgage.

        "Prudent Engineering and Operating Practices" means, with respect to a
particular time, those practices, methods, techniques and standards, as at such
time, that are generally accepted for use in the merchant power electric
generation industry commonly used in safe and prudent electric engineering and
operations to design, engineer, construct, test, operate and maintain electric
generation and transmission equipment.

        "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.

        "Rating Agency" means each of S&P and Moody's, and their respective
successors, or any other nationally recognized statistical rating agency.

        "Raytheon/Fore River Guaranty" means the Guaranty dated as of May 8,
2000, by Raytheon Company in favor of Sithe Fore River.

        "Raytheon/Mystic Development Guaranty" means the Guaranty dated as of
May 8, 2000, by Raytheon Company in favor of Mystic Development.

        "Recipient" has the meaning set forth in Section 10.09 of the Credit
Agreement.

        "Release" means any release, pumping, pouring, emptying, injecting,
escaping, leaching, migrating, dumping, seepage, spill, leak, flow, discharge,
disposal or emission.

        "Related Facilities Agreement" means the Related Facilities Agreement to
be executed between National Grid USA and Sithe Fore River.

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        "Representative" means, with respect to any Person, any one of the
individuals designated as such in the certificate of such Person delivered
pursuant to Section 5.01(h) of the Credit Agreement, or any other individual
thereafter designated as such by such Person to the Administrative Agent from
time to time in writing.

        "Request for Issuance" has the meaning set forth in Section 3.02(b) of
the Credit Agreement.

        "Required Lenders" means, on any relevant date of determination, Lenders
holding or, in the case of the reimbursement obligations of the Borrower under
any Letter of Credit, participating in, at least 51% of the sum of (a) the
aggregate principal amount of the outstanding Advances plus (b) the aggregate
undrawn amount of any Letter of Credit (if any of the Letters of Credit are
outstanding at such time).

        "Required Project Approvals" shall have the meaning, with respect to a
Project, set forth in Section 3.01(m) of the Project Company Guarantee.

        "Requirement of Law" shall mean, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, as to any Person or a Project, any Law
applicable to or binding upon (a) such Person or any of its properties or to
which such Person or any of its properties is subject or (b) the Project or to
which a Project is subject, including relevant Environmental Laws, restrictive
land use covenants and zoning, use and building codes, laws, regulations and
ordinances.

        "Revolving Credit Facility" has the meaning set forth in the Section 1.1
of Sithe Equity Guaranty.

        "Risk Management Policy" means (i) the Credit Risk Management Policy
relating to Sithe Boston Generating and (ii) the Market Risk Management Policy
relating to Sithe Boston Generating, as such risk management policies may be
amended as permitted by the Loan Documents.

        "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor rating agency.

        "Scheduled Debt Service" means, for any period (without duplication),
all principal payments on the Advances (excluding any repayments of Working
Capital Advances) and all payments of interest, Fees or other amounts, scheduled
to be made by the Borrower during such period under this Agreement, the Notes,
any Swap Agreement and any other Loan Document. For the purposes of computing
Scheduled Debt Service for any period, all payments received by the Borrower
during such period under any Swap Agreement may be netted against Scheduled Debt
Service for such period.

        "SCR Overhaul" means, with respect to a combustion turbine and its
associated heat recovery steam generator, the replacement of the catalyst
associated with the selective catalytic reduction equipment installed therein.

        "SEC" means the Securities and Exchange Commission and any federal
agency successor thereto.

        "Second Completion Date" means the later of (i) Project Completion for
the Mystic 8&9 Project and (ii) Project Completion for the Fore River Project.

        "Secured Parties" has the meaning set forth in the Depositary Agreement.

        "Security" means any shares, stock, bonds, debentures, notes, evidences
of indebtedness or any other instruments commonly known as "securities".

        "Security Agreement" means the Security Agreement dated as of
January 31, 2001, by and among the Collateral Agent, the Borrower, Sithe Mystic,
Sithe Mystic Development and Sithe Fore River.

        "Security Documents" means the Mortgage, the Security Agreement, the
Depositary Agreement, the Consents, the Borrower Pledge Agreement, the SPM
Security Agreement, SPM Depositary

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Agreement, each financing statement and any other instrument or document
delivered to grant the Collateral Agent a security interest in the Collateral or
to assure or preserve the Collateral Agent's security interest therein or any
right or remedy created thereby.

        "Shared Use Agreements" means agreements providing for the sharing of
real property, transmission lines, water lines, permits, contractual rights and
other property and rights among the Projects and other generating facilities
adjacent to the Project sites.

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

        "Sithe" means Sithe Energies, Inc., a Delaware corporation.

        "Sithe Boston Power Services" means Sithe Boston Power Services, LLC, a
Delaware limited liability company.

        "Sithe Equity Guaranty" means the Equity Guaranty dated as of
January 31, 2001, by Sithe in favor of the Collateral Agent.

        "Sithe Edgar" means Sithe Edgar, LLC, a Delaware limited liability
company.

        "Sithe Fore River" means Sithe Fore River Development, LLC, a Delaware
limited liability company.

        "Sithe Mystic" means Sithe Mystic LLC, a Delaware limited liability
company.

        "Sithe Mystic Administrative Services Agreement" means the
Administrative Services Agreement dated as of January 31, 2001, between Sithe
Mystic and Sithe.

        "Sithe Mystic Development" means Sithe Mystic Development LLC a Delaware
limited liability company.

        "Sithe Mystic Interconnection Agreement" means the Interconnection and
Operation Agreement dated as of December 10, 1997, between BECO and Sithe.

        "Sithe Mystic Station O&M Agreement" means the Operation and Maintenance
Agreement dated as of January 31, 2001, between Sithe Mystic and Sithe New
England Power Services.

        "Sithe Mystic Terminalling Agreement" means the Terminalling Agreement
dated as of March 15, 1988, between Exxon Company, U.S.A. and Sithe Mystic, as
amended and assigned to Sithe by BECO effective May 15, 1998.

        "Sithe New England" means Sithe New England Holdings, LLC, a Delaware
limited liability company.

        "Sithe New England Power Services" means Sithe New England Power
Services, Inc., a Delaware corporation.

        "Sithe Power Marketing" means Sithe Power Marketing, L.P., a limited
partnership organized under the laws of Delaware.

        "Sithe Undertaking" means the Undertaking Agreement dated as of
January 31, 2001 between Sithe and the Collateral Agent, with respect to Sithe
Power Marketing's obligations under the Power Marketing Agreement.

        "SPC" has the meaning specified in Section 10.07(d) of the Credit
Agreement.

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        "SPM Depositary Agreement" means the Collateral Agency and Depositary
Agreement dated as of January 31, 2001, by and among Sithe Power Marketing, the
Borrower, State Street Bank and Trust Company, as depositary thereunder, and
State Street Bank and Trust Company, as collateral agent thereunder.

        "SPM Security Agreement" means the Security Agreement dated as of
January 31, 2001, between Sithe Power Marketing and the Borrower.

        "Specifications" means with respect to any Project, the specifications
of such Project as set forth and referred to in Exhibit A (Specifications) to
the related EPC Agreement.

        "Standby Letters of Credit" shall mean collectively, the Interconnection
Security Letters of Credit and the DSR Letter of Credit.

        "Stated Amount" means (i) in respect of the Interconnection Security
Letter of Credit for the Mystic 8&9 Project, initially $12,421,250 (as may be
reduced by the Borrower upon the submission to the Project LC Issuer of a
Reduction Certificate in the form attached to such Letter of Credit), (ii) in
respect of the Interconnection Security Letter of Credit for the Fore River
Project, initially $5,866,250 (as may be reduced by the Borrower upon the
submission to the Project LC Issuer of a Reduction Certificate in the form
attached to such Letter of Credit), (iii) in respect of the Interconnection
Security Letter of Credit for the Fore River Project to be provided to National
Grid USA, if any, initially $2,000,000, (iv) in respect of the Interconnection
Payment Letter of Credit for the Mystic 8&9 Project, $39,685,000, (v) in respect
of the Interconnection Payment Letter of Credit for the Fore River Project,
$19,865,000, and (vi) in respect of the DSR Letter of Credit, an amount equal
$60 million; provided, that if on the date such DSR Letter of Credit is issued,
amounts remain available for Drawing under previously issued Interconnection
Security Letters of Credit and/or LC Loans relating to a Drawing under a
previously issued Interconnection Security Letter of Credit remain unpaid, such
amount available for Drawing shall equal (X) $60,000,000 minus (Y) the sum of
(a) the aggregate amount available for Drawing under all such outstanding
Interconnection Security Letters of Credit, plus (b) the aggregate principal
amount of all outstanding LC Loans resulting from all Drawings under an
Interconnection Security Letter of Credit; provided, further, that the amount
available for Drawing of the DSR Letter of Credit calculated pursuant to the
immediately preceding proviso shall be increased, from time to time, by the
amount of any (a) permanent reduction in the aggregate amount available for
Drawing under all outstanding Interconnection Security Letters of Credit,
(b) the expiration of any outstanding Interconnection Security Letter of Credit
(provided no extension, renewal or replacement has been provided therefore) and
(b) repayment of any outstanding LC Loans resulting from a Drawing under such
Interconnection Security Letters of Credit (provided a Reinstatement Certificate
is not provided to the beneficiary of such Letter of Credit in respect of such
repayment).

        "Subsequent Advances" has the meaning set forth in Section 5.03 of the
Credit Agreement.

        "Subsidiary" means, with respect to any Person, any corporation or
unincorporated entity of which more than 50% of the outstanding capital stock
(or comparable interest) having ordinary voting power (irrespective of whether
at the time capital stock of any other class or classes of such corporation or
entity shall or might have voting power upon the occurrence of any contingency)
is at the time directly or indirectly owned by said Person (whether directly or
through one or more other Subsidiaries).

        "Swap Agreement" means any agreement entered into by the Borrower with a
Lender (or any Affiliate thereof), other than for speculative purposes,
providing for a swap, ceiling rates, ceiling and floor rates, contingent
participating or other hedging mechanism with respect to the interest payable on
the Project Advances, substantially in the form of Exhibit 1.01G to the Credit
Agreement.

        "Swap Bank" means a Lender (or any Affiliate thereof) party to a Swap
Agreement.

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        "Swap Claims" means any settlement amounts or other breakage or
termination fees payable by the Borrower under any Swap Agreement in connection
with any unwinding, breach or termination thereof.

        "Taking" means any requisition, expropriation or condemnation of any
interest in a Project, or any portion thereof, or any similar event.

        "Taxes" has the meaning set forth in Section 6.01(g) of the Credit
Agreement.

        "Tax Sharing Agreement" means the Tax Sharing Agreement dated as of
January 31, 2001, by and among Sithe Northeast Generating Company, Inc.,
Borrower, Sithe Mystic, Sithe Mystic Development and Sithe Fore River.

        "Technical Committee" shall have the meaning set forth in Section 9.07
of the Credit Agreement.

        "Term Sheet Base Case" means the Base Case Financial Projections
attached to the Commitment Letter dated December 7, 2000, among Sithe and the
Lead Arrangers.

        "Total Commitment" means the total of (i) the Aggregate Project
Commitment, (ii) the Aggregate Working Capital Commitment and (iii) the
Aggregate LC Commitment.

        "Trading Account" has the meaning set forth in the SPM Depositary
Agreement.

        "Transaction Documents" means, collectively, the Project Documents and
the Loan Documents.

        "Type", when used in the context of any Advance, has the meaning
assigned to that term in the definition of "Advance" herein.

        "Uniform Commercial Code" means the Uniform Commercial Code, as amended
from time to time, in effect in any specified jurisdiction.

        "WGI" means Washington Group International, Inc.

        "Working Capital Advance" means an advance by a Lender to the Borrower
pursuant to Section 2.03 of the Credit Agreement.

        "Working Capital Borrowing" means a borrowing consisting of Working
Capital Advances made of, or Converted into, the same Type and Interest Period
made on the same day by the Lenders. Working Capital Borrowings consisting of
Working Capital Advances of the same Type and Interest Period on the same day
shall be deemed a single Borrowing hereunder until repaid in full or next
Converted.

        "Working Capital Commitment" has the meaning assigned thereto in
Section 2.02(a) of the Credit Agreement.

        "Working Capital Note" means a promissory note of the Borrower payable
to the order of each Lender, evidencing the aggregate indebtedness of the
Borrower to such Lender resulting from the Working Capital Advances made by such
Lender.

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PROJECT COMPANY GUARANTEE

        THIS PROJECT COMPANY GUARANTEE, dated as of January 31, 2001, made
jointly and severally by SITHE MYSTIC LLC ("Sithe Mystic"), SITHE MYSTIC
DEVELOPMENT LLC ("Sithe Mystic Development") and SITHE FORE RIVER
DEVELOPMENT, LLC ("Sithe Fore River" and, collectively with Sithe Mystic and
Sithe Mystic Development, the "Guarantors", and individually, a "Guarantor"), in
favor of BNP PARIBAS, acting in its capacity as the collateral agent (the
"Collateral Agent") for the Secured Parties (as defined below).

W I T N E S S E T H:

        WHEREAS, each Guarantor is a direct wholly-owned subsidiary of SITHE
BOSTON GENERATING, LLC, a Delaware limited liability company (the "Borrower").

        WHEREAS, the Borrower has entered into the Credit and Reimbursement
Agreement dated as of January 31, 2001 (as the same may be amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), with the
financial institutions listed on the signature pages thereof under the heading
"The Lenders" and the other financial institutions from time to time party
thereto (each, a "Lender" and collectively, the "Lenders") and BNP PARIBAS, as
administrative agent (the "Administrative Agent").

        WHEREAS, the Credit Agreement contemplates the execution, delivery and
the implementation of this Guarantee.

        WHEREAS, it is a condition precedent to the obligations of the Lenders
under the Credit Agreement that this Guarantee shall have been entered into by
the parties hereto and shall have become unconditionally and fully effective in
accordance with the terms hereof.

        WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guarantee and will receive direct and indirect benefits by
reason of the availability of the Advances.

        NOW, THEREFORE, in order to induce the Lenders to make the Advances to
the Borrower pursuant to the Credit Agreement, and for other good and valuable
consideration receipt of which is hereby acknowledged by each Guarantor, each
Guarantor hereby agrees with the Collateral Agent, for its benefit and the
ratable benefit of the Collateral Agent and the Secured Parties, as follows:

ARTICLE I

DEFINITIONS

        SECTION 1.01.    Certain Terms.    The following terms (whether or not
underscored) when used in this Guarantee, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

        (a)  "Funding Guarantor" has the meaning assigned to such term in
Section 5.5 hereof.

        (b)  "Guaranteed Obligations" has the meaning assigned to that term in
Section 2.1 hereof.

        (c)  "Guarantor" and "Guarantors" have the respective meanings assigned
to those terms in the preamble hereto.

        (d)  "Guarantee" means this Project Company Guarantee, as the same may
be amended, supplemented, amended and restated or otherwise modified from time
to time.

        SECTION 1.02.    Credit Agreement Definitions.    Unless otherwise
defined herein, terms used in this Guarantee, including its preamble and
recitals, have the meanings provided in Annex A to the Credit Agreement.

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ARTICLE II

GUARANTEE

        SECTION 2.01.    Guarantee.    Each Guarantor jointly and severally with
each other Guarantor hereby unconditionally and irrevocably guarantees the full
and prompt payment when due, whether at stated maturity, by acceleration or
otherwise (including, without limitation, all amounts which would have become
due but for the operation of the automatic stay under Section 362(a) of the
Federal Bankruptcy Code, 11 U.S.C. 362(a)), of the following (collectively, the
"Guaranteed Obligations"):

        (a)  all Obligations of the Borrower under the Loan Documents, whether
for principal, interest, fees, expenses, Swap Claims or otherwise; and

        (b)  any and all expenses (including reasonable counsel fees and
expenses) incurred by the Collateral Agent or any Lender in enforcing any of
their respective rights under this Guarantee;

        SECTION 2.02.    Limitation of Guarantor's Liability.    Each Guarantor
confirms that it is its intention that the guaranty by such Guarantor pursuant
to this Guarantee not constitute a fraudulent transfer or conveyance for
purposes of any federal, state or foreign law. To effectuate the foregoing
intention, such Guarantor hereby irrevocably agrees that the obligations of each
Guarantor under this Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee, result in the obligations of such Guarantor under
this Guarantee not constituting a fraudulent conveyance or fraudulent transfer
under federal, state or foreign law.

        SECTION 2.03.    Guarantee Absolute.    This Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment. Each
Guarantor guarantees that the Obligations will be paid strictly in accordance
with the terms of the Credit Agreement, and that all other Guaranteed
Obligations shall be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Collateral
Agent or any of the Secured Parties with respect thereto. The liability of each
Guarantor under this Guarantee shall be absolute and unconditional irrespective
of:

        (a)  any lack of validity or enforceability of this Guarantee, the
Credit Agreement, any other Loan Document or any other agreement or instrument
relating to any of the foregoing, the absence of any action to enforce the same,
any release of the Borrower or any other Guarantor, the recovery of any judgment
against the Borrower or any Guarantor, any action to enforce the same or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor;

        (b)  any occurrence or condition whatsoever, including without
limitation, (i) any compromise, settlement, release, waiver, renewal, extension,
indulgence or modification of, or any change in, any of the obligations of the
Borrower or any Guarantor contained in this Guarantee, the Credit Agreement or
any other Transaction Document, (ii) any impairment, modification, release or
limitation of the liability of the Borrower or any Guarantor or any of their
estates in bankruptcy, or any remedy for the enforcement thereof, resulting from
the operation of any present or future provision of any applicable bankruptcy
law, as amended, or other statute or from the decision of any court, (iii) the
assertion or exercise by any Guarantor, the Collateral Agent or any Lender of
any rights or remedies, (iv) the assignment or the purported assignment of any
property as security for the Obligations, including all or any part of the
rights of any Guarantor under this Guarantee, (v) the extension of the time for
payment by the Borrower or any Guarantor of any payments or other sums or any
part thereof owing or payable under any of the terms and provisions of any
Transaction Document or of the time for performance by the Borrower or any
Guarantor of any other obligations under or arising out of any terms or
provisions or the extension of the renewal of any thereof, (vi) the modification
or amendment

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(whether material or otherwise) of any duty, agreement or obligation of the
Borrower or any Guarantor set forth in any Transaction Document, (vii) the
voluntary or involuntary liquidation, dissolution, sale or other disposition of
all or substantially all of the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceeding affecting the Borrower or any of the Guarantors or any of their
respective assets, or the disaffirmancy of this Guarantee or any Transaction
Document in any such proceeding or (viii) the release or discharge of the
Borrower or any Guarantor from the performance or observance of any agreement,
covenant, term or condition contained in any of such instruments by operation of
law; or

        (c)  any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the Guaranteed Obligations.

Each Guarantor hereby (i) waives diligence, presentment, demand of payment,
filing of claims with a court in the event of the merger, insolvency or
bankruptcy of any Guarantor, and all demands whatsoever, (ii) acknowledges that
any agreement, instrument or document evidencing this Guarantee may be
transferred and that the benefit of its obligations hereunder shall extend to
each holder of any agreement, instrument or document evidencing this Guarantee
without notice to them and (iii) covenants that this Guarantee will not be
discharged except by complete performance of this Guarantee. Each Guarantor
further agrees that if at any time all or any part of any payment theretofore
applied by any person to this Guarantee is, or must be, rescinded or returned
for any reasons whatsoever, including without limitation, the insolvency,
bankruptcy or reorganization of the Borrower or any Guarantor, this Guarantee
shall, to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence notwithstanding such application, and this
Guarantee shall continue to be effective or be reinstated, as the case may be,
as though such application had not been made.

        SECTION 2.04.    Waiver.    Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guarantee and any requirement that the
Collateral Agent or any Lender protect, secure, perfect or insure any security
interest or lien or any property subject thereto or exhaust any right or take
any action against the Borrower or any other person or entity (including any
other guarantor) or any collateral.

        SECTION 2.05.    Subrogation.    No Guarantor will exercise any rights
which it may acquire by way of subrogation under this Guarantee, by any payments
made hereunder or otherwise, until all the Guaranteed Obligations shall have
been paid in full. If any amount shall be paid to any of the Guarantors on
account of such subrogation rights at any time when all the Guaranteed
Obligations shall not have been paid in full (whether pursuant to a claim in any
bankruptcy or similar proceeding or otherwise), such amount shall be held in
trust for the benefit of the Collateral Agent and the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited and applied upon the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of the Credit Agreement, or any other Loan Documents.

        SECTION 2.06.    Consent to Jurisdiction; Waiver of Immunities.    

        (a)  Each Guarantor hereby irrevocably submits to the non-exclusive in
personam jurisdiction of any New York State or Federal court of competent
jurisdiction sitting in New York City in any action or proceeding arising out of
or relating to this Guarantee, and each Guarantor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard or determined in
such New York State or Federal court. Each Guarantor hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Guarantors may, with
the prior written consent of the Collateral Agent, appoint any other Person
maintaining an office in New York City as a process agent, and upon the
acceptance of

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the appointment as process agent, such process agent shall thereupon become
process agent hereunder. Service of process in any such action or proceeding may
be made by mailing (by certified mail) or delivering a copy of such process to
each of the Guarantors in care of the Borrower, at the Borrower's above address,
and each Guarantor hereby irrevocably authorizes and directs the Borrower to
accept such service on its behalf. As an alternative method of service, each
Guarantor also irrevocably consents to the service of any and all process in any
such action or proceeding by the mailing (by certified mail) of copies of such
process to the Guarantors at their addresses specified in Section 4.2. Each
Guarantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in accordance with applicable law in other
jurisdictions by suit on the judgment or in any other manner provided by law.

        (b)  Nothing in this Section shall affect the right of the Collateral
Agent to serve legal process in any other manner permitted by law or affect the
right of the Collateral Agent to bring any action or proceeding against each
Guarantor or its property in the courts of any other jurisdictions.

        (c)  To the extent that any of the Guarantors has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or to its
property, each Guarantor hereby irrevocably waives such immunity in respect of
its obligations under this Guarantee.

        (d)  By executing this Guarantee, each Guarantor hereby irrevocably and
unconditionally waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Guarantee brought in any of the aforesaid courts, and
hereby further irrevocably and unconditionally waives and agrees not to plead
any claim that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

ARTICLE III

REPRESENTATIONS AND COVENANTS

        SECTION 3.02.    Representations and Warranties.    Each Guarantor
hereby represents and warrants to the Collateral Agent as follows (such
representations and warranties being made as of the Closing Date and, to the
extent provided herein, on each subsequent date on which such representations
and warranties are made or deemed to be made hereunder):

        (a)  It is duly organized, validly existing, and in good standing under
the laws of its jurisdiction of formation;

        (b)  It (i) has the power and authority to own its property and assets
and to transact the business in which it is engaged or presently proposes to
engage, and (ii) is authorized to do business as a foreign corporation and is in
good standing in each jurisdiction in which it is required to be authorized to
do business;

        (c)  It has full power and authority and legal right to execute and
deliver this Guarantee and the other Transaction Documents to which it is a
party and to perform its obligations hereunder and thereunder;

        (d)  It has taken all necessary action to authorize its execution,
delivery and performance of this Guarantee and the Transaction Documents to
which it is a party;

        (e)  This Guarantee and each other Transaction Document to which it is a
party has been duly executed and delivered by such Guarantor;

        (f)    For Federal income tax purposes, it is not an association taxable
as a corporation;

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        (g)  This Guarantee and each other Transaction Document to which it is a
party constitute a legal, valid and binding obligation of such Guarantor
enforceable against such Guarantor in accordance with their terms except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of rights of creditors generally and
except to the extent that enforcement of rights and remedies set forth therein
may be limited by equitable principles (regardless of whether enforcement is
considered in a court of law or a proceeding in equity);

        (h)  Neither the execution, delivery or performance by such Guarantor of
the Transaction Documents to which it is a party, the compliance by such
Guarantor with the terms and provisions thereof, nor the consummation of the
transaction contemplated thereby, will:

          (i)  Conflict with, contravene, or violate any provision of any
material Requirement of Law or any Governmental Approval;

        (ii)  Conflict with, or result in any breach of, any of the terms and
conditions of, or result in the creation or imposition of (or the obligation to
create or impose), any Lien (except Liens created pursuant to the Security
Documents) upon any of the property or assets of such Guarantor pursuant to the
terms of any contractual obligation, agreement or instrument to which such
Guarantor is a party or by which it or any of its property or assets is bound;
or

        (iii)  Conflict with, contravene, or violate any provision of the
articles or certificates of formation, limited liability company agreements or
other organizational documents of such Guarantor or, or any Transaction Document
or other material contractual obligation, agreement or instrument binding upon
such Guarantor unless such conflict, contravention or violation could not
reasonably be expected to have a Project Material Adverse Effect;

        (i)    (1) At Closing, except for such matters relating to such
Guarantor as set forth in Schedule 3.01(i), there is no litigation, action,
suit, investigation or proceeding by or before any Governmental Authority or
arbitrator pending or affecting or involving or, to the knowledge of the
responsible officers of the Guarantor, threatened against the Guarantor which,
individually or in the aggregate, represent a potential judgment or involves
injunctive relief that would reasonably be expected to have a Material Adverse
Effect; (2) subsequent to Closing, except for such matters relating to such
Guarantor as set forth in Schedule 3.01(i), as updated from time to time by such
Guarantor by written notice to the Administrative Agent, there is no litigation,
action, suit, investigation or proceeding by or before any Governmental
Authority or arbitrator pending or affecting or involving or, to the knowledge
of the responsible officers of such Guarantor, threatened against such Guarantor
which, individually, or in the aggregate represents a potential judgment in
excess of $5,000,000 or involves injunctive relief that could reasonably be
expected to have a Project Material Adverse Effect;

        (j)    With respect to such Guarantor and, to such Guarantor's knowledge
with respect to Material Project Participants, there is no injunction, writ,
preliminary restraining order or any order of any nature issued by an
arbitrator, court or other Governmental Authority directing that any of the
material transactions provided for in any of the Transaction Documents not be
consummated as herein or therein provided;

        (k)  Such Guarantor is not in breach of or in default with respect to
any order of any court, arbitrator, administrative agency or other Governmental
Authority which breach or default could reasonably be expected to have a Project
Material Adverse Effect;

        (l)    The proforma balance sheet of such Guarantor which was delivered
pursuant to Section 5.01(h) of the Credit Agreement were prepared in accordance
with GAAP (except for the omission of footnotes) and fairly present the proforma
financial condition of the Guarantor on the Closing Date;

        (m)  [Intentionally Omitted];

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        (n)  All Governmental Approvals with respect to such Guarantor, which
under any Requirement of Law, including without limitation Environmental Law,
are required to have been obtained by such Guarantor on or prior to the Closing
Date are listed in Part A of Schedule 3.01(n) (collectively, the "Required
Project Approvals"). Except as indicated in Part A of Schedule 3.01(n), all such
Required Project Approvals have been obtained, are in full force and effect, are
held by or on behalf of such Guarantor, are final, and are not subject to
appeal;

        (o)  All Governmental Approvals which under any Requirement of Law,
including without limitation Environmental Law, are required to be obtained by
such Guarantor after the Closing Date are listed in Part B of Schedule 3.01(n)
(collectively, the "Deferred Project Approvals"). Such Guarantor reasonably
believes that each Deferred Project Approval shall be obtained in a final and
non-appealable form in the ordinary course prior to the time it is required to
be obtained hereunder or under the other Transaction Documents;

        (p)  Such Guarantor is in compliance with, and its related Project is
being owned, operated and maintained in compliance with, all Requirements of
Law, including without limitation Environmental Law, and in compliance with the
requirements of all Required Project Approvals, except such noncompliance as
could not, individually or in the aggregate, reasonably be expected to have a
Project Material Adverse Effect;

        (q)  No Project Default or Project Event of Default has occurred and is
continuing;

        (r)  To such Guarantor's knowledge, no Borrower Default or Borrower
Event of Default has occurred or is continuing and no Material Project
Participant is in breach or default of any of the terms or provisions of any
Material Project Document relating to such Guarantor's Project;

        (s)  Such Guarantor has filed or caused to be filed all federal,
foreign, state and other tax returns which are required to be filed by it and
has paid (prior to their delinquency dates) all taxes, fees, charges and
assessments ("Taxes") which have become due pursuant to such returns or pursuant
to any assessment received by it, other than Taxes with respect to such
Guarantor, the payment of which are subject to a Contest or which are listed on
Schedule 3.01(s) hereto;

        (t)    Such Guarantor is not conducting any business other than
Permitted Business and does not own any Subsidiaries or any equity in any other
Person;

        (u)  The Obligations of such Guarantor constitute direct, unconditional
and general obligations of such Guarantor which are not subordinated (whether by
contract or otherwise) to the claims of any other creditor of such Guarantor,
other than Project Company Permitted Liens and subordination effected by
operation of any Requirement of Law;

        (v)  Such Guarantor has good, marketable and valid title in and to or
valid leasehold interest in or easement over all of its property and assets,
free and clear of all Liens other than Project Company Permitted Liens;

        (w)  Such Guarantor has obtained and holds in full force and effect all
patents, trademarks, copyrights and other such rights or adequate licenses
therein, free from unduly burdensome restrictions, which are necessary for the
ownership, construction, operation and maintenance of the Project;

        (x)  The Transaction Documents, the Required Project Approvals and, upon
receipt thereof, the Deferred Project Approvals, create rights in the Borrower
sufficient to enable such Guarantor to own, construct, operate and maintain the
Project and to perform as required under the Transaction Documents.

        (y)  The copies of the Material Project Documents to which such
Guarantor is a party delivered pursuant to this Section 3.01(y) are true,
correct and complete copies of such documents (with any waivers or amendments to
date hereof), and such Material Project Documents (with the exception of

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the Mystic Development Interconnection Agreement and the Related Facilities
Agreement) are in full force and effect in accordance with their terms and no
term or condition thereof has been amended from the form thereof delivered to
the Administrative Agent and the Collateral Agent, or waived except as permitted
under this Guarantee.

        (z)  All utility services, means of transportation, facilities and other
materials necessary for the construction and operation of such Guarantor's
related Project (including as necessary, gas, electrical, water and sewage
services and facilities) are, or will be when needed, available to such Project
and arrangements in respect thereof have been made, or will be made, on
commercially reasonable terms, to the extent that the absence of such utility
services, means of transportation, facilities and materials could reasonably be
expected to result in a Material Adverse Effect. The services to be performed,
the materials to be supplied and the land use and other rights granted to such
Guarantor under the Project Documents will provide it with rights and property
interests necessary for the development, construction, operation and maintenance
of such Project, other than those services, materials or rights which it can
obtain in the ordinary course of business without material expense or material
delay;

        (aa) The Security Documents create, as security for the Obligations,
valid and enforceable and, following any filings to be made in respect thereof,
perfected first priority Liens on all of the Collateral held by such Guarantor,
in favor of the Collateral Agent for the ratable benefit of the Secured Parties,
subject to no Liens other than Permitted Liens. All Governmental Approvals, if
any, necessary or desirable to perfect such Liens have been duly effected or
taken and all fees and expenses required to be paid in connection with the
filing or obtaining of such Governmental Approvals have been paid;

        (bb) (i) Such Guarantor has not received any Environmental Notice.
(ii) Other than matters with respect to such Guarantor as set forth in
Schedule 3.01(bb) (or as set forth in any environmental reports referred to in
such schedule), to the knowledge of such Guarantor, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including
without limitation Environmental Discharge, that could reasonably be expected to
form the basis of any litigation, action, suit, investigation or proceeding by
or before any Governmental Authority or arbitrator pending or affecting or
involving or, to the knowledge of the responsible officers of such Guarantor,
threatened against such Guarantor which, individually or in the aggregate,
represents a potential judgment that would reasonably be expected to exceed
$5,000,000;

        (cc) Such Guarantor has obtained and maintains all insurance required
pursuant to Section 3.02(aa) hereof and no event, condition or occurrence has
occurred or is existing which could render such insurance voidable, void or
illegal;

        (dd) Such Guarantor is not (i) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company," or a "public utility
company" within the meaning of PUHCA, or (iii) subject to financial,
organizational or rate regulation under the Federal Power Act except that such
Guarantor is and will be a "public utility" under the Federal Power Act with
authority to sell wholesale electric power and ancillary services at
market-based rates and with all waivers of regulations and blanket
authorizations as are customarily granted by FERC to a "public utility" that
sells wholesale power at market-based rates, including blanket authority to
issue securities and waiver and abbreviated filing requirements for interlocking
positions;

        (ee) Such Guarantor is not, and, by reason of (i) the ownership (direct
or indirect) or operation of its related Project, or (ii) any other transaction
contemplated by any Transaction Document, will not be deemed by any Governmental
Authority to be, subject to financial, organizational or rate regulation as an
"electric utility," "electric corporation," "electrical company," "steam
company," "steam utility," "public utility", "public utility company," "public
utility holding company" or similar entity within the meaning of any Requirement
of Law, except that such Guarantor is and will be a "public utility" under the
Federal Power Act with authority to sell wholesale electric power and ancillary
services at market-

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based rates and with all waivers of regulations and blanket authorizations as
are customarily granted by FERC to a "public utility" that sells wholesale power
at market-based rates;

        (ff)  Subject to subsection (gg) below, none of the Borrower, the
Administrative Agent, the Collateral Agent nor the Lenders will, solely by
reason of (i) such Guarantor's ownership (direct or indirect), construction,
operation and maintenance of its related Project as contemplated by the
Transaction Documents, (ii) the making of any of the Commitments, (iii) the
securing of the Obligations by Liens on the Collateral or (iv) any other
transaction contemplated by this Agreement or any other Transaction Document, be
deemed by any Governmental Authority to be, or to be subject to regulation as,
an "electric utility," "electric corporation," "electrical company," "steam
company," "steam utility," "public utility," "public utility company," "public
utility holding company" or similar entity within the meaning of any Requirement
of Law;

        (gg) If such Guarantor's Project is operated as contemplated by the Loan
Documents, none of the Borrower, the Administrative Agent, the Collateral Agent
nor the Lenders will, solely by reason of ownership or operation of the Project
upon the exercise of their remedies under the Security Documents, and without
regard to any other activity of the Borrower, the Administrative Agent, the
Collateral Agent or any Lender, be deemed by any Governmental Authority to be
subject to financial, organizational or rate regulation as an "electric
utility," "electric corporation," "electrical company," "steam company," "steam
utility," "public utility," "public utility company," "public utility holding
company" or similar entity within the meaning of any Requirement of Law,
provided that such Guarantor maintains its EWG status or is no longer required
under any Requirement of Law to maintain such status in order to be exempt from
PUCHA, except that ownership or operation of such Project may subject such owner
or operator to regulation as a "public utility" under the Federal Power Act;

        (hh) There are no collective bargaining agreements covering the
employees of such Guarantor or Multiemployer Plans which could reasonably be
expected to have a Project Material Adverse Effect;

        (ii)  Such Guarantor does not maintain or contribute to any Plan, which
maintenance or contribution could reasonably be expected to have a Project
Material Adverse Effect;

        (jj)  (i) As of the Closing Date, there is no fact known to such
Guarantor which has had or could reasonably be expected to have a Project
Material Adverse Effect which will not be set forth in the documents,
certificates and other written statements furnished to the Administrative Agent,
the Independent Engineer, the Fuel Consultant and the Insurance Consultant prior
to the Closing Date. (ii) As of the Closing Date, the factual statements made by
such Guarantor and all documentation (other than projections and forecasts),
taken as a whole, furnished in writing by such Guarantor to the Administrative
Agent, the Independent Engineer, the Fuel Consultant and the Insurance
Consultant, taken as a whole, including written updated or supplemented
information delivered on or prior to the Closing Date are, to such Guarantor's
knowledge, true and correct in all material respects. (iii) The assumptions
constituting the basis on which such Guarantor prepared the Project Budget and
the Construction Schedule are reasonable and were developed and utilized
consistently and in good faith and such Guarantor has no reason to believe that
such assumptions are incorrect or misleading in any material respect; and

        (kk) No consent from, authorization by, or registration or filing with,
any Person is required for the due execution, delivery, or performance of, any
Loan Document by such Guarantor, except (i) those that have already been
obtained or made, and (ii) filings necessary to create, perfect or retain the
perfection of Liens against the Collateral held by such Guarantor.

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        SECTION 3.02.    Covenants.    Each Guarantor hereby agrees with the
Collateral Agent and each Lender that, so long as there are outstanding
Obligations or Commitments, such Guarantor shall, unless the Required Lenders
shall otherwise consent in writing:

        (a)  Mandatory Payments. Apply (i) any proceeds or funds received by
such Guarantor in respect of a Casualty Event or Taking or in respect of
performance liquidated damages under the EPC Agreement to which such Guarantor
is a party (after giving effect to any Extension Period as defined in
Section 20.2.4 of such EPC Agreement which may have been granted by such
Guarantor), which such Guarantor has not, in accordance with Section 3.02(b),
applied toward the repair, replacement, rebuilding or restoration of the
affected Project, to the prepayment of Advances made to the Borrower under the
Credit Agreement in accordance with Section 4.02 thereof, (ii) fifty
(50) percent of any proceeds or funds received by such Guarantor in respect of a
Casualty Event or Taking or performance liquidated damages, which remain after
making all required repairs, replacements, rebuildings or restoration to the
affected Project, to the prepayment of Advances made to the Borrower under the
Credit Agreement in accordance with Section 4.02 thereof (with the remaining
fifty (50) percent to be deposited into the Revenue Account and applied in
accordance with the Depositary Agreement) and (iii) any Net Emissions Profits
(as defined in Section 3.04(d) hereof) to the prepayment of Advances made to the
Borrower under the Credit Agreement in accordance with Section 4.02 thereof.

        (b)  Application of Proceeds and Performance Liquidated Damages.

          (i)  In the event that such Guarantor receives proceeds in respect of
(A) a Casualty Event of $10,000,000 or less or (B) any Taking of $10,000,000 or
less, so long as no Project Event of Default with respect to the affected
Project, and no Borrower Event of Default shall have occurred and be continuing,
such Guarantor shall be entitled to receive from the Collateral Agent or the
Administrative Agent, as the case may be, such proceeds as reimbursement for, or
payment of, the costs of repair, replacement, rebuilding or restoration of any
portion of such Project on account of such Taking or Casualty Event, as the case
may be.

        (ii)  In the event that such Guarantor receives proceeds in respect of
(A) a Casualty Event in excess of $10,000,000 or (B) any Taking in excess of
$10,000,000, so long as no Project Event of Default with respect to affected
Project, and no Borrower Event of Default shall have occurred and be continuing,
such Guarantor shall be entitled to receive from the Collateral Agent or the
Administrative Agent, as the case may be, such proceeds as reimbursement for, or
payment of, the costs of repair, replacement, rebuilding or restoration of any
portion of such Project on account of such Taking or Casualty Event, as the case
may be, if, and only if, prior to application by the Collateral Agent or the
Administrative Agent, as the case may be, of such proceeds, such Guarantor shall
have provided to the reasonable satisfaction of the Required Lenders and the
Administrative Agent (A) contracts, purchase orders or other instruments for
such repair, replacement, rebuilding or restoration demonstrating such
Guarantor's ability to effect such repair, replacement, rebuilding or
restoration at a cost not greater than the amount of such proceeds (or, if such
cost is greater, accompanied by an explanation of the source of funds for such
excess amounts), (B) assurances that such affected Project is capable of being
restored to substantially the same operating standards as existed immediately
prior to such Casualty Event or Taking, (C) assurances showing the Borrower's
ability to meet its obligations under the Loan Documents during the period from
such Taking or Casualty Event, as the case may be, until completion of such
repair, replacement, rebuilding or restoration, and until completion of such
repair, replacement, rebuilding or restoration, and thereafter for a period
reasonably acceptable to the Required Lenders and the Administrative Agent, and
(D) assurances that all Material Project Documents relating to the affected
Project shall remain in full force and effect during such period and thereafter
for a period acceptable to the Required Lenders and the Administrative Agent;
provided, further, that any determination by such Guarantor not to apply such
proceeds or to rebuild or restore the affected Project subject to such Taking or
Casualty Event shall be subject to

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the prior written approval of the Technical Committee, in consultation with the
Independent Engineer, such approval not to be unreasonably withheld or delayed.

        (iii)  In the event that any performance liquidated damages are received
by either Development Project Company in excess of $10,000,000 under such
Development Project Company's EPC Agreement, such Guarantor may use such amounts
to complete the affected Project if completion is performed in accordance with a
plan approved by the Technical Committee in consultation with the Independent
Engineer (such approval not to be unreasonably withheld or delayed). Neither
Development Project Company may grant the Contractor an Extension Period in
excess of 30 days pursuant Section 20.2.4 of either EPC Agreement unless
consented to by the Technical Committee.

        (iv)  Such Guarantor shall give prompt notice to the Borrower of the
receipt of any proceeds described under this Section 3.02(b).

        (v)  Notwithstanding any provisions of Section 3.02(a) and (b) to the
contrary, the proceeds of any Taking made by the Massachusetts Water Resources
Authority ("MWRA") at the real property owned by Sithe Fore River and located in
Weymouth and Quincy, Massachusetts, shall be governed by the provisions of that
certain Closing Agreement dated May 15, 1998, among BECO, Sithe, Sithe New
England, and Sithe Edgar, as amended by Supplement to Closing Agreement dated
October 29, 1999 (collectively, the "Closing Agreement"), a copy of which has
been provided to the Secured Parties. Specifically, to the extent that any such
Taking is in connection with the MWRA Development (as defined in such Closing
Agreement), any pro tanto award paid by the MWRA to Sithe Edgar or Sithe Fore
River, as successor-in-interest to Sithe Edgar LLC, shall be paid to BECO as
provided in such Closing Agreement. In addition, BECO, pursuant to the Closing
Agreement, has retained the right to commence an action under Massachusetts
General Laws Chapter 79 for damages (in excess of any amounts awarded pursuant
to such pro tanto award), which damage case may be brought in the name of Sithe
Fore River. BECO shall be entitled to receive the proceeds of such action which
shall be applied pursuant to Section 2.2.5.1 of the Closing Agreement. However,
to the extent that Sithe Fore River receives any payments pursuant to
Section 2.2.5.1, such payments shall be applied pursuant to the provisions of
Section 3.02(a) and (b) set forth above, with the exception of this
Section 3.02(b)(v). The Collateral Agent and the Secured Parties by their
acceptance of this Project Company Guarantee agree to sign any document, waiver,
release, or countersign any check made payable by BECO in order to effectuate
the provisions of such Closing Agreement.

        (c)  Records. (i) Keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all requirements of any
Requirement of Law shall be made of all dealings and transactions in relation to
its business and activities. (ii) Such Guarantor will at all times cause a
complete set of the current and (when available) as built plans (and all
supplements thereto) relating to its related Project to be maintained at such
Project. (iii) Such Guarantor will also maintain accurate and complete records
of all investigations, studies, sampling and testing conducted, and any and all
remedial actions taken, by such Guarantor or, to its knowledge and to the extent
obtained by such Guarantor, by any Governmental Authority or other Person with
respect of any Environmental Matter on or affecting the Project;

        (d)  Inspection Rights. Permit officers and designated representatives
of the Collateral Agent, the Administrative Agent, each Lender (but not during
performance tests) and the Independent Engineer to visit and inspect any of the
properties of such Guarantor, and to examine the books and records of such
Guarantor (including, without limitation, the books of record and account of
such Guarantor), and discuss the affairs, finances and accounts of such
Guarantor with, and be advised as to the same by, its and their officers,
directors and independent accountants, all upon reasonable notice and at such
reasonable times as the Collateral Agent and the Administrative Agent may
desire; provided, that any

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such inspections, examinations or discussions shall, in the case of any Lender,
be coordinated through the Administrative Agent and the Administrative Agent
will attempt to consolidate inspection by multiple Lenders;

        (e)  [Intentionally omitted.]

        (f)    Preservation of Existence, Etc. Cause to be done all things
necessary to preserve and keep in full force and effect its limited liability
company existence, its good standing in its jurisdiction of formation, its
qualification to do business in each other jurisdiction where such qualification
is necessary, and, except where failure to maintain the same could not
reasonably be expected to have a Project Material Adverse Effect, its patents,
trademarks, tradenames, copyrights, franchises and similar rights;

        (g)  Maintenance of Properties. Subject to the exceptions set forth in
Section 3.04(d), keep, or cause to be kept, in good working order and condition,
ordinary wear and tear excepted, the properties owned or leased by it;

        (h)  Good Title. Subject to the exceptions set forth in Section 3.04(d),
preserve and maintain good and valid title to, or leasehold interest in, all of
the properties and assets owned or leased by it subject to no Liens other than
Permitted Liens;

        (i)    Taxes. File all tax returns when due where required to be filed
by it and pay or cause to be paid when due, all Taxes and all charges,
betterments, or other assessments relating to the Collateral, and all other
lawful governmental and non-governmental claims required to be paid by such
Guarantor except to the extent any of the same are subject to a contest;

        (j)    Compliance With Laws. (i) Except to the extent that the failure
to do so could not reasonably be expected to have a Project Material Adverse
Effect, comply with all Requirements of Law and third party consents and
maintain in full force and effect all Governmental Approvals and third party
consents necessary for the conduct of its business and the operation of such
Guarantor's Project. (ii) Except to the extent that the failure to do so could
not reasonably be expected to have a Project Material Adverse Effect, comply
with, and ensure compliance by any and all occupants and operators of the
related Project with all Requirements of Law, including Environmental Laws;

        (k)  Governmental Approvals. Except to the extent that the failure to do
so could not reasonably be expected to have a Project Material Adverse Effect
(i) maintain in full force and effect all Governmental Approvals with respect to
its related Project then required under any Requirement of Law to have been
obtained or made, (ii) obtain all Deferred Project Approvals with respect to its
related Project as promptly as practicable but in any event no later than the
date required to be obtained under any Requirement of Law and (iii) own,
construct, operate and maintain its related Project in compliance with the terms
and provisions of all Governmental Approvals;

        (l)    Environmental Matters. Keep its related Project free from any
Lien imposed pursuant to Environmental Laws, and pay or cause to be paid when
due any and all costs in connection with the foregoing, including without
limitation the cost of identifying the nature and extent of the presence of any
Hazardous Substances in, on or from the Project or any real property owned or
leased by such Guarantor and the cost of delineation, removal, treatment and
disposal of any such Hazardous Substances. If such Guarantor fails to do any of
the foregoing, then (i) after the occurrence of a Project Event of Default
related thereto which is continuing under this Agreement or (ii) in the event
any Secured Party sustains or reasonably determines that it may sustain any
liability, loss, cost, damage or expense (including attorney's fees and
expenses) arising out of the presence of Hazardous Substances in, on or about
its related Project, the Administrative Agent or the Collateral Agent may cause
such Guarantor's Project to be freed (by removal or otherwise) from such
Hazardous Substances and the cost of such remedial action (including attorney's,
consultants' and laboratories' fees and expenses) shall be added to the
Obligations of such Guarantor pursuant to this Agreement and secured

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by the Security Documents. Such Guarantor will give the Collateral Agent and the
Administrative Agent and employees reasonable access to its Project to effect
the foregoing;

        (m)  [Intentionally omitted.]

        (n)  Revenue Account. Transfer and deposit, or cause to be transferred
and deposited, all Project Revenues received by, or on behalf of, such Guarantor
from whatever sources to the Revenue Account (as defined in the Depositary
Agreement) or, with respect to the Development Project Companies prior to the
Completion Date with respect to such Development Project, the Construction
Account (as defined in the Depositary Agreement). Notwithstanding the foregoing,
the Mystic Station Net Revenues shall be transferred and deposited in the Mystic
Station Revenue Account (as defined in the Depositary Agreement) prior to the
Second Completion Date;

        (o)  Regulatory Status. Take all commercially reasonable actions (a) to
maintain status at all times as an "exempt wholesale generator," and (b) to
cause its related Project to be at all times an "eligible facility," unless the
failure to take such actions could not reasonably be expected to have a Project
Material Adverse Effect;

        (p)  Inspection Rights of Consultants. (i) Provide each of the
Independent Engineer and the Insurance Consultant with all information
reasonably requested and exercise due care to ensure that any such information
is accurate in all material respects and does not omit any information necessary
to make such material not materially misleading. (ii) Permit the Independent
Engineer to attend performance tests and, upon reasonable notice, meetings
regarding construction and completion of its related Project;

        (q)  Replacement of Auditors. Appoint and maintain as the Auditors
another of the "Big Five" accounting firms in the event that Deloitte &
Touche LLP should cease to be the Auditors of such Guarantor for any reason;

        (r)  Performance of Obligations. Perform all of its obligations under
the terms of each agreement or instrument by which it or any of its properties
is bound or to which it is a party, including without limitation all Project
Documents in respect of its related Project;

        (s)  Consents Obtain executed consents, in form and substance reasonably
satisfactory to the Administrative Agent, to the assignment of each material
Additional Project Document entered into after the Closing Date from each other
Person party thereto;

        (t)    Casualty Event. If a Casualty Event shall occur with respect to
its related Project, diligently pursue all rights to compensation in respect of
such Casualty Event;

        (u)  Default under Project Document. If a Default or Event of Default
occurs under any Material Project Document or Additional Project Document with
respect to its related Project, pursue, in consultation with the Administrative
Agent, all rights and remedies of such Guarantor in respect of such Default or
Event of Default;

        (v)  Operation of the Projects. Operate and maintain such Project in
accordance with the terms of this Agreement, the Transaction Documents and the
Governmental Approvals;

        (w)  Operator Information. To the extent that the Operator of its
related Project provides monthly reports, promptly provide the same to the
Administrative Agent.

        (x)  Additional Property; Easements. To the extent and at such time as
such Guarantor acquires additional property, easements and rights-of-way, such
Guarantor shall promptly cause such property, easements and rights-of-way to be
subjected to the Lien of the Security Documents. At the request of the
Collateral Agent, such Guarantor will execute and deliver all necessary
amendments to the Security Documents with respect thereto and file and record
all Governmental Approvals necessary or advisable

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to enable the Collateral Agent to obtain a first priority perfected Lien in such
additional property, easements and rights-of-way;

        (y)  Risk Management Policy. Comply in all material respects with the
Risk Management Policy.

        (z)  Firm Gas Transportation. Commencing on the Completion Date with
respect to the Fore River Project, Sithe Fore River shall procure (in its own
name or through actions taken by Sithe Power Marketing) either directly from
Algonquin or through capacity releases in the secondary market, no later than
October 1st of each calendar year, firm gas transportation services for at least
70,000 MMBtu per day on the Algonquin mainline with respect to at least the
six-month period commencing October 1st through March 31st of such calendar
year; provided, however, that such obligation shall terminate upon the
commencement of firm gas transportation services under the HubLine Service
Agreement.

        (aa) Insurance.

          (i)  Keep its present and future properties and business insured
against loss or damage in such a manner and to the same extent as required in
Schedule 3.02(aa) relating to such Guarantor. On or prior to the dates required
pursuant to Schedule 3.02(aa), such Guarantor shall submit to the Administrative
Agent certificates of insurance relating to the insurance required thereby
relating to such Project;

        (ii)  With respect to each Development Project Company, cause the
Contractor of its related Project to keep the insurances described in Part A of
Schedule 3.02(aa) relating to such Project. On or prior to the dates required
pursuant to Schedule 3.02(aa) such Development Project Company will cause the
Contractor to submit to the Administrative Agent certificates of insurance
relating to the insurance required by Part A of Schedule 3.02(aa) relating to
such Project;

        (iii)  Perform all of its obligations under the terms of each policy of
insurance listed on Schedule 3.02(aa) with respect to its related Project; and

        (iv)  The provisions of this Section 3.02(aa) shall be deemed to be
supplemental to, but not duplicative of, the provisions of any of the Security
Documents that require the maintenance of insurance. In the event that any
insurance whatsoever is purchased, taken or otherwise obtained by such Guarantor
with respect to its related Project otherwise than as required hereunder or if
not properly endorsed to the Collateral Agent as the sole loss payee or
beneficiary or otherwise made upon the terms required in this Section, without
limitation to any provision of the Security Documents, such insurance shall be
considered assigned hereunder to the Collateral Agent with the right of the
Collateral Agent to make, settle, compromise and liquidate any and all claims
made thereunder, without prejudice to the exercise of any other rights and
remedies that the Collateral Agent may have under any of the Loan Documents or
under any Requirement of Law.

        (bb) Operating Budget.

          (i)  Adopt, with respect to (X) each Development Project, on or before
the Project Completion Date for each such Project and (Y) Mystic Station, no
later than 60 days following Closing, an operating plan and budget in
substantially the form attached hereto as Exhibit C, which shall include all
Operating Expenses for each such Project for the period from such date to the
conclusion of the then current calendar year and provide a copy of such
operating plan and budget at such time to the Collateral Agent and the
Administrative Agent. No less than sixty (60) days prior to each calendar year
thereafter, such Guarantor will submit to the Administrative Agent an operating
plan and budget for the ensuing calendar year (each such operating plan and
budget is herein called an "Operating Budget"). The Non-Variable Operating
Expenses set forth in each Operating Budget shall not become effective until
approved by the Administrative Agent pursuant

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to clause (ii) below. Any proposed capital expenditures during any year by such
Project shall be submitted to the Administrative Agent for approval together
with the operating plan and budget.

        (ii)  Deliver to the Administrative Agent an Operating Budget not less
than sixty (60) days in advance of each calendar year together with an Officer's
Certificate of such Guarantor stating that to such officer's knowledge, such
Operating Budget contains a reasonable estimate of the Non-Variable Operating
Expenses for the period covered thereby; provided, that with respect to any
proposed Operating Budget, if the Administrative Agent fails to expressly
approve or disapprove in writing the Non-Variable Operating Expenses contained
in such Operating Budget by the beginning of the calendar year in which such
proposed Operating Budget to be used, such proposed Non-Variable Operating
Expenses shall be deemed approved. No expenditures for capital improvements
outside of the Operating Budget shall be deemed approved; express written
approval by the Administrative Agent is required (once so approved, an "Approved
Capital Expenditure" for such calendar year). If the Administrative Agent shall
have accepted certain Non-Variable Operating Expenses contained in an Operating
Budget submitted to the Administrative Agent, any such approved Non-Variable
Operating Expenses shall become effective. Any remaining Non-Variable Operating
Expense contained in such Operating Budget not specifically approved by the
Administrative Agent shall be deemed, for such ensuing calendar year, to equal
the lesser of (x) the amount set forth in respect of such Non-Variable Operating
Expense in the Operating Budget of the relevant Project for the preceding
calendar year and (y) the amount set forth in respect of such Non-Variable
Operating Expense in the Closing Base Case, in each case adjusted for actual
inflation, provided, however, if such Non-Variable Operating Expense was not
included as a type of Operating Expense in the Closing Base Case then, until
approved (in which case the foregoing provisions of this sentence shall apply),
such Non-Variable Operating Expense shall be deemed, for such ensuing calendar
year, to equal the amount set forth in respect of such Non-Variable Operating
Expense in the Operating Budget of the relevant Project for the preceding
calendar year.

        (iii)  If during any calendar year, such Guarantor proposes to exceed
the aggregate amount of Non-Variable Operating Expenses contained in the
applicable Operating Budget by more than 10%, such Guarantor shall propose an
amendment to such Operating Budget to the Administrative Agent and such
amendment shall become effective upon its approval. At the time such Guarantor
submits such proposal, such Guarantor shall certify the purpose of such
amendment and that such amendment is reasonably necessary or advisable for the
operation and maintenance of its Project.

        (iv)  If during any calendar year, such Guarantor proposes to exceed the
aggregate amount of Non-Variable Operating Expenses contained in the applicable
Operating Budget by more than 15%, such Guarantor shall propose an amendment to
such Operating Budget to the Administrative Agent and such amendment shall
become effective upon approval of the Technical Committee. At the time such
Guarantor submits such proposal, such Guarantor shall certify the purpose of
such amendment and that such amendment is reasonably necessary or advisable for
the operation and maintenance of its Project.

        (cc) Further Assurances. Take all such further actions and execute all
such further documents and instruments as the Administrative Agent may at any
time reasonably determine to be desirable to further carry out and consummate
the transactions contemplated by the Transaction Documents or to maintain and
preserve the Liens of the Security Documents, including such necessary actions
to perfect or protect the priority of the Lien of the Collateral Agent on the
Collateral under the Security Documents.

        SECTION 3.03.    Additional Covenants of Development Project
Companies.    In addition to the covenants in Section 3.02 above, each
Development Project Company hereby agrees with the Collateral

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Agent and each Lender that, so long as there are outstanding Obligations or
Commitments, such Development Project Company shall, unless the Required Lenders
shall otherwise consent in writing:

        (a)  Project Budget. Not reallocate Project Costs except as permitted
pursuant to Section 2.01(b) of the Credit Agreement.

        (b)  Construction and Completion of the Projects. Duly construct and
complete, or cause the construction and completion of, its related Project in
accordance with the specifications set forth in the EPC Agreement for its
related Project;

        (c)  Performance Tests. Permit the Administrative Agent and the
Independent Engineer to witness and verify the Performance Tests (as defined in
the EPC Agreements) and such Development Project Company shall give the
Administrative Agent and the Independent Engineer not less than thirty (30) days
prior written notice of the expected date of the Performance Tests and not less
than ten (10) days prior written notice (to such Development Project Company's
knowledge) of the exact date(s) of the Performance Tests. If, upon completion of
the Performance Tests, such Development Project Company is of the belief that
the Performance Tests have been satisfied, it shall so notify the Administrative
Agent and the Independent Engineer and shall deliver a copy of all the test
results requested by the Administrative Agent or the Independent Engineer
supporting such conclusion, accompanied by supporting data and conclusions,
evidencing such Development Project Company's belief that it has satisfied its
obligations with respect to the Performance Tests. If the Performance Tests have
been satisfactorily completed, the Independent Engineer shall so certify in
writing to the Administrative Agent; and

        (d)  Contractor Information. To the extent that the Contractor of its
related Project provides monthly reports, promptly provide the same to the
Administrative Agent.

        SECTION 3.04.    Negative Covenants.    Each Guarantor hereby agrees
with the Collateral Agent and each Lender that, so long as there are outstanding
Obligations or Commitments, such Guarantor shall not, unless the Required
Lenders shall otherwise consent in writing:

        (a)  Permitted Debt. Create, incur, assume, suffer to exist or otherwise
become or remain directly or indirectly liable with respect to any Debt, other
than the following ("Project Company Permitted Debt"):

          (i)  liabilities under the Loan Documents and Project Documents with
respect to its related Project to which such Guarantor is a party;

        (ii)  liabilities for Project Costs and Financing Costs for its related
Project;

        (iii)  (a) with respect to Sithe Fore River, Capital Lease Liabilities
not to exceed, in the aggregate, $20,000,000, (b) with respect to Sithe Mystic
Development, Capital Lease Liabilities not to exceed, in the aggregate,
$40,000,000, and (c) with respect to Sithe Mystic, Capital Lease Liabilities not
to exceed, in the aggregate, $15,000,000, in each case, from the date of
determination through the earlier of (x) the expiration date of the applicable
capitalized lease(s) and (y) the Maturity Date;

        (iv)  any Debt of such Guarantor set forth in Schedule 3.04(a), which is
outstanding on the Closing Date;

        (v)  (A) Permitted Borrower Debt which is on-lent to such Guarantor and
(B) subordinated loans made available to such Guarantor by the Borrower;

        (vi)  surety bonds, performance bonds or similar arrangements with
third-party sureties, indemnitors or similar persons obtained or made in
connection with a good faith contest;

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      (vii)  trade accounts payable and other Debt for the acquisition of goods,
services or rights in the ordinary course of business;

      (viii)  endorsement of negotiable instruments for collection; and

        (ix)  unsecured Debt incurred in connection with Permitted Hedging
Transactions in relation to its related Project;

        (b)  Liens. Create, incur, assume or suffer to exist, directly or
indirectly, on any of its property or assets, whether now owned or hereafter
acquired, any Liens except for:

          (i)  Liens granted to the Collateral Agent for the benefit of the
Secured Parties pursuant to the Security Documents or permitted under the Loan
Documents, which Liens shall be perfected first priority security interests
subject only to other Project Company Permitted Liens;

        (ii)  Liens for Taxes not yet delinquent or which is the subject of a
Contest;

        (iii)  Liens arising from judgments or awards so long as an appeal is
being prosecuted in good faith with adequate reserves being maintained therefor;

        (iv)  Liens, deposits or pledges to secure statutory obligations or
performance bids, tenders, contracts or leases, or for purposes of like general
nature in the ordinary course of business;

        (v)  mechanics', materialmen's and other statutory Liens arising in the
ordinary course of business or for the payment of Project Costs, Financing Costs
or other costs associated with the ownership, construction, operation and
maintenance of its related Project, to the extent that the same are insured by
the then-current title insurance policy issued in connection with each Project;

        (vi)  Liens securing Project Company Permitted Debt described under
clauses (i) (only with respect to liabilities incurred under Loan Documents),
(iii) (capital leases), (iv) (outstanding on the Closing Date) and (v)(B)
(subordinated loans from Borrower) of Section 3.04(a) above;

      (vii)  Liens securing Permitted Borrower Debt described under clauses
(i) (Loan Documents), (ii) (outstanding on the Closing Date), (iii) (pari passu
indebtedness associated with Additional Project) and (iv) (Swap Agreements) of
Section 7.02(a) of the Credit Agreement;

      (viii)  Liens arising under Shared Use Agreements;

        (ix)  Liens, encumbrances or other exceptions set forth in the title
policies or an endorsement thereto delivered to the Lenders, or otherwise
disclosed to the Lenders on or before the Closing Date; and

        (x)  other easements, licenses, Liens and encumbrances incident to the
conduct of such Guarantor's Permitted Business that are not incurred in
connection with the obtaining of any loan, advance or credit and that do not in
the aggregate materially impair the use of its property for the purposes of its
business;

        (c)  Dividends. Declare or pay any dividends or distributions, or return
any capital, or authorize or make any other distribution, payment or delivery of
property or cash, other than to the Borrower;

        (d)  Sales of Assets, Etc. Convey, lease, sell, transfer or otherwise
dispose of all or substantially all of its business or property, (whether in one
transaction or a series of transactions) whether now or hereafter acquired,
except (i) concurrently with or after the payment in full of the Obligations,
(ii) the sale or other disposition of capacity, energy, ancillary services or
fuel, whether or not pursuant to a long-term contract, provided, that such
assets are not necessary for the operation of such related Project, (iii) the
sale or other disposition after the date hereof of emissions credits, provided,
such emission credits are not required for the operation of such related Project
under existing Bilateral Contracts (as defined in the Power Marketing Agreement)
to be performed within the calendar year in

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which the proposed sale is to be consummated and net profits received by such
Project (or allocable to such Project) from such permitted sale or other
disposition in respect of emissions credits relating to future years' operations
("Net Emissions Profits") shall be applied in accordance with Section 3.02(a)
hereof; Net Emissions Profits will be determined at the end of each calendar
year based on the aggregate sales and repurchases of emission credits during
that year relating to future years, (iv) the sale of worn out or obsolete
equipment in the ordinary course of business, (v) with the prior written
approval of the Independent Engineer, the sale of assets which are replaced with
like assets, such sales not to exceed $10,000,000 in the aggregate and
(vi) other sales of non-material assets that are less than $3,000,000 per sale
and $10,000,000 in the aggregate;

        (e)  Mergers, Etc. Merge or consolidate into or with any Person, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue its business (whether in one transaction or a series of
transactions); provided, that such Guarantor may merge with or into any other
Project Company or any other wholly-owned Subsidiary of the Borrower so long as
the surviving company assumes the obligations of such Guarantor under the Loan
Documents;

        (f)    Acquisitions, Subsidiaries, Etc. (i) Acquire by purchase or
otherwise any property or assets of, or stock or equity interest or other
evidence of beneficial ownership of, any Person except pursuant to the
Transaction Documents and except purchases of inventory, equipment, materials
and supplies in the ordinary course of such Guarantor's business, (ii) enter
into any partnership or joint venture; or (iii) create or acquire any
Subsidiary, except for Subsidiaries created or acquired in connection with
Additional Projects, provided, that such Subsidiaries created or acquired in
connection with the Additional Projects shall not be acquired or created until
each such Subsidiary has executed and delivered to the Administrative Agent a
guarantee in substantially the form of this Guarantee, security documents and
all necessary documents, certificates and instruments reasonably requested by
the Administrative Agent in form and substance substantially similar to the Loan
Documents to which the Guarantors are currently a party; provided, further, that
all pre-financing development activities involving such Additional Projects not
be undertaken by any such Subsidiary or if undertaken by any such Subsidiary
shall be funded utilizing cash contributed by Sithe or Sithe New England.

        (g)  Investments in Other Persons. Lend money or credit or make advances
or contributions to any Person, or directly or indirectly purchase or acquire
any stock, obligations or securities of, or any other interest in, make any
capital contribution to any Person or make any investments, except:

          (i)  short-term bank deposits, government obligations, money market
funds and other similar short-term investments;

        (ii)  maintenance of the Accounts and the Permitted Investments of the
funds on deposit therein; and

        (iii)  Permitted Investments;

        (h)  Transactions with Affiliates. Enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any Affiliate, other than (i) transactions pursuant to the Transaction Documents
in effect on the Closing Date; (ii) transactions scheduled or provided for in
the Project Documents; (iii) the reimbursement of Pre-Closing Project Costs to
the extent permitted pursuant to Section 7.02(f)(i)(B) of the Credit Agreement;
(iv) the incurrence and repayment of Permitted Debt and the grant of security
interests in connection therewith; (v) payments to the Borrower;
(vi) transactions on terms and conditions at least as favorable as could be
obtained in a comparable arm's-length transaction in the ordinary course of
business with a Person not an Affiliate; (vii) with the prior written approval
of the Arrangers or the Technical Committee, such consent not to be unreasonably
withheld; (viii) transactions which are not material to the transactions
contemplated by the Loan Documents; and (ix) transactions in which the only
parties are two or more of the Borrower, the Guarantors or the owner of any
Additional Project.

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        (i)    Business. Enter into or engage in any business other than
Permitted Business;

        (j)    Additional Agreements. Enter into any agreement (other than the
Loan Documents as in effect on the Closing Date) which restricts the ability of
such Guarantor to (i) enter into amendments or modifications of the Transaction
Documents, (ii) enter into waivers of material Transaction Documents,
(iii) sell, transfer or otherwise dispose of its assets, (iv) create, incur,
assume or suffer to exist any Lien upon any of its property and (v) create,
incur, assume, suffer to exist or otherwise become liable with respect to any
Debt;

        (k)  Compliance with ERISA. With respect to any Plan, (i) fail to
satisfy the minimum funding requirements of ERISA or the Code; (ii) take any
action, or omit to take any action which could give rise to a nonexempt
prohibited transaction (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA) that is reasonably likely to subject the Lenders to any
material tax or penalty under Section 4975 of the Code or Section 502(i) of
ERISA; or (iii) engage in any transactions prohibited by ERISA or have any
liabilities, in each case, which could reasonably expected to have a Material
Adverse Effect;

        (l)    Material Project Documents. Cancel, waive or terminate, or agree
to or permit any amendment, assignment or modification of, any Material Project
Document with respect to its related Project, unless such amendment, waiver,
modification, cancellation, termination or assignment would not reasonably be
expected to have a Project Material Adverse Effect or such Guarantor obtains
prior written consent of the Technical Committee to such amendment, waiver,
modification, cancellation, termination or assignment;

        (m)  Profits, Management, Etc. Enter into any partnership,
profit-sharing, royalty agreement or other similar arrangement whereby such
Guarantor's income or profits are, or might be, shared with any other Person
(other than Sithe Power Marketing), or enter into any management contract or
similar arrangement whereby its business or operations are managed by any other
Person (other than Sithe Power Marketing, Sithe Boston Power Services, Sithe New
England Power Services and Sithe);

        (n)  Abandonment. Abandon the development, construction or operation of
its related Project which shall be evidenced by such Guarantor's cessation of
such activity for a period of thirty (30) consecutive days;

        (o)  Organizational Documents. Amend or modify, in any material fashion,
its certificate of formation or limited liability company agreement;

        (p)  Guaranty Obligations. Create, incur, assume, guarantee or remain
liable on any Guaranty Obligations except to the extent any such Guaranty
Obligation (i) constitutes Project Company Permitted Debt; or (ii) is in favor
of the Lenders pursuant to this Guarantee or the Loan Documents;

        (q)  Margin Stock. Purchase or carry any Margin Stock (as defined in
Regulation U);

        (r)  Name Change. Change its name or location without 15 days' prior
written notice to the Collateral Agent and the Administrative Agent;

        (s)  Issuance of Shares, Securities, Etc. Issue or permit the issuance
of any shares of membership interests of such Guarantor unless after giving
effect thereto all such membership interests shall have been pledged to the
Collateral Agent pursuant to the terms of a pledge agreement substantially
similar to the Borrower Pledge Agreement. Such Guarantor shall not issue or have
outstanding any securities convertible into or exchangeable for its membership
interests or issue or grant or have outstanding any rights to subscribe for or
to purchase, or any options or warrants for the purchase of, or any agreements,
arrangements or understandings providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its membership interests;

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        (t)    Bank Accounts. Maintain bank accounts other than the Accounts
each of which shall be maintained with the Collateral Agent;

        (u)  Distributions. Whether directly or indirectly, create or otherwise
cause or suffer to exist any encumbrance or restriction on its ability to
declare or pay dividends or distributions to, repay or prepay any Debt owed to,
make loans or advances to, or otherwise transfer assets to or invest in, the
Borrower or any other Guarantor, except for any such encumbrance or restriction
arising under or by reason of the Loan Documents;

        (v)  Tax Status; Investment Company. (i) Elect or cause itself to be
treated as a corporation for U.S. federal or state income tax purposes or
(ii) take any action which could cause it to be in violation of the Investment
Company Act of 1940, as amended;

        (w)  Replacement Price Index. Sithe Mystic Development shall not agree
to a replacement price index under Section 4.5 of the Gas Sale and Purchase
Agreement without the prior written consent of the Technical Committee, which
shall not be unreasonably withheld; and

        (x)  Risk Management Policy. Cancel or terminate, or agree to or permit
any amendment or modification of, the Risk Management Policy (to the extent
applicable to it) except to the extent action has been taken with respect to the
Risk Management Policy as permitted under Section 7.02(l) of the Credit
Agreement;

        SECTION 3.05.    Additional Negative Covenants with respect to the
Development Project Companies.    In addition to the negative covenants in
Section 3.04 above, each Development Project Company hereby agrees with the
Collateral Agent and each Lender that, so long as there are outstanding
Obligations or Commitments, such Development Project Company shall not, unless
the Required Lenders shall otherwise consent in writing:

        (a)  EPC Agreement. Assign or convey any of its right, title or interest
under the EPC Agreement to which it is a party except as permitted by the Loan
Documents;

        (b)  [Intentionally Omitted].

        (c)  Change Orders. Become bound to any Change Order that, (A) (i) with
respect to Sithe Fore River, increases the Project Costs of the Fore River
Project by more than $5,000,000, (ii) with respect to Sithe Mystic Development,
increases the Project Costs of the Mystic 8&9 Project by more than $10,000,000,
(B) when aggregated with all previous Change Orders in respect of both
Development Projects since the Closing Date, exceeds $25,000,000 or (C) result
in an extension of the Performance Test Completion Deadline or results in any
amendment, modification or supplement to the Minimum Performance Standards,
Performance Guarantees, Performance Tests, Performance Guarantee Liquidated
Damages, Delay Liquidated Damages (as each such term is defined in the EPC
Agreements) or the conditions pursuant to which any such payment is required to
be made in each case whether directly, indirectly, by modification of the
definition of "force majeure" or any other provision in the EPC Agreements, or
otherwise, and could not otherwise result in a Project Material Adverse Effect,
unless, in each case, either (A) (i) such Development Project Company provides
the Independent Engineer with twenty-one (21) days to examine any proposed
change order before becoming bound thereby, and (ii) the Independent Engineer
notifies such Development Project Company during such 21-day period that such
change order, in the Independent Engineer's reasonable opinion (x) will not
cause a shortfall in the funding available for completion of Project Costs
(unless such shortfall is covered by support reasonably acceptable to the
Administrative Agent), (y) will not affect the completion or commercial
operation of the related Project in a manner that could reasonably be expected
to have a Project Material Adverse Effect and (z) is reasonably and necessarily
made, or (B) the Technical Committee approves such Change Order notwithstanding
failure of the Independent Engineer to give the notice described in clause (ii)
hereunder; and

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        (d)  Project Budget; Construction Schedule.

          (i)  Make any payments or expenditures prior to the Project Completion
Date, except those contemplated by the Project Budget for its related Project or
otherwise agreed upon by the Technical Committee in their reasonable judgment in
consultation with the Independent Engineer. Notwithstanding the foregoing, such
Development Project Company may reallocate amounts within the Project Budget in
accordance with Section 2.01(b) of the Credit Agreement and utilize
Pre-Completion Revenues to pay pre-Completion Operating Expenses in accordance
with Section 4.01(d) of the Depositary Agreement; or

        (ii)  Amend or supplement, directly or indirectly, the Project Budget
for its related Project without (A) first submitting to the Administrative Agent
a copy of such proposed amendment or supplement and (B) obtaining the prior
written consent of the Technical Committee, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, such
Development Project Company may reallocate amounts within the Project Budget in
accordance with Section 2.01(b) of the Credit Agreement; or

        (iii)  Amend or supplement the Construction Schedule for its related
Project without (A) first submitting the Administrative Agent a copy of such
proposed amendment or supplement and (B) obtaining the prior written consent of
the Technical Committee, which consent shall not be unreasonably withheld or
delayed.

        (e)  Introduction of Refurbished Capital Parts. Consent, pursuant to
Section 3.2 of the applicable LTSA, to the introduction by MHIA of any
refurbished capital part originating from a facility other than a Project,
without the prior approval of the Technical Committee. The Technical Committee
shall endeavor to respond to any such request as soon as practicable.

        SECTION 3.06.    Reporting Obligations.    Each Guarantor hereby agrees
with the Collateral Agent and each Lender, that so long as there are outstanding
Obligations or Commitments, unless the Required Lenders shall otherwise consent
in writing, such Guarantor will furnish to the Administrative Agent:

        (a)  Financial Statements. (i) Promptly upon completion thereof and in
any event within 120 days after the end of each fiscal year of such Guarantor,
any audited annual financial statements prepared during the term of this
Guarantee. (ii) Promptly upon completion thereof and in any event within 60 days
after the end of each of the first three fiscal quarters of each fiscal year of
such Guarantor, any unaudited quarterly financial statements prepared during the
term of this Guarantee.

        (b)  Officer's Certificates. At the time of the delivery of the
financial statements under Subsection (a) above, a certificate of an Authorized
Officer of such Guarantor which certifies (i) that such financial statements
fairly present the financial condition and the results of operations of such
Guarantor on the dates and for the periods indicated in accordance with GAAP,
subject, in the case of interim financial statements, to normally recurring
year-end adjustments and (ii) that such Authorized Officer has reviewed the
terms of the Loan Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the business and financial
condition of such Guarantor during the accounting period covered by such
financial statements, and that as a result of such review such Authorized
Officer has concluded that no Project Default, Borrower Default, Project Event
of Default or Borrower Event of Default, as applicable, has occurred during the
period commencing at the beginning of the accounting period covered by the
financial statements accompanied by such certificate and ending on the date of
such certificate or, if any Project Default, Borrower Default, Project Event of
Default or Borrower Event of Default, has occurred, specifying the nature and
extent thereof and, if continuing, the action such Guarantor proposes to take in
respect thereof.

        (c)  [Intentionally Omitted.]

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        (d)  Additional Project Documents. Promptly following the entering into
and obtaining thereof, all Additional Project Documents entered into and
obtained by such Guarantor since the Closing Date and not theretofore furnished
to the Administrative Agent.

        (e)  Management Letters. Promptly after receipt thereof, copies of any
"management letter" or other material report received by such Guarantor from the
Auditor.

        (f)    Notices under Project Documents. Promptly and in any event within
ten (10) Business Days after receipt or delivery thereof by such Guarantor, a
copy of each notice or document given or received by such Guarantor in relation
to any suspension, default or prospective default or payment of liquidated
damages under any Material Project Document; provided, however, that if such
notice or document requires any action to be taken by such Guarantor within a
shorter period, such notice or document shall be furnished to the Administrative
Agent no later than within such shorter period.

        (g)  Deferred Project Approvals. Promptly after receipt thereof, copies
of any Deferred Project Approvals obtained by such Guarantor, together with such
documents relating thereto as the Administrative Agent shall reasonably request.

        (h)  Certain Events. Promptly after such Guarantor obtains knowledge
thereof, written notice of:

          (i)  the occurrence of any (i) Borrower Default or Borrower Event of
Default or (ii) Project Default or Project Event of Default of which an
Authorized Officer of such Guarantor has knowledge specifying the nature thereof
and the action which such Guarantor is taking and proposes to take with respect
to the same;

        (ii)  any dispute relating to its Project, any Project Document,
Additional Project Document or Governmental Approval between any of such
Guarantor and any other Project Party of Governmental Authority that could
reasonably be expected to have a Project Material Adverse Effect;

        (iii)  any event of force majeure or similar event under any Material
Project Document;

        (iv)  any revocation, termination, withdrawal, suspension, modification
or withholding of, or receipt of any notice regarding the foregoing relating to,
any Governmental Approval;

        (v)  receipt of any written notice from any Governmental Authority with
respect to the acquisition by condemnation, expropriation or otherwise of such
Guarantor, any Collateral, or any part of such Guarantor's business or assets;

        (vi)  the receipt by such Guarantor of any communication (written or
oral), whether from a Governmental Authority or other Person which alleges that
such Guarantor is not in compliance with applicable Environmental Laws or
Governmental Approvals with respect to Environmental Laws where such
noncompliance could reasonably be expect to have a Project Material Adverse
Effect;

      (vii)  any Environmental Matter pending or threatened against such
Guarantor that could reasonably be expected to have a Project Material Adverse
Effect;

      (viii)  any Environmental Discharge that could form the basis of any
Environmental Matter against such Guarantor that could reasonably be expected to
have a Project Material Adverse Effect;

        (ix)  any pending or threatened litigation, action, suit, investigation
or proceedings by or before any Governmental Authority or arbitrator involving
such Guarantor involving (A) an amount in dispute in excess of (i) $5,000,000 in
respect of any one such proceeding or (ii) $10,000,000 in respect of all such
proceedings; or (B) any injunctive or equitable relief;

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        (x)  any dispute between such Guarantor and any Governmental Authority
involving (A) an amount in dispute in excess of (i) $5,000,000 in respect of any
one such dispute or (ii) $10,000,000 in respect of all such disputes; or (B) any
injunctive or equitable relief;

        (xi)  the occurrence of any Casualty Event affecting the Project in
excess of $5,000,000;

      (xii)  any default under any of the Material Project Document or
Additional Project Documents specifying the nature thereof and the action which
such Guarantor is taking and proposes to take with respect to the same;

      (xiii)  any cancellation of or material change in the terms, coverage or
amounts of the insurance for such Guarantor or a change in the commercial
availability of any such insurance for such Guarantor that could reasonably be
expected to have a Project Material Adverse Effect; and

      (xiv)  any Performance Test conducted pursuant to such Guarantor's EPC
Agreement.

        (i)    Other Information. From time to time, reports, statements, lists
of property and such other information or documents (financial or otherwise) as
the Administrative Agent may reasonably request.

ARTICLE IV

PROJECT EVENTS OF DEFAULT

        SECTION 4.01.    Project Events of Default.    If any of the following
events shall occur and be continuing with respect to a Guarantor after the
expiration of the grace period, if any, applicable thereto, such event shall
constitute a "Project Event of Default" with respect to the affected Guarantor:

        (a)  Failure to Make Payments. Such Guarantor shall fail to pay any
Guaranteed Obligations within five (5) Business Days after the same shall become
due (such five-day period not to be in addition to, but shall be inclusive of
the cure period set forth in Section 8.01(a)(i) of the Borrower Credit
Agreement) or to make mandatory payments as and when required pursuant to
Section 3.02(a);

        (b)  Breach of Representation or Warranty. Any representation or
warranty made by such Guarantor in any Loan Document or in any certificate
delivered pursuant thereto shall prove to be false or misleading when made or
deemed made if (i) as a result of such falsity or misrepresentation, a Project
Material Adverse Effect occurs or could reasonably be expected to occur and
(ii) such falsity, misrepresentation or Project Material Adverse Effect is not
cured or vitiated prior to the 45th day after the date on which such
misrepresentation occurred;

        (c)  Breach of Covenants by Such Guarantor. Other than as described in
clause (a) above, such Guarantor shall fail to perform or observe any covenant
or obligation arising under any Loan Document to which it is a party, including
this Guarantee, provided, that in the case of affirmative covenants (other than
covenants set forth in Sections 3.02(b) (application of proceeds),
(f) (existence), (h) (title) (only with respect to material properties and
material assets), (n) (Revenue Account), (y) (risk management policy),
(aa) (insurance) and Section 3.06 (h)(i) (notice of default)), unless such
failure has been cured or remedied within a 30 days after such Guarantor becomes
aware of such breach, or if such failure is not susceptible of being remedied
within 30 days, such longer period not to exceed 90 additional days, provided,
that as to such extension, such Guarantor shall at all times be diligently
attempting to remedy such failure and such extension of time would not
reasonably be expected to have a Project Material Adverse Effect;

        (d)  Default Under Other Agreements. (i) The principal amount of any
unsecured Debt (other than the Obligations) of such Guarantor in excess of
$10,000,000 (or its equivalent in another currency) shall be declared due and
payable, or required to be prepaid other than by a regularly required repayment,
prior to the stated maturity thereof. (ii) Such Guarantor shall default in the
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of any secured
Debt (other than the Obligations) in the aggregate principal

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amount of $10,000,000 or more; or such Guarantor shall default in the
performance or observance of any obligation or condition with respect to any
such Debt or any other event shall occur or condition exist, if the effect of
such default, event or condition is to accelerate the maturity of any such Debt
or to permit (without regard to any required notice or lapse of time) the holder
or holders thereof, or any trustee or the Administrative Agent for such holders,
to accelerate the maturity of any such Debt, or any such Debt shall become or be
declared to be due and payable prior to its stated maturity other than as a
result of a regularly scheduled payment;

        (e)  Bankruptcy, Etc. An Event of Bankruptcy shall occur with respect to
such Guarantor;

        (f)    Dissolution. Any order, judgment, or decree shall be entered
against such Guarantor decreeing its involuntary dissolution or split up and
such order shall remain undischarged and unstayed for a period in excess of
thirty (30) days; or such Guarantor shall otherwise dissolve or cease to exist;

        (g)  Abandonment. Such Guarantor shall have abandoned the development,
construction or operation of its Project, such abandonment to be evidenced by
such Guarantor's cessation of such activity for a period of 30 consecutive days;

        (h)  Judgments. One or more judgments or decrees shall be entered by a
court of competent jurisdiction against such Guarantor (i) in an aggregate
amount in excess of $10,000,000 and (A) any such judgments or decrees shall not
be stayed, satisfied or discharged within sixty (60) days or (B) enforcement
proceedings shall be commenced by any creditor on such judgment or decrees or
(ii) providing for injunctive or other equitable relief the effect of which
relief could reasonably be expected to have a Project Material Adverse Effect;

        (i)    Security Documents. Any of the Security Documents shall for any
reason cease to be in full force and effect, or shall cease to give the
Collateral Agent the Liens, rights, powers and privileges purported to be
created thereby on any material Collateral held by such Guarantor (unless such
failure has been cured or remedied within ten (10) days from the date of such
cessation);

        (j)    EPC Agreement; Other Material Project Document.

          (i)  (A) With respect to either Development Project Company, the EPC
Agreement of such Development Project Company ceases to be in full force and
effect (except in accordance with its terms), (B) a material provision of such
EPC Agreement ceases to be valid or (C) occurrence of a material default by the
Contractor under such EPC Agreement, in each case at any time prior to the
expiration of all warranty periods under such EPC Agreement, if such cessation,
invalidity or material default has or could reasonably be expected to have a
Project Material Adverse Effect and is not cured (in the case of clause (A),
with a replacement EPC Agreement reasonably acceptable to the Technical
Committee) prior to the 90th day after such cessation, invalidity or material
default.

        (ii)  (A) A default by such Guarantor or any Principal Project
Participant under any of the other Material Project Documents to which such
Guarantor is party, and such default is not remedied within the applicable grace
period and could reasonably be expected to have a Project Material Adverse
Effect, or (B) any such Material Project Document ceases to be in full force and
effect (except in accordance with its terms), such cessation has or could
reasonably be expected to have a Project Material Adverse Effect and such
document is not replaced within ninety (90) days (so long as the Borrower is
diligently pursuing such replacement) with an agreement reasonably acceptable to
the Technical Committee;

        (k)  Loan Documents. Any Loan Document to which such Guarantor is a
party shall cease to be valid and binding and in full force and effect; provided
that no such event shall be a Project Event of Default if, within thirty
(30) days of such occurrence, such Guarantor enters into an alternate agreement
which is satisfactory to the Administrative Agent;

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        (l)    Compliance with ERISA. Such Guarantor shall fail to perform or
observe the covenant set forth in Section 3.04(k) and such failure could
reasonably be expect to have a Project Material Adverse Effect;

        (m)  Exempt Wholesale Generator. Such Guarantor shall cease to be an EWG
(provided, that such event shall not be a Project Event of Default if such
Guarantor is no longer required under any Requirement of Law to hold such status
in order to be exempt from PUHCA);

        (n)  Regulatory Status. Such Guarantor shall become subject to
regulation as (i) an investment company (under the Investment Company Act of
1940, as amended) or (ii) a "holding company," or a "public utility company"
(within the meaning of the Public Utility Holding Company Act of 1935, as
amended).

        (o)  Governmental Approvals. Any Required Project Approval or other
Government Approval then required to have been obtained by such Guarantor for
the development, construction or operation of its Project, execution or
performance of a Transaction Document shall be revoked, terminated, withdrawn,
suspended, modified or withheld or shall cease to be in full force and effect
and such revocation, termination, suspension, modification or cessation (i) has
or could reasonably be expected to have a Project Material Adverse Effect and
(ii) is not effectively cured prior to the later of sixty (60) days after the
occurrence of such revocation, termination, suspension, modification or
cessation (or one hundred twenty (120) additional days if such Guarantor is
diligently pursuing such cure);

        (p)  Change of Control. A Change of Control shall occur as to such
Guarantor; or

        (q)  Date Certain. If such Guarantor is a Development Project Company,
its Project shall not have achieved Project Completion on or before the Date
Certain.

ARTICLE V

MISCELLANEOUS

        SECTION 5.01.    Amendments, Etc.    No amendment or waiver of any
provision of this Guarantee nor consent to any departure by any of the
Guarantors therefrom shall in any event be effective unless the same shall be in
writing and signed by the Collateral Agent (acting pursuant to direction
consistent with Section 10.01 of the Credit Agreement) and each Guarantor, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

        SECTION 5.02.    Addresses for Notices.    All notices and other
communications provided for hereunder shall be in writing or by telex or
facsimile transmission and, if to any Guarantor, mailed, telexed, given by
facsimile transmission or delivered to them in care of Sithe Energies, Inc. at
335 Madison Avenue, New York, New York 10017, Attention: Treasurer, Telephone
No. (212) 351-0061, Facsimile No. (212) 351-0813, with copies to the General
Counsel, Sithe Energies, Inc., 335 Madison Avenue, New York, New York 10017,
Facsimile No. (212) 351-0019, and if to the Collateral Agent, mailed, telexed,
given by facsimile transmission or delivered to it, addressed to it at
BNP PARIBAS, 787 Seventh Avenue, New York, New York 10019, Attention: Project
Finance—Portfolio Administration, Greg Miller/Sean Finnegan, Telephone No.
(212) 841-2131/2310, Facsimile No. (212) 841-3219/2203, or as to each party at
such other address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this Section. Any
notice, if mailed and properly addressed with postage prepaid, shall be deemed
given when received; any notice, if transmitted by telex, shall be deemed given
when transmitted (answerback confirmed), and if transmitted by facsimile
transmission or delivery, shall be deemed given when received.

        SECTION 5.03.    No Waiver; Remedies.    No failure on the part of the
Collateral Agent or any Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise

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thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or equity.

        SECTION 5.04.    Right to Set-Off.    Upon the occurrence and during the
continuance of any Borrower Default of the nature referred to in Section 8.01(a)
of the Credit Agreement or, with the consent of the Lenders, any Borrower Event
of Default, the Collateral Agent and each Lender are each hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Collateral Agent or such Lender, as the case may be, to or for the credit
or the account of any Guarantor against any and all of the Guaranteed
Obligations of the Guarantors now or hereafter existing under this Guarantee,
irrespective of whether the Collateral Agent shall have made any demand under
this Guarantee. The Collateral Agent agrees promptly to notify the Guarantors
after any such set-off and application made by the Collateral Agent, provided,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Collateral Agent or such Lender, as
the case may be, under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Collateral
Agent or any of the Lenders may have.

        SECTION 5.05.    Contribution Obligations among Guarantors.    In order
to provide for just and equitable contribution among the Guarantors, the
Guarantors agree, among themselves, that in the event any payment or
distribution is made by a Guarantor (a "Funding Guarantor") under this
Guarantee, such Funding Guarantor shall be entitled to a contribution from the
other Guarantors for all such payments or distributions, or damages and expenses
incurred by such Funding Guarantor in discharging any Guaranteed Obligations.
Each Guarantor which is not a Funding Guarantor shall be liable to a Funding
Guarantor with respect to any such payments or distributions, or damages and
expenses, in an aggregate amount equal to (a) the ratio of (i) the net worth of
such Guarantor, as determined in accordance with the most recent balance sheet
of such Guarantor at the time of such payment by a Funding Guarantor, to
(ii) the aggregate net worth of all Guarantors, similarly determined, multiplied
by (b) the amount which the Funding Guarantor paid on account of the Guaranteed
Obligations. In the event that at any time there exists more than one Funding
Guarantor, then payment from the other Guarantors pursuant to this Section shall
be in an aggregate amount equal in proportion to the total amount of money paid
for or on account of the Guaranteed Obligations by the Funding Guarantors
pursuant to this Guarantee. If the Funding Guarantor is required to make any
payment hereunder, such Funding Guarantor shall also be entitled to a right of
subrogation in respect of such payment from the other Guarantors.
Notwithstanding anything in this Section to the contrary, the agreements in this
Section are to establish the relative rights of contribution of the Guarantors
and shall not modify the joint and several nature of the obligations of each
Guarantor owed to the for the benefit of the Secured Parties or impair the
rights of the Collateral Agent for the benefit of the Secured Parties to hold
any of the Guarantors liable for payment of the full amount of all Guaranteed
Obligations.

        SECTION 5.06.    Continuing Guarantee.    This Guarantee is a continuing
guaranty and shall (a) remain in full force and effect until final payment in
full of the Guaranteed Obligations and all other amounts payable under this
Guarantee, subject to reinstatement in accordance with Section 2.2 hereof,
(b) be jointly and severally binding upon each of the Guarantors, their
successors and assigns, and (c) inure to the benefit of and be enforceable by
the Collateral Agent for its benefit and the benefit of the Secured Parties and
their respective successors, transferees and assigns; provided, however, that no
Guarantor may assign or transfer any of its obligations hereunder without the
prior written consent of the Collateral Agent and each of the Secured Parties.

        SECTION 5.07.    Severability.    Any provision of this Guarantee which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such

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prohibition or unenforceability without invalidating the remaining provisions of
this Guarantee or affecting the validity or enforceability of such provisions in
any other jurisdiction.

        SECTION 5.08.    Governing Law.    THIS GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW). EACH OF THE
PARTIES HERETO (I) IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE
CITY OF NEW YORK IN ANY ACTION ARISING OUT OF ANY LOAN DOCUMENT, (II) AGREES
THAT ALL CLAIMS IN SUCH ACTION MAY BE DECIDED IN SUCH COURT, (III) WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM AND (IV) CONSENTS TO THE SERVICE OF PROCESS BY MAIL. A FINAL JUDGMENT IN
ANY SUCH ACTION SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY
MANNER PERMITTED BY LAW OR AFFECT ITS RIGHT TO BRING ANY ACTION IN ANY OTHER
COURT.

        SECTION 5.09.    Loan Document; Etc.    This Guarantee is a Loan
Document executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered, and applied in
accordance with the terms and provisions of the Credit Agreement.

        SECTION 5.10.    Waiver of Jury Trial.    EACH GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE COLLATERAL
AGENT, THE LENDERS, OR ANY OF THE GUARANTORS. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE COLLATERAL AGENT ENTERING INTO THIS GUARANTY.

        SECTION 5.11.    Non-Recourse.    The provisions of Section 10.13 of the
Credit Agreement are hereby incorporated by reference, with the same effect as
if such provision where set forth herein in its entirety.

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        IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

  SITHE MYSTIC LLC
 
By:
 
    

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Name: Sandra Manilla
Title: Vice President and Treasurer
 
SITHE FORE RIVER DEVELOPMENT, LLC
 
By:
 
    

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Name: Sandra Manilla
Title: Vice President and Treasurer
 
SITHE MYSTIC DEVELOPMENT LLC
 
By:
 
    

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Name: Sandra Manilla
Title: Vice President and Treasurer
 
BNP PARIBAS, as Collateral Agent
 
By:
 
    

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Name: Dan Cozine
Title: Managing Director
 
By:
 
    

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Name: Christophe Bernard
Title: Associate

Signature Page to
Project Company Guarantee

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EXECUTION VERSION

PROJECT COMPANY GUARANTEE

by

SITHE MYSTIC LLC,
SITHE FORE RIVER DEVELOPMENT, LLC, and
SITHE MYSTIC DEVELOPMENT LLC,
each as a Guarantor

in favor of

BNP PARIBAS,

as Collateral Agent

Dated as of
January 31, 2001

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Table of Contents

 
   
  Page

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ARTICLE I DEFINITIONS   1   SECTION 1.01.   Certain Terms   1   SECTION 1.02.  
Credit Agreement Definitions   2
ARTICLE II GUARANTEE
 
2   SECTION 2.01.   Guarantee   2   SECTION 2.02.   Limitation of Guarantor's
Liability   3   SECTION 2.03.   Guarantee Absolute   3   SECTION 2.04.   Waiver
  4   SECTION 2.05.   Subrogation   4   SECTION 2.06.   Consent to Jurisdiction;
Waiver of Immunities   4
ARTICLE III REPRESENTATIONS AND COVENANTS
 
5   SECTION 3.01.   Representations and Warranties   5   SECTION 3.02.  
Covenants   11   SECTION 3.03.   Additional Covenants of Development Project
Companies   18   SECTION 3.04.   Negative Covenants   19   SECTION 3.05.  
Additional Negative Covenants with respect to the Development Project Companies
  24   SECTION 3.06.   Reporting Obligations   25
ARTICLE IV PROJECT EVENTS OF DEFAULT
 
28   SECTION 4.01.   Project Events of Default   28
ARTICLE V MISCELLANEOUS
 
31   SECTION 5.01.   Amendments, Etc.   31   SECTION 5.02.   Addresses for
Notices   31   SECTION 5.03.   No Waiver; Remedies   31   SECTION 5.04.   Right
to Set-Off   31   SECTION 5.05.   Contribution Obligations among Guarantors   32
  SECTION 5.06.   Continuing Guarantee   32   SECTION 5.07.   Severability   32
  SECTION 5.08.   Governing Law   32   SECTION 5.09.   Loan Document; Etc.   33
  SECTION 5.10.   Waiver of Jury Trial   33   SECTION 5.11.   Non-Recourse   33

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SCHEDULES

Schedule 3.01(i)   Litigation or Proceedings Schedule 3.01(n)   Required Project
Approvals Schedule 3.01(s)   Contested or Outstanding Taxes Schedule 3.01(bb)  
Environmental Matters or Proceedings Schedule 3.02(aa)   Insurance
Schedule 3.04(a)   Existing Debt

EXHIBITS

Exhibit A   Project Budget Exhibit B   Construction Schedule Exhibit C   Form of
Operating Budget Exhibit D   Form of Release

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QuickLinks

Exhibit 10-2