Exhibit 4.14-a



                                                                  EXECUTION COPY
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                                 SUFFOLK COUNTY
                          INDUSTRIAL DEVELOPMENT AGENCY


                                       AND


                             KEYSPAN-PORT JEFFERSON
                               ENERGY CENTER, LLC

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

                                 LEASE AGREEMENT
                             -----------------------


                          Dated as of November 1, 2003


                                   $75,000,000
                  Suffolk County Industrial Development Agency
                      Industrial Development Revenue Bonds
               (KeySpan-Port Jefferson Energy Center, LLC Project)
                                  Series 2003A

                      Affecting the Facility located at the
                Facility Realty described in Appendix A hereto in
                     the Town of Brookhaven, Village of Port
                          Jefferson, County of Suffolk
                              and State of New York


                              WINSTON & STRAWN LLP
                                 200 Park Avenue
                            New York, New York 10166
                       Attention: William F. Dudine, Esq.
                               File No.: 81326.09

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<TABLE>
<CAPTION>

<S>       <C>            <C>                                                                                                <C>
ARTICLE I.                Definitions and Representations......................................................................2

           Section 1.1.             Definitions................................................................................2
           Section 1.2.             Construction  In this Agreement:...........................................................5
           Section 1.3.             Representations and Warranties by Agency...................................................5
           Section 1.4.             Findings by Agency.........................................................................6
           Section 1.5.             Representations and Warranties by Lessee...................................................6

ARTICLE II.               The Project..........................................................................................8

           Section 2.1.             The Project................................................................................8
           Section 2.2.             Completion by the Lessee...................................................................8
           Section 2.3.             Issuance of Series 2003A Bonds.............................................................8

ARTICLE III.              Lease Of Facility And Rental Provisions..............................................................8

           Section 3.1.             Duration of Term...........................................................................8
           Section 3.2.             Lease of the Facility......................................................................8
           Section 3.3.             Rental Provisions; Pledge of Agreement and Rents...........................................9
           Section 3.4.             Obligation of Lessee Unconditional........................................................10
           Section 3.5.             Payment of Purchase Price of Tendered Bonds...............................................10
           Section 3.6.             Credit Facility...........................................................................10


ARTICLE IV.               Maintenance, Taxes, Payments In Lieu Of Taxes And Insurance.........................................11

           Section 4.1.             Maintenance, Alterations and Improvements.................................................11
           Section 4.2.             Removal of Property of the Facility.......................................................12
           Section 4.3.             No Exemption From Real Estate Taxes.......................................................13
           Section 4.4.             Taxes, Assessments and Charges............................................................13
           Section 4.5.             Insurance.................................................................................14
           Section 4.6.             Advances by Agency, Trustee...............................................................14
           Section 4.7.             Compliance with Law.......................................................................14

ARTICLE V.                Damage, Destruction And Condemnation................................................................15

           Section 5.1.             Damage, Destruction and Condemnation......................................................15

ARTICLE VI.               Particular Covenants................................................................................16

           Section 6.1.             Restrictions on Lessee....................................................................16
           Section 6.2.             Indemnity.................................................................................17
           Section 6.3.             Compensation and Expenses of Trustee, Bond Registrar, Paying Agents and Agency............20
           Section 6.4.             Retention of Title to Facility; Grant of Easements; Release of Certain Land...............20
           Section 6.5.             Lessee's Covenant as to Tax Exemption.....................................................21
           Section 6.6.             Financial Statements; No-Default Certificates.............................................21
           Section 6.7.             Discharge of Liens........................................................................22
           Section 6.8.             Agency's Authority; Covenant of Quiet Enjoyment...........................................23
           Section 6.9.             No Warranty of Condition or Suitability...................................................23


<PAGE>


           Section 6.10.            Amounts Remaining in Funds................................................................23
           Section 6.11.            Issuance of Additional Bonds..............................................................24
           Section 6.12.            Redemption Under Certain Circumstances; Special Covenants.................................24
           Section 6.13.            Further Assurances........................................................................24
           Section 6.14.            Non-Discrimination; Employment Information, Opportunities and Guidelines..................25
           Section 6.15.            Recording and Filing......................................................................26
           Section 6.16.            Right to Cure Agency Defaults.............................................................26
           Section 6.17.            Description of Facility Equipment.........................................................27

ARTICLE VII.              Events Of Default; Remedies.........................................................................26

           Section 7.1.             Events of Default.........................................................................26
           Section 7.2.             Remedies on Default.......................................................................28
           Section 7.3.             Reserved..................................................................................29
           Section 7.4.             Remedies Cumulative.......................................................................29
           Section 7.5.             No Additional Waiver Implied by One Waiver................................................29
           Section 7.6.             Effect on Discontinuance of Proceedings...................................................29
           Section 7.7.             Agreement to Pay Attorneys' Fees and Expenses.............................................29

ARTICLE VIII.             Events Of Default; Remedies.........................................................................29

           Section 8.1.             Options...................................................................................29
           Section 8.2.             Conveyance on Exercise of Option to Terminate.............................................31
           Section 8.3.             Option to Purchase or Invite Tenders of Bonds.............................................32
           Section 8.4.             Termination of Agreement..................................................................32
           Section 8.5.             Mode Change Notice........................................................................32

ARTICLE IX.               Miscellaneous.......................................................................................32

           Section 9.1.             Indenture; Amendment......................................................................32
           Section 9.2.             Force Majeure.............................................................................33
           Section 9.3.             Assignment or Sublease....................................................................33
           Section 9.4.             Priority of Indenture.....................................................................34
           Section 9.5.             Benefit of and Enforcement by Bondholders.................................................34
           Section 9.6.             Amendments................................................................................34
           Section 9.7.             Notices...................................................................................34
           Section 9.8.             Prior Agreements Superseded...............................................................34
           Section 9.9.             Severability..............................................................................35
           Section 9.10.            Inspection of Facility....................................................................35
           Section 9.11.            Effective Date; Counterparts..............................................................35
           Section 9.12.            Binding Effect............................................................................35
           Section 9.13.            Net Lease.................................................................................35
           Section 9.14.            Law Governing.............................................................................35
           Section 9.15.            Investment of Funds.......................................................................35
           Section 9.16.            Investment Tax Credit.....................................................................35
           Section 9.17.            Waiver of Trial by Jury...................................................................35
           Section 9.18.            Consent to Jurisdiction; Service of Process...............................................35
           Section 9.19.            No Recourse Under This Agreement or on Bonds..............................................36
           Section 9.20.            Date of Agreement for Reference Purposes Only.............................................37
</TABLE>

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<PAGE>

                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT,  made and entered into as of November 1, 2003, by and
between SUFFOLK COUNTY INDUSTRIAL  DEVELOPMENT AGENCY, a corporate  governmental
agency   constituting  a  body  corporate  and  politic  and  a  public  benefit
corporation of the State of New York, duly organized and existing under the laws
of the State of New York (the "Agency"),  having its principal  office at H. Lee
Dennison  Building,  100 Veterans Memorial Highway,  Hauppauge,  New York 11788,
party of the first part, and KEYSPAN-PORT  JEFFERSON  ENERGY CENTER,  LLC, a New
York limited  liability  company qualified to do business under and by virtue of
the laws of the State of Delaware,  having its  principal  office at c/o KeySpan
Corporation,  One MetroTech  Center,  Brooklyn,  New York 11201 (the  "Lessee"),
party of the second part:

                                   WITNESSETH:

     WHEREAS, the New York State Industrial Development Agency Act, constituting
Title  1 of  Article  18-A  of the  General  Municipal  Law,  Chapter  24 of the
Consolidated  Laws of New  York,  as  amended  (the  "Enabling  Act")  has  been
heretofore enacted by the Legislature of the State of New York for the purposes,
among others, of providing for the creation of industrial  development  agencies
in the several counties, cities, villages and towns in the State of New York, to
promote, develop, encourage,  assist and advance the job opportunities,  health,
general  prosperity and economic  welfare of the people of the State of New York
and to improve their prosperity and standard of living; and

     WHEREAS, the Agency has been heretofore established under said Enabling Act
pursuant to Chapter 675 of the 1975 Laws of New York, as amended  (together with
the Enabling  Act, the "Act"),  and is  authorized  to acquire real property and
interests therein,  buildings and other  improvements  thereon and machinery and
equipment  and interest  therein in  connection  therewith  for the purposes set
forth above, and to lease the same as herein more particularly described; and

     WHEREAS,  the  Agency  is  further  authorized  by  the  Act to  issue  its
industrial  development  revenue  bonds  payable  solely from and secured by the
revenues derived from the leasing of the land,  buildings and other improvements
and the machinery and equipment so acquired; and

     WHEREAS,  the Lessee and KeySpan,  have entered into  negotiations with the
Agency in connection with a "project" as such term is defined under the Act (the
"Project")  consisting  of the  refinancing  and  reimbursing  of certain  costs
incurred by the Lessee in connection with the acquisition and construction of an
approximately  5,390 square foot building and the acquisition  and  installation
therein of two single  cycle  generating  units to be used by the Lessee for the
purpose of providing an aggregate of  approximately 79 megawatts to the existing
Long Island electric grid (the "Facility"); and

     WHEREAS,  the Facility is located on an existing 1.5 acre site known as The
Port Jefferson Energy Center, and located on the western shore of Port Jefferson
Harbor at the  terminus of Beach Street  (approximately  0.5 miles north of West
Broadway),  in the Town of  Brookhaven,  in the Village of Port  Jefferson  (the
"Facility Realty") as more particularly described in Appendix A hereto; and

     WHEREAS,  pursuant to a certain agreement of lease,  dated May 3, 2002 (the
"Ground Lease"),  between Long Island Lighting  Company,  doing business as LIPA
("LIPA"), and the Lessee, LIPA has leased the Facility Realty to the Lessee; and

     WHEREAS, the Lessee is the owner of the Facility; and

     WHEREAS, pursuant to the Company Lease Agreement, the Lessee has leased the
Facility to the Agency; and


<PAGE>


     WHEREAS,  the Project is complete and the Facility began full operations on
July 1, 2002; and

     WHEREAS,  the Agency has  determined  that Agency  financing  assistance is
necessary  to provide  employment  in, and is  beneficial  for the  economy  and
prosperity  of,  the  inhabitants  of  Suffolk  County  and  the  offer  of such
assistance  to the  Lessee  was  reasonably  necessary  to induce  the Lessee to
proceed with the Project; and

     WHEREAS,  as a result of such  negotiations,  the Lessee has  requested the
Agency to issue its bonds in the aggregate  principal  amount of  $75,000,000 to
finance a portion of the costs of the Project; and

     WHEREAS,  the  Agency  adopted a bond  resolution  on  November  20,  2003,
authorizing the Project and the issuance of its industrial  development  revenue
bonds to  finance a portion  of the costs of the  Project,  the  leasing  of the
Facility  to the Agency and the  subleasing  of the  Facility to the Lessee (the
"Bond Resolution"); and

     WHEREAS, the Agency, in order to provide funds for a portion of the cost of
the Project and for incidental  and related costs  thereto,  will issue and sell
its $75,000,000  aggregate  principal amount of Industrial  Development  Revenue
Bonds  (KeySpan-Port  Jefferson Energy Center,  LLC Project),  Series 2003A (the
"Series  2003A  Bonds"),  pursuant  to the  Act,  the  Bond  Resolution,  and an
Indenture of Trust of even date  herewith by and between the Agency and The Bank
of New York,  as  Trustee,  securing  said  Bonds and any  Additional  Bonds (as
hereinafter defined) issued thereunder; and

     WHEREAS,  simultaneously  herewith,  the  Lessee  will  deliver  a  Payment
Agreement,  dated  November 26, 2003 (the "Payment  Agreement"),  to the Agency,
providing  for the payment of an amount equal to the  principal  of,  redemption
premium and interest on the Series 2003A Bonds; and

     WHEREAS, the payment of all amounts due under the Payment Agreement and any
other amounts due hereunder  shall be  guaranteed  by KeySpan  Corporation  (the
"Guarantor"),  a corporation  organized and existing under the laws of the State
of New York,  pursuant to a Guaranty  Agreement,  dated  November  26, 2003 (the
"Guaranty"), from the Guarantor to the Agency; and

     NOW,  THEREFORE,  in  consideration  of the  premises  and  the  respective
representations and agreements hereinafter  contained,  the parties hereto agree
as follows  (provided  that in the  performance  of the agreements of the Agency
herein contained, any obligation it may incur for the payment of money shall not
subject the Agency to any pecuniary or other  liability nor create a debt of the
State of New York or of Suffolk  County,  and  neither the State of New York nor
Suffolk  County  shall be liable on any  obligation  so  incurred,  but any such
obligation  shall be  payable  solely  out of the lease  rentals,  revenues  and
receipts  derived from or in  connection  with the  Facility,  including  moneys
received under this Lease Agreement):

                                   ARTICLE I.
                         Definitions and Representations

     Section 1.1. Definitions. Terms not otherwise defined herein shall have the
same  meanings as used in the  Indenture  or the Tax  Certificate  herein  below
defined.  The following  terms shall have the  following  meanings in this Lease
Agreement:

     Agency  shall mean the Suffolk  County  Industrial  Development  Agency,  a
corporate  governmental  agency  constituting a body corporate and politic and a
public benefit  corporation of the State,  duly organized and existing under the
laws of the State, and any body, board, authority,  agency or other governmental


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agency or instrumentality  which shall hereafter succeed to the powers,  duties,
obligations and functions thereof.

     Agreement  shall mean this Lease  Agreement,  dated as of November 1, 2003,
between the Agency and the Lessee,  and shall include any and all amendments and
supplements   thereto  hereafter  made  in  conformity  herewith  and  with  the
Indenture.

     Application  shall  mean,  collectively,  the  application  and  all  other
materials  heretofore submitted by or on behalf of the Lessee and its Affiliates
to the Agency.

     Approved  Facility  shall mean shall use of the  Facility by the Lessee for
the "local furnishing of electrical energy" as described in Section 142(a)(8) of
the Code and as a qualified "project" within the meaning of the Act.

     Authorized  Representative  shall mean, (i) in the case of the Agency,  the
Chairman, Vice Chairman, Treasurer,  Assistant Treasurer,  Secretary,  Assistant
Secretary,  Executive  Director,  Administrative  Director,  or any  officer  or
employee  of the Agency  authorized  to perform  specific  acts or to  discharge
specific  duties,  and  (ii) in the  case of the  Lessee,  its  President,  Vice
President, Treasurer, Secretary, or any member of the Lessee.

     Bonds shall mean the Series 2003A Bonds and any Additional Bonds.

     Code shall mean the Internal  Revenue Code of 1986,  as amended,  including
the regulations thereunder.

     Commencement  Date shall  mean,  November  26,  2003,  the date of original
issuance and delivery of the Series 2003A Bonds.

     Company Lease shall mean the Company Lease Agreement,  dated as of November
1, 2003,  between  the  Lessee and the  Agency,  and shall  include  any and all
amendments and supplements  thereto  hereafter made in conformity  therewith and
with the Indenture.

     County shall mean the Suffolk County, New York.

     Event of Default shall have the meaning specified in Section 7.1 hereof.

     Facility shall have the meaning specified in the recitals hereto.

     Facility Equipment shall mean all fixtures, machinery,  equipment, chattels
and articles of personal  property and all  appurtenances  and additions thereto
and  substitutions  and replacements  thereof,  now or hereafter  attached to or
contained  in or located at the Facility or placed on any part  thereof,  though
not  attached  thereto,  the costs of which are refined or  reimbursed  with the
proceeds of Bonds and which are used or usable in connection with the present or
future operation thereof or the activities at any time conducted therein and all
other  property  used in  connection  with the  production  of  income  from the
Facility  and/or  improvements  located  therein  or  adapted  for use  therein,
including,  without  limitation,  any  machinery,  equipment and other  tangible
personal  property  acquired and  installed at the  Facility,  together with all
repairs,  replacements,  improvements,  substitutions  and  renewals  thereof or
therefor  and all  parts,  additions  and  accessories  incorporated  therein or
affixed thereto,  but excluding  Lessee's Property within the meaning of Section
4.1(c) hereof or Existing  Facility  Property  released  pursuant to Section 4.2
hereof.

     Facility Realty shall have the meaning specified in the recitals hereto.

     Fiscal Year of the Lessee shall mean a year of 365 or 366 days, as the case
may be, commencing on January 1 and ending on December 31, or such other year of


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similar  length as to which the Lessee  shall have given  prior  written  notice
thereof  to the Agency and the  Trustee at least  ninety  (90) days prior to the
commencement thereof.

     Ground Lease shall have the meaning specified in the recitals hereto.

     Guaranty Agreement shall have the meaning specified in the recitals hereto.

     Improvements  shall mean all  structures,  fixtures and other  improvements
existing on the Commencement  Date or at any time made,  erected or incorporated
into  the  Facility  (including  any  improvements  made as part of the  Project
pursuant to Section 2.2 hereof) and all replacements,  improvements, extensions,
substitutions, restorations, repairs or additions thereto.

     Indenture  shall mean the  Indenture of Trust of even date  herewith by and
between the Agency and the Trustee, as from time to time amended or supplemented
by Supplemental Indentures in accordance with Article XI of the Indenture.

     KeySpan  shall  mean  KeySpan  Corporation,  a  corporation  organized  and
existing under and by virtue of the laws of the State of New York, and qualified
to do business in the State, and its permitted successors and assigns.

     Legal Requirements shall mean the Constitutions of the United States and of
the State of New York all laws, statutes, codes, acts, ordinances,  resolutions,
orders, judgments, decrees, injunctions, rules, regulations,  permits, licenses,
authorizations,  directions  and  requirements  (including  but not  limited  to
zoning,  land  use,  planning,  environmental  protection,  air,  water and land
pollution,  toxic wastes,  hazardous  wastes,  solid wastes,  wetlands,  health,
safety,  equal  opportunity,  minimum wages,  and  employment  practices) of all
governments,  departments,  commissions, boards, courts, authorities,  agencies,
officials and officers, foreseen or unforeseen, ordinary or extraordinary,  that
are applicable now or may be applicable at any time hereafter to (i) the Lessee,
(ii) the  Facility or any part  thereof,  or (iii) any use or  condition  of the
Facility or any part thereof.

     Lessee or Company shall mean KeySpan-Port  Jefferson Energy Center,  LLC, a
limited liability company organized and existing under and by virtue of the laws
of the State of Delaware,  and  qualified  to do business in the State,  and its
permitted  successors  and  assigns  pursuant  to  Sections  6.1 and 9.3  hereof
(including  any  surviving,  resulting or transferee  corporation as provided in
Section 6.1 hereof).

     Lessee Property shall have the meaning specified in Section 4.1(c) hereof.

     LIPA shall have the meaning specified in the recitals hereto.

     Net Proceeds shall mean,  when used with respect to any insurance  proceeds
or condemnation award,  compensation or damages,  the gross amount from any such
proceeds, award, compensation or damages less all expenses (including attorneys'
fees,  adjuster's  fees and any  extraordinary  expenses  of the  Agency  or the
Trustee) incurred in the collection thereof.

     Payment Agreement shall have the meaning specified in the recitals hereto.

     Project shall have the meaning specified in the recitals hereto.

     Prohibited  Person  shall  mean (i) any Person (A) that is in default or in
breach, beyond any applicable grace period, of its obligations under any written
agreement  with the Agency or the County,  or (B) that  directly  or  indirectly
controls,  is controlled by, or is under common control with a Person that is in
default or in breach,  beyond any applicable  grace period,  of its  obligations
under any written  agreement with the Agency or the County,  unless such default


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<PAGE>


or breach has been  waived in writing by the Agency or the  County,  as the case
may be, and (ii) any Person (A) that has been convicted in a criminal proceeding
for a felony or any crime  involving  moral  turpitude  or that is an  organized
crime figure or is reputed to have  substantial  business or other  affiliations
with an organized crime figure, or (B) that directly or indirectly controls,  is
controlled  by, or is under common control with a Person that has been convicted
in a criminal  proceeding for a felony or any crime involving moral turpitude or
that is an organized crime figure or is reputed to have substantial  business or
other affiliations with an organized crime figure.

     Security  Documents  shall mean,  collectively  and severally,  the Company
Lease, the Lease Agreement,  the Payment  Agreement and the Indenture,  together
with any and all other  agreements or  instruments  delivered or assigned to the
Trustee as security for the payment of the principal of and redemption  premium,
if any, and interest on the Bonds.

     Series 2003A Bonds shall mean the $75,000,000 aggregate principal amount of
Industrial Development Revenue Bonds (KeySpan-Port  Jefferson Energy Center, LLC
Project),  Series  2003A  of the  Agency  issued,  executed,  authenticated  and
delivered under the Indenture.

     SEQRA shall mean, collectively, the State Environmental Quality Review Act,
being Article 8 of the New York State  Environmental  Conservation  Law, and the
implementing regulations.

     Trustee  shall mean The Bank of New York,  in its capacity as Trustee,  and
its  successors  in such  capacity  and its  hereafter  appointed  in the manner
provided in the Indenture.

     Section 1.2.  Construction In this Agreement,  unless the context otherwise
requires:

     (a) The terms "hereby", "hereof",  "hereto", "herein",  "hereunder" and any
similar terms, as used in this Agreement,  refer to this Agreement, and the term
"hereafter" shall mean after, and the term "heretofore"  shall mean before,  the
date of the execution and delivery of this Agreement.

     (b) Words of the masculine gender shall mean and include  correlative words
of the feminine and neuter genders and words importing the singular number shall
mean and include the plural number and vice versa.

     (c) Words importing persons shall include firms, associations, partnerships
(including  limited  partnerships),   trusts,  corporations,  limited  liability
companies and other legal entities,  including public bodies, as well as natural
persons.

     (d) Any headings  preceding the texts of the several  Articles and Sections
of this Agreement, and any table of contents appended to copies hereof, shall be
solely for  convenience  of  reference  and shall not  constitute a part of this
Agreement, nor shall they affect its meaning, construction or effect.

     Section 1.3. Representations and Warranties by Agency. The Agency makes the
following representations and warranties:

     (a) The  Agency is a  corporate  governmental  agency  constituting  a body
corporate  and politic  and a public  benefit  corporation  duly  organized  and
existing  under the laws of the State,  and is authorized and empowered to enter
into the  transactions  contemplated  by this  Agreement  and to  carry  out its
obligations  hereunder.  By proper  action of its  members,  the Agency has duly
authorized the execution and delivery of this Agreement.

     (b) In order to  finance a portion of the cost of the  Project,  the Agency
proposes to issue the Series 2003A Bonds in the  aggregate  principal  amount of


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<PAGE>


$75,000,000.  The Series 2003A Bonds will mature,  bear interest,  be redeemable
and have the other terms and provisions set forth in the Indenture.

     Section 1.4. Findings by Agency. The Agency, based upon the representations
and  warranties of the Lessee  contained in this  Agreement and the  information
contained in the Application, hereby finds and determines that:

     (a) the financing of a portion of the costs of the Project by the Agency is
reasonably necessary to induce the Lessee to proceed with the Project;

     (b) the Project shall not result in the removal of any facility or plant of
the Lessee or any other  occupant  or user of the  Project  from  outside of the
County (but within the State) to within the County or in the  abandonment of one
or more facilities or plants of the Company or any other occupant or user of the
Project located within the State but outside of the County;

     (c) no funds of the Agency shall be used in connection with the Project for
the purpose of preventing the establishment of an industrial manufacturing plant
or for the purpose of advertising or promotional  materials which depict elected
or appointed government officials in either print or electronic media, nor shall
any funds of the Agency be given in connection  with the Project to any group or
organization  which is attempting to prevent the  establishment of an industrial
or manufacturing plant within the State of New York; and

     (d) not more than  one-third of the total cost of the Project is in respect
of  facilities  or property  primarily  used in making  retail sales of goods or
services to customers who personally visit such facilities within the meaning of
the Act.

     Section 1.5. Representations and Warranties by Lessee. The Lessee makes the
following representations and warranties:

     (a) The  Lessee is a limited  liability  company  duly  organized,  validly
existing and in good standing under the laws of the State of Delaware, is not in
violation  of any  provision  of  its  articles  of  organization  or  operating
agreement,  has the power and authority to own its property and assets, to carry
on its business as now being conducted by it and to execute, deliver and perform
this Agreement. The Lessee is duly qualified to do business in New York.

     (b) The execution, delivery and performance of this Agreement and the other
Security  Documents to which the Lessee is a party and the  consummation  of the
transactions  herein  contemplated  have been duly  authorized  by all requisite
action on the part of the Lessee and will not violate any  provision of law, any
order of any court or agency of government,  or the articles of  organization or
operating  agreement  of  the  Lessee,  or any  indenture,  agreement  or  other
instrument  to which the Lessee is a party or by which it or any of its property
is  subject  to or  bound,  or be in  conflict  with or result in a breach of or
constitute  (with due  notice  and/or  lapse of time) a  default  under any such
indenture,  agreement or other  instrument  or result in the  imposition  of any
lien,  charge or  encumbrance  of any nature  whatsoever  other  than  Permitted
Encumbrances.

     (c) The financial assistance of the Agency in the financing of a portion of
the costs of the Project is reasonably necessary to induce the Lessee to proceed
with the Project.

     (d) Any costs  incurred  with respect to that part of the Project paid from
the  proceeds  of the sale of the Series  2003A  Bonds shall be capable of being
treated on the books of the Lessee as capital  expenditures  in conformity  with
generally accepted accounting principles applied on a consistent basis.


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<PAGE>


     (e) The  property  included in the  Facility  is property of the  character
subject to the allowance for depreciation under Section 167 of the Code.

     (f) No part of the  proceeds  of the  Series  2003A  Bonds  will be used to
finance inventory or will be used for working capital.

     (g)  Expenses for  supervision  by the officers or employees of the Lessee,
and expenses for work done by such officers or employees in connection  with the
Project  will be included as a Project Cost only to the extent that such Persons
were  specifically  employed for such  particular  purpose,  the expenses do not
exceed the actual cost  thereof and are to be treated on the books of the Lessee
as a capital  expenditure  in  conformity  with  generally  accepted  accounting
principles applied on a consistent basis.

     (h) This Agreement and the other Security  Documents to which the Lessee is
a party  constitute  the  legal,  valid and  binding  obligations  of the Lessee
enforceable against the Lessee in accordance with their respective terms, except
to  the  extent   enforcement   may  be  limited  by   bankruptcy,   moratorium,
reorganization and other similar laws affecting  creditors' rights generally and
by application of equitable principles.

     (i) The Facility has been designed,  and the operation of the Facility will
be,  in  compliance  with  all  applicable  Federal,  State  and  local  laws or
ordinances  (including  rules and  regulations)  relating  to zoning,  building,
safety and environmental quality.

     (j) There is no action or  proceeding  pending or to the best  knowledge of
the  Lessee  threatened  by or  against  the  Lessee by or  before  any court or
administrative  agency that might adversely  affect the ability of the Lessee to
perform its obligations under this Agreement and each other Security Document to
which the Lessee shall be a party, except as previously disclosed to the Agency,
and all  authorizations,  consents  and  approvals  of  governmental  bodies  or
agencies  required  to be  obtained  by the  Lessee  as of the  date  hereof  in
connection  with the  execution  and delivery of this  Agreement  and each other
Security Document to which the Lessee shall be a party or in connection with the
performance  of the  obligations  of the Lessee  hereunder and under each of the
Security Documents have been obtained.

     (k) The Lessee  shall  operate  the  Facility  or cause the  Facility to be
operated in accordance with this Agreement and as an Approved Facility.

     (l) No part of the  proceeds  of the  Series  2003A  Bonds  will be used to
finance a project where facilities or property that are primarily used in making
retail sales to customers who personally  visit such facilities  constitute more
than one third of the total project cost.  For purposes of this  representation,
retail  sales  shall  mean:  (i)  sales by a  registered  vendor  under  article
twenty-eight of the New York State Tax Law primarily  engaged in the retail sale
of tangible personal property,  as defined in subparagraph (i) of paragraph four
of  subdivision  (b) of section eleven hundred one of the Tax Law; or (ii) sales
of a service to such customers.

     (m)  Pursuant  to the  Company  Lease,  the  Agency  has a valid  leasehold
interest in the Facility.

     (n) The total cost of the Project  being funded with the Series 2003A Bonds
is at least  $75,000,000,  which  represents  only a portion  of the total  cost
incurred by the Lessee in connection with the Project.

     (o) The Project will not have a "significant  effect on the environment" as
defined in SEQRA..


                                       7
<PAGE>


     (p) There have been no material  changes in the Project since the submittal
of the  Application  by the Lessee and the  Agency's  adoption  of the  negative
declaration  of the Long  Island  Power  Authority,  dated  November  13,  2001,
pursuant to SEQRA.

     (q) The Application is true, correct and complete.

     (r) Neither the Lessee nor any Affiliate thereof is a Prohibited Person.

                                   ARTICLE II.
                                   The Project

     Section 2.1. The Project.  (a) The Lessee shall cause to be conveyed to the
Agency at the time of the  delivery  and  payment  of the Series  2003A  Bonds a
leasehold interest in the Facility free and clear of all liens, claims, charges,
encumbrances,   security   interests  and   servitudes   other  than   Permitted
Encumbrances,  all against  payment  therefor by the Agency from the proceeds of
the Series 2003A Bonds deposited in the Project Fund to the extent  permitted in
Section 2.2 hereof and Section 6.02 of the Indenture.

     (b) The Lessee  shall pay (i) all of the costs and  expenses in  connection
with the  preparation  of any  instruments  of  conveyance  and  transfer of the
Facility to the Agency,  the delivery of any instruments and documents and their
filing  and  recording,  if  required,  (ii) all taxes and  charges  payable  in
connection with such  conveyance and transfer,  or attributable to periods prior
to the  conveyance  and transfer,  to the Agency as set forth in Section  2.1(a)
hereof, and (iii) all shipping and delivery charges and other expenses or claims
incurred in connection with the Project.

     (d) The Lessee covenants that it has obtained all necessary  approvals from
any and all governmental  agencies with respect to the Project and the operation
of the Facility, all of which were done in compliance, in all material respects,
with all Legal Requirements.

     Section 2.2.  Completion by Lessee.  The Lessee  represents and warrants to
the Agency that, as of the  Commencement  Date,  the Project is complete and the
Facility is and has been fully operational since July 1, 2002.

     Section 2.3.  Issuance of Series 2003A  Bonds.  Contemporaneously  with the
execution and delivery of this  Agreement,  the Agency will sell and deliver the
Series 2003A Bonds in the aggregate  principal  amount of $75,000,000  under and
pursuant to the Bond  Resolution,  authorizing  the issuance of the Series 2003A
Bonds,  and under and  pursuant to the  Indenture.  The  proceeds of sale of the
Series 2003A Bonds equal to (i) the interest  accruing on the Series 2003A Bonds
to the date of delivery  thereof,  if any,  shall be  deposited  in the Interest
Account  of the Bond  Fund,  and  (ii)  the  balance  of the  proceeds  shall be
deposited  in the Project  Fund and  applied to the payment of Project  Costs in
accordance  with the  provisions  of the  Indenture.  Pending such  application,
amounts in the Project Fund may be invested as provided in the Indenture.

                                  ARTICLE III.
                     Lease Of Facility And Rental Provisions

     Section 3.1. Duration of Term. The term of this Agreement shall commence on
the date of execution  and delivery of this  Agreement  and shall expire June 1,
2027 or such  earlier  or later  date as this  Agreement  may be  terminated  as
hereinafter  provided.  The Agency hereby  delivers to the Lessee and the Lessee
hereby accepts sole and exclusive possession of the Facility.

     Section 3.2. Lease of the Facility.  The Agency hereby leases to the Lessee
and the Lessee hereby  leases from the Agency the  Facility,  all for and during
the term herein provided and upon and subject to the terms and conditions herein


                                       8
<PAGE>


set forth.  The Lessee shall during the term of this Agreement  occupy,  use and
operate the Facility,  or cause the Facility to be occupied,  used and operated,
in  accordance  with  the  provisions  of the Act and for the  general  purposes
specified in the recitals to this Agreement. The Lessee shall not occupy, use or
operate the  Facility or allow the  Facility or any part thereof to be occupied,
used or operated for any unlawful  purpose or in violation of any certificate of
occupancy  affecting the Facility or which may constitute a nuisance,  public or
private,  or make void or  voidable  any  insurance  then in force with  respect
thereto.

     Section 3.3. Rental Provisions; Pledge of Agreement and Rents.
                  -------------------------------------------------

     (a) The Lessee  covenants to make rental  payments  which the Agency agrees
shall be paid by the Lessee directly to the Trustee on each Lease Rental Payment
Date for  deposit  in the Bond  Fund in an  amount  equal to the sum of (i) with
respect  to  interest  due and  payable  on the  Bonds,  an amount  equal to the
interest  next  becoming  due  and  payable  on the  Bonds  on  the  immediately
succeeding  Interest  Payment Date, (ii) the principal  amount of the Bonds then
Outstanding which will become due on the immediately succeeding Interest Payment
Date (whether at maturity or by redemption  or  acceleration  as provided in the
Indenture),  and (iii) the principal of and Redemption  Premium,  if any, on the
Bonds  to be  redeemed  which  will  become  due on the  immediately  succeeding
redemption  date together with accrued  interest to the date of redemption.  The
Lessee  further  agrees  to pay  such  additional  amounts  as set  forth in the
Indenture  with  respect to interest on the Series 2003A Bonds in the event of a
Determination of Taxability or an Event of Default.

     (b)  Notwithstanding  anything in the  foregoing  to the  contrary,  if the
amount on deposit and  available in the Bond Fund is not  sufficient  to pay the
principal of, and redemption premium, if any, and interest on the Bonds when due
(whether at maturity or by redemption or  acceleration  or otherwise as provided
in the Indenture),  the Lessee shall forthwith pay the amount of such deficiency
in immediately  available  funds to the Trustee for deposit in the Bond Fund and
such payment shall constitute rental payments under this Section 3.3.

     (c) The Lessee further  covenants to make rental  payments which the Agency
agrees shall be paid by the Lessee in  immediately  available  funds directly to
the Tender  Agent for  deposit  into the Bond Fund on or prior to each  Purchase
Date for the Bonds in an amount equal to Purchase  Price for such Bonds tendered
or deemed tendered for purchase solely to the extent amounts available under any
applicable  Credit  Facility or amounts on deposit in the Purchase Fund shall be
insufficient to pay the Purchase Price thereof on a Purchase Date therefor.

     (d) In the event the Lessee  should fail to make or cause to be made any of
the payments required under the foregoing  provisions of this Section,  the item
or  installment  not so paid shall continue as an obligation of the Lessee until
the amount not so paid shall have been fully paid.

     (e) The Lessee shall have the option to prepay its rental  obligation  with
respect  to the  Bonds,  in  whole  or in part at the  times  and in the  manner
provided in Article VIII hereof as and to the extent  provided in the  Indenture
for redemption of the Bonds.

     (f) No further  rental  payments need be made to the Agency during the term
of this  Agreement  when and so long as the  amount  of cash  and/or  Government
Obligations  on deposit in the Bond Fund is  sufficient to satisfy and discharge
the  obligations of the Agency under the Indenture and pay the Bonds as provided
in Section 10.01 of the Indenture.

     (g)  Pursuant  to the  Indenture  the Agency  will pledge and assign to the
Trustee as security for the Bonds all of the Agency's right,  title and interest
in this  Agreement  (except for the Agency's  Reserved  Rights),  including  all
rental  payments  hereunder,  and in  furtherance of said pledge the Agency will
unconditionally  assign such  rental  payments to the Trustee for deposit in the
Bond Fund in accordance  with the Indenture.  The Lessee hereby  consents to the


                                       9
<PAGE>


above-described  lien and security  interest,  and pledge and assignment of this
Agreement.

     (h) The Lessee covenants and agrees that it will comply with the provisions
of the Indenture  with respect to the Lessee and that the Trustee shall have the
power, authority,  rights and protections provided in the Indenture.  The Lessee
further  covenants to use its best efforts to cause there to be obtained for the
Agency any documents or opinions required of the Agency under the Indenture.

     (i) The Lessee  covenants  and agrees to provide to the Trustee for deposit
into  the  Rebate  Fund  sufficient  moneys  as  necessary  to meet  the  Rebate
Requirement described in the Tax Certificate.

     (j) The Lessee  covenants and agrees to make any and all payments  required
pursuant to Sections 6.2 and 6.3 hereof.

     Section 3.4.  Obligation  of Lessee  Unconditional.  The  obligation of the
Lessee to pay the rent and all other payments provided for in this Agreement and
to maintain the Facility in accordance  with Section 4.1 of this Agreement shall
be  absolute  and  unconditional,  irrespective  of any defense or any rights of
set-off,  recoupment  or  counterclaim  or  deduction  and without any rights of
suspension,  deferment,  diminution or reduction it might otherwise have against
the  Agency,  the  Trustee or the Holder of any Bond and the  obligation  of the
Lessee shall arise whether or not the Project has been  completed as provided in
this  Agreement.  The Lessee will not suspend or discontinue any such payment or
terminate  this  Agreement  (other  than such  termination  as is  provided  for
hereunder)  for any cause  whatsoever,  and the Lessee  waives all rights now or
hereafter  conferred  by  statute or  otherwise  to quit,  terminate,  cancel or
surrender this  Agreement or any obligation of the Lessee under this  Agreement,
or the Facility or any part thereof except as provided in this Agreement,  or to
any abatement, suspension,  deferment, diminution or reduction in the rentals or
other payments hereunder.

      Section 3.5.         Payment of Purchase Price of Tendered Bonds.
                           -------------------------------------------

     (a) Any payment by the Lessee to the Tender  Agent of amounts  necessary to
pay the  Purchase  Price of the  Bonds  pursuant  to the  Indenture  shall be in
immediately  available  funds  and paid to the  Tender  Agent  at its  principal
corporate trust office on the date set forth in the Indenture.

     (b) The Lessee hereby  approves and agrees to be bound by the provisions of
the  Indenture  regarding the  purchase,  offer,  sale and delivery of the Bonds
required to be tendered  for purchase  thereunder.  The Lessee shall have all of
the rights and obligations  provided in the Indenture with respect to the Lessee
in connection with such transactions and the appointment of the Tender Agent and
the  Remarketing  Agent  thereunder.  The  Agency  shall have no  obligation  or
responsibility  with  respect  to the  purchase  of  the  Bonds  or any  related
arrangements,  except  that  the  Agency  at the  expense  of the  Lessee  shall
cooperate in the making of any such arrangements.

     Section 3.6.         Credit Facility.
                          ----------------

     (a) On the first date that the Bonds bears  interest at a rate other than a
Term Rate or a Fixed Rate,  the Lessee will cause to be delivered to the Trustee
the Credit  Facility and other necessary  documents or opinions  related thereto
referred  to in the  Indenture.  The Lessee  hereby  authorizes  and directs the
Trustee  to draw  moneys  under the Credit  Facility  that may at the time be in
effect with respect to the Bonds in accordance with its terms and the provisions
of the  Indenture to the extent  necessary to (i) make payments of the principal
of,  redemption  premium (if any,  and only to the extent  provided  for in such
Credit  Facility) and interest on the Bonds as and when the same become due, and
(ii) pay the Purchase Price required to be paid pursuant to the Indenture as and
when the same become due.


                                       10
<PAGE>


     (b) The  Lessee  shall  have the  option to  terminate,  modify,  extend or
otherwise  reduce the  coverage of the Credit  Facility or to replace the Credit
Facility with an Alternate  Credit  Facility as provided in the  Indenture..  So
long as a Series  of Bonds  bears  interest  at Term Rate or a Fixed  Rate,  the
Lessee  shall not be  required  to provide or  maintain a Credit  Facility  with
respect to the Bonds.

     (c) If at any time (i) there  shall have been  delivered  to the Trustee an
Alternate Credit Facility with respect to the Bonds, together with the documents
and opinions  required by the  Indenture,  or (ii) the Lessee shall give written
instructions  to the Trustee to terminate  the then existing  Applicable  Credit
Facility,  then the  Trustee  shall  promptly  surrender  the same to the issuer
thereof for  cancellation,  in accordance with the terms of such Credit Facility
and the Indenture.

     (d)  Notwithstanding  any other  provision  of this  Section 3.6 the Lessee
shall not pledge,  or  otherwise  grant a lien on or security  interest  in, any
cash, security or other assets (other than the Bonds) as security for the issuer
of the Credit Facility  unless the Lessee  furnishes to the Agency and Trustee a
Favorable  Opinion of Bond  Counsel as to such  pledge,  lien or other  security
interest.

     (e) So long as a Credit  Facility shall remain in effect,  the principal of
and interest on the Bonds shall be paid in the first  instance  from proceeds of
draws  under the Credit  Facility  and second  from any  amounts  payable by the
Lessee,  and any available  moneys  representing  the payments by the Lessee and
other amounts referred to in Section 3.3 shall at the direction of the Lessee be
used to reimburse the Credit Facility Provider for such draws as provided in the
Indenture  and  payments of the  Purchase  Price of the Bonds shall be paid from
remarketing  proceeds  and, if  necessary,  from the proceeds of draws under the
Credit Facility and any available moneys representing payments by the Lessee and
other amounts referred to in Section 3.3(c) shall at the direction of the Lessee
be used to reimburse the Credit Facility  Provider for such draws as provided in
the Indenture.


                                  ARTICLE IV.
           Maintenance, Taxes, Payments In Lieu Of Taxes And Insurance

Section 4.1.         Maintenance, Alterations and Improvements.
                     ------------------------------------------

     (a) During the term of this Agreement, the Lessee will keep the Facility in
good and safe operating  order and  condition,  ordinary wear and tear excepted,
will  occupy,  use and  operate  the  Facility  in the  manner  for which it was
designed and  intended and  contemplated  by this  Agreement,  and will make all
replacements,  renewals and repairs thereto (whether  ordinary or extraordinary,
structural or  nonstructural,  foreseen or unforeseen)  reasonably  necessary to
ensure that the security  for the Bonds shall not be  materially  impaired.  All
replacements,  renewals  and repairs  shall be  substantially  equal in quality,
class and value to the original  work and be made and  installed  in  compliance
with the requirements of all governmental  bodies.  The Agency shall be under no
obligation  to  replace,  service,  test,  adjust,  erect,  maintain  or  effect
replacements,  renewals or repairs of the Facility, to effect the replacement of
any inadequate,  obsolete,  worn-out or unsuitable parts of the Facility,  or to
furnish any  utilities or services for the Facility and the Lessee hereby agrees
to assume full responsibility therefor.

     (b) The Lessee shall have the  privilege of making such  alterations  of or
additions  to the  Facility or any part  thereof  from time to time as it in its
discretion  may determine to be desirable  for its uses and  purposes,  provided
that (i) the fair market  value of the  Facility is not reduced  below its value
immediately  before such alteration or addition and the  usefulness,  structural
integrity or operating efficiency of the Facility is not substantially impaired,
(ii) such  additions or alterations  are effected with due diligence,  in a good
and workmanlike  manner and in compliance,  in all material  respects,  with all
applicable  Legal  Requirements,  (iii) such  additions  or  alterations  to the
Facility are promptly  and fully paid for by the Lessee in  accordance  with the
terms of the  applicable  contract(s)  therefor,  and in order that the Facility
shall at all times be free of any mortgage, lien, charge, encumbrance,  security


                                       11
<PAGE>


interest or claim other than Permitted Encumbrances,  and (iv) such additions or
alterations  do not  substantially  change the nature of the Facility so that it
would not constitute a qualified  "project" as defined in and as contemplated by
the Act. All such  alterations of and additions to the Facility shall constitute
a part of the Facility,  subject to this Agreement,  and the Indenture,  and the
Lessee  shall  deliver  or  cause  to be  delivered  to the  Agency  appropriate
documents as may be reasonably  necessary to convey a leasehold interest in such
property to the Agency and to subject such  property to this  Agreement  and the
lien and  security  interest  of the  Indenture,  free and  clear of all  liens,
charges,  encumbrances,  security  interests  or  claims  other  than  Permitted
Encumbrances.

     (c) The Lessee shall have the right to install or permit to be installed at
the Facility, machinery,  equipment and other personal property not constituting
part of the Facility (the  "Lessee's  Property")  without  conveying a leasehold
interest in such  property to the Agency nor  subjecting  such  property to this
Agreement.  The Agency shall not be responsible for any loss of or damage to the
Lessee's  Property.  The  Lessee  shall have the right to create or permit to be
created any mortgage,  encumbrance,  lien or charge on, or  conditional  sale or
other title retention agreement with respect to, the Lessee's Property.

     (d) The Lessee  shall not create,  permit or suffer to exist any  mortgage,
encumbrance,  lien,  security interest,  claim or charge against the Facility or
any  part  thereof,  or the  interest  of the  Lessee  in the  Facility  or this
Agreement except for Permitted Encumbrances.

Section 4.2.         Removal of Property of the Facility.
                     -----------------------------------

          (a) The Lessee shall have the privilege  from time to time of removing
     from the  Facility  any  fixture  constituting  part of the  Facility  (the
     "Existing Facility  Property") and thereby acquiring such Existing Facility
     Property, provided that:

          (i) such  Existing  Facility  Property is  substituted  or replaced by
     property  (A)  having  equal  or  greater  fair  market  value,   operating
     efficiency  and/or  utility  and (B) being  free of all  mortgages,  liens,
     charges,  encumbrances,  claims and security interests other than Permitted
     Encumbrances; or

          (ii) if such Existing  Facility  Property is not to be  substituted or
     replaced by other property but is instead to be sold,  scrapped,  traded-in
     or  otherwise  disposed of in an  arms'-length  bona fide  transaction  for
     consideration  in excess of  $100,000,  the Lessee shall pay to the Trustee
     for deposit in the Redemption  Account of the Bond Fund the amounts derived
     from such sale or  scrapping,  the trade-in  value  credit  received or the
     proceeds  received from such other  disposition if the Bonds are subject to
     optional redemption;

provided,  however,  no such removal as set forth in paragraph (i) or (ii) above
shall be effected if (w) such removal would change the nature of the Facility so
it would not constitute an Approved Facility,  (x) such removal would impair the
usefulness,  structural integrity or operating  efficiency of the Facility,  (y)
such removal would reduce the fair market value of the Facility  below its value
immediately  before  such  removal  (except  by  the  amount  deposited  in  the
Redemption Account of the Bond Fund pursuant to paragraph (ii) above), or (z) if
there shall exist and be continuing an Event of Default  hereunder.  Any amounts
received  pursuant to  paragraph  (ii) above which are not in excess of $100,000
shall be retained by the Lessee.

     (b) The Lessee shall deliver or cause to be delivered to the Agency and the
Trustee  appropriate  documents  conveying to the Agency a leasehold interest in
any property  installed or placed upon the Facility  pursuant to Section  4.2(a)
(i) hereof and  subjecting  such  substitute  or  replacement  property  to this
Agreement,  and upon written request of the Lessee,  the Agency shall deliver to
the  Lessee,  within  sixty (60) days  after  receipt  of such  written  report,


                                       12
<PAGE>


appropriate  documents  to  terminate  the  Agency's  leasehold  interest in any
property removed from the Facility pursuant to Section 4.2(a) hereof. The Lessee
agrees to pay all costs and  expenses  (including  reasonable  counsel  fees and
disbursements)  incurred  in  subjecting  to  this  Agreement  of  any  property
installed or placed at Facility as part of the Facility pursuant to this Section
4.2.

     (c) The  removal  from  the  Facility  of any  Existing  Facility  Property
pursuant to the provisions of Section 4.2(a) hereof shall not entitle the Lessee
to any  abatement or reduction in the rentals and other  amounts  payable by the
Lessee under this Agreement.

Section 4.3.         No Exemption From Real Estate Taxes.
                     -----------------------------------

     (a) It is  recognized  that under the  provisions of the Act, the Agency is
required to pay no real estate taxes upon any of the property  acquired by it or
under  its  jurisdiction  or  control  or  supervision  or upon its  activities.
Notwithstanding  the  foregoing,  neither  the Lessee nor any of its  Affiliates
shall  claim  exemption  from such real estate  taxes by virtue of the  Agency's
leasehold interest in the Facility.

     (b) In the event the Facility is exempt from real estates  taxes solely due
to the Agency's  leasehold  interest in the  Facility,  the Lessee shall pay all
real estate taxes to the appropriate  taxing authorities that would otherwise be
imposed on the Facility if the Agency had no leasehold interest in the Facility.

     (c) Nothing in this Section 4.3 shall be construed  (i) to limit,  amend or
modify any  exemption  that the Lessee , the  Facility or LIPA may  otherwise be
entitled to for any reason  other than the  Agency's  leasehold  interest in the
Facility,  or (ii) to limit or impair  the  Lessee's  or LIPA's  rights,  to the
extent  permitted by law, to obtain  reductions in the valuation of the Facility
or the right to obtain exemptions (and discounts,  if any) therefrom and to seek
to obtain a refund of any such payments made.

     (d) The  Lessee  may  contest  in good  faith the  validity,  existence  or
imposition  of real estate taxes on the  Facility if (i) such contest  shall not
result in the Facility or any part of any thereof or interest  therein  being in
any danger of being sold,  forfeited or lost, (ii) such contest shall not result
in the Lessee,  the Agency,  or the Trustee  being in any danger of any civil or
any criminal  liability  other than normal  accrual of interest,  for failure to
comply  therewith,  and (iii) the Lessee shall have furnished such security,  if
any, as may be reasonably  requested by the Agency or the Trustee to protect the
security intended to be offered by the Security Documents.

Section 4.4.         Taxes, Assessments and Charges.
                     -------------------------------

     (a) The  Lessee  shall  pay when the same  shall  become  due all taxes and
assessments,  general and specific,  if any, levied and assessed upon or against
the Facility, this Agreement, any estate or interest of the Agency or the Lessee
in the Facility, or the rentals hereunder during the term of this Agreement, and
all water and sewer charges,  special  district  charges,  assessments and other
governmental  charges  and  impositions  whatsoever,   foreseen  or  unforeseen,
ordinary or  extraordinary,  under any  present or future  law,  and charges for
public or private  utilities or other charges  incurred in the  occupancy,  use,
operation, maintenance or upkeep of the Facility, all of which are herein called
"Impositions".  The Agency shall promptly forward to the Lessee any notice, bill
or other statement received by the Agency concerning any Imposition.  The Lessee
may pay any  Imposition  in  installments  if so payable by law,  whether or not
interest accrues on the unpaid balance.

     (b) In the event the Facility is exempt from Impositions  solely due to the
Agency's  leasehold  interest  in  the  Facility,   the  Lessee  shall  pay  all
Impositions to the appropriate taxing authorities  equivalent to the Impositions
which would have been  imposed on the  Facility  if the Agency had no  leasehold
interest in the Facility.


                                       13
<PAGE>


Section 4.5.         Insurance.
                     ---------

     (a) At all times throughout the term of this Agreement,  including  without
limitation  during any period of construction or reconstruction of the Facility,
the Lessee  shall  maintain  general  liability,  property  damage  and  worker'
compensation   insurance,   against  such  risks,  loss,  damage  and  liability
(including  liability to third parties) and for such amounts as are  customarily
insured against by other entities of like size and type as that of the Lessee.

     (b) Concurrently  with the original issuance of the Series 2003A Bonds, the
Lessee shall  deliver or cause to be delivered to the Agency and the Trustee the
following documents evidencing compliance with this Section 4.5: (i) on or prior
to the execution and delivery of this Agreement,  (A) a broker's  certificate of
coverage,  and (B)  certificate  of  liability  insurance,  evidence of property
insurance, and certificates or other evidence of other required insurance,  and,
(ii) as soon as practicable  thereafter,  duplicate copies of insurance policies
and/or binders.  At least seven (7) Business Days prior to the expiration of any
such policy,  the Lessee shall  furnish the Agency and the Trustee with evidence
that such policy has been  renewed or replaced or is no longer  required by this
Agreement.

     (c) The Lessee shall, at its own cost and expense,  make all proofs of loss
and take all other steps necessary or reasonably  requested by the Agency or the
Trustee to collect from insurers for any loss covered by any insurance  required
to be obtained by this  Section  4.5. The Lessee shall not do any act, or suffer
or permit any act to be done, whereby any insurance required by this Section 4.5
would or might be suspended or impaired.

     (d) THE AGENCY DOES NOT IN ANY WAY REPRESENT THAT THE INSURANCE REFERRED TO
HEREIN,  WHETHER IN SCOPE OR COVERAGE,  IS ADEQUATE OR SUFFICIENT TO PROTECT THE
BUSINESS OR INTEREST OF THE LESSEE OR ANY AFFILIATE THEREOF.

     Section  4.6.  Advances by Agency or the  Trustee.  In the event the Lessee
fails to make any  payment or perform or observe any  obligation  required of it
under this Agreement,  the Agency or the Trustee, after first affording ten (10)
days notice notifying the Lessee of any such failure on its part, upon notice by
the Agency or the Trustee  (except if any emergency  condition  shall exist) may
(but shall not be obligated  to), and without waiver of any of the rights of the
Agency or the Trustee under this Agreement,  the Indenture or any other Security
Documents,  make such  payment or  otherwise  cure any  failure by the Lessee to
perform  and observe its other  obligations  hereunder.  All amounts so advanced
therefor by the Agency or the Trustee shall become an  additional  obligation of
the Lessee to the Agency or the Trustee,  which amounts,  together with interest
thereon at the rate of the  Trustee's  "prime  rate" plus four  percent (4%) per
annum from the date  advanced,  the Lessee will pay upon demand  therefor by the
Agency or the  Trustee . Any remedy  herein  vested in the Agency or the Trustee
for the collection of the rental  payments or other amounts due hereunder  shall
also be  available to the Agency or the Trustee for the  collection  of all such
amounts so advanced.

Section 4.7.         Compliance with Law.
                     --------------------

     (a) The  Lessee  shall not use or  occupy,  and will not  permit any use or
occupancy of, the Facility,  or any part thereof, in violation of any applicable
Legal  Requirements.  The  Lessee  shall,  throughout  the  term of  this  Lease
Agreement and at its sole cost and expense, promptly observe and comply with all
material Legal  Requirements,  and shall observe and comply with all conditions,
requirements,  and  schedules  necessary  to  preserve  and extend  all  rights,
licenses,  permits  (including  without  limitation  zoning  variances,  special
exception and non-conforming uses), privileges,  franchises and concessions. The
Lessee  shall  not,  without  the prior  written  consent  of the Agency and the
Trustee,  initiate,  join in or consent  to any  private  restrictive  covenant,
private zoning ordinance,  or other private  restrictions,  limiting or defining
the uses which may be made of the Facility or any part thereof.


                                       14
<PAGE>


     (b) The  Lessee  may  contest  in good  faith the  validity,  existence  or
applicability  of any of the  foregoing if (i) such contest  shall not result in
the Facility or any part of any thereof or interest  therein being in any danger
of being sold,  forfeited  or lost,  (ii) such  contest  shall not result in the
Lessee,  the  Agency  or the  Trustee  being in any  danger  of any civil or any
criminal liability other than normal accrual of interest,  for failure to comply
therewith,  and (iii) the Lessee shall have furnished such security,  if any, as
may be reasonably requested by the Agency or the Trustee to protect the security
intended to be offered by the Security Documents.

                                   ARTICLE V.
                      Damage, Destruction And Condemnation

Section 5.1.         Damage, Destruction and Condemnation.
                     -------------------------------------

     (a) In the event  that at any time  during the term of this  Agreement  the
whole or  substantially  all of the Facility  shall be damaged or destroyed,  or
taken or condemned by a competent authority for any public use or purpose, or by
agreement  between the Agency and those authorized to exercise such right, or if
the temporary use of the Facility shall be so taken by condemnation or agreement
(a "Loss Event"):

     (i) the Agency  shall have no  obligation  to rebuild,  replace,  repair or
restore the Facility,

     (ii) there shall be no abatement,  postponement or reduction in the rent or
other amounts payable by the Lessee under this Agreement, and

     (iii) the Lessee will  promptly  give written  notice of such Loss Event to
the Agency and the Trustee, generally describing the nature and extent thereof.

     (b) Upon the occurrence of a Loss Event, the Lessee shall either:

     (i) at its own cost and expense,  promptly and diligently rebuild, replace,
repair or restore the Facility to substantially its condition  immediately prior
to the Loss Event,  or to a condition of at least  equivalent  value,  operating
efficiency  and  function,   and  the  Lessee  shall  not  be  entitled  to  any
reimbursement from the Agency, the Trustee or any Bondholder, nor shall the rent
or other amounts payable by the Lessee under this Agreement be abated, postponed
or reduced, or

     (ii) if, to the extent  and upon the  conditions  permitted  to do so under
Section 8.1 hereof and under the Indenture, exercise its option to terminate the
Agency's  leasehold interest in the Facility and make advance rental payments to
redeem the Bonds in whole.

Not later than ninety (90) days after the occurrence of a Loss Event, the Lessee
shall  advise the Agency and the Trustee in writing of the action to be taken by
the Lessee under this Section 5.1(b), a failure to so timely notify being deemed
an election in favor of subdivision (i) above to be exercised in accordance with
the provisions of clause (i) above.

     (c) All such rebuilding, replacements, repairs or restorations shall

     (i) automatically be deemed a part of the Facility and leased by the Agency
and be subject to this Agreement, the Company Lease and the Indenture,

     (ii) not change the nature of the Facility as an Approved Facility, and


                                       15
<PAGE>


     (iii) be effected with due diligence in a good and workmanlike  manner,  in
compliance, in all material respects, with all applicable Legal Requirements and
be promptly and fully paid for by the Lessee in accordance with the terms of the
applicable contract(s) therefor.

     (d) Pending the disbursement or transfer  thereof,  the Net Proceeds in the
Renewal Fund shall be applied and may be invested as provided in the Indenture.

     (e) The Agency, the Trustee and the Lessee shall cooperate and consult with
each  other  in  all  matters   pertaining  to  the  settlement,   compromising,
arbitration  or  adjustment of any claim or demand on account of any Loss Event,
and the settlement, compromising, arbitration or adjustment of any such claim or
demand shall be subject to the written approval of the Lessee (such approval not
to be unreasonably withheld).

     (f)  If  all  or  substantially  all of the  Facility  shall  be  taken  or
condemned,  or if the taking or condemnation renders the Facility unsuitable for
use by the Lessee as contemplated  hereby,  the Lessee shall exercise its option
to terminate the Agency's leasehold interest in the Facility pursuant to Section
8.1 hereof, and the amount of the Net Proceeds so recovered shall be transferred
from the Renewal Fund and deposited in the Redemption  Account of the Bond Fund,
and the Lessee shall  thereupon pay to the Trustee for deposit in the Redemption
Account of the Bond Fund an amount which,  when added to any amounts then in the
Bond Fund and  available  for that  purpose,  shall be  sufficient to retire and
redeem the Bonds in whole at the  earliest  possible  date  (including,  without
limitation,  principal  and  interest  to the  maturity or  redemption  date and
redemption premium, if any), and to pay the expenses of redemption, the fees and
expenses of the Agency,  the Bond Registrar,  the Trustee and the Paying Agents,
together with all other amounts due under the Indenture, the Tax Certificate and
under this Agreement, and such amount shall be applied, together with such other
available  moneys  in such Bond  Fund,  if  applicable,  to such  redemption  or
retirement of the Bonds on said redemption or maturity date.

     (g) The Lessee shall be entitled to any insurance  proceeds or condemnation
award, compensation or damages attributable to the Lessee's Property.

     (h) The Lessee hereby waives the  provisions of Section 227 of the New York
Real Property Law or any law of like import now or hereafter in effect.

                                  ARTICLE VI.
                              Particular Covenants

     Section  6.1.  Restrictions  on  Lessee.  The Bonds  will be payable by the
Agency as to  principal,  interest and  redemption  premium,  if any, out of the
revenue  derived from the leasing of the  Facility,  including  all revenues and
rental  income  derived  from or in  connection  with the  Facility  and  moneys
received  under this  Agreement,  and the  parties  hereto  understand  that the
purchasers  of the Bonds will make their  purchase  in reliance in part upon the
credit and financial  condition of the Lessee.  Except as otherwise  provided in
this Section  6.1,  the Lessee  agrees that at all times during the term of this
Agreement  it will (i)  maintain its  existence,  (ii)  continue to be a limited
liability  company  subject  to  service  of  process  in the State  and  either
organized  under the laws of the State, or organized under the laws of any other
state of the United States and duly qualified to do business in the State, (iii)
not sell, transfer, pledge or otherwise encumber all or substantially all of the
assets which constitute the Facility, (iv) not liquidate, wind-up or dissolve or
otherwise  dispose of all or  substantially  all of its  property,  business  or
assets  remaining after the execution and delivery of this Agreement and (v) not
consolidate  with or merge into another entity or permit one or more entities to
consolidate with or merge into it. The Lessee may,  however,  without  violating
the foregoing,  consolidate  with or merger into another entity or permit one or
more  other  entities  to  consolidate  with or merge into it, or sell by public
offering  or  otherwise  transfer  all or  substantially  all  of its  property,
business or assets to another such entity (and thereafter liquidate,  wind-up or
dissolve  or not,  as the Lessee may elect) if (i) the Lessee is the  surviving,


                                       16
<PAGE>


resulting or transferee entity, as the case may be, and the resulting entity has
a net  worth  at least  equal to that of the  Lessee  prior  to such  merger  or
consolidation  or  otherwise  acceptable  to  a  majority  in  interest  of  the
Bondholders  Outstanding,  or (ii)  in the  event  that  the  Lessee  is not the
surviving,  resulting or transferee  entity, as the case may be, such entity (A)
is a solvent  entity  subject  to  service  of  process  in the State and either
organized  under the laws of the State, or organized under the laws of any other
state of the United States and duly  qualified to do business in the State,  (B)
assumes in  writing  all of the  obligations  of the  Lessee  contained  in this
Agreement and all other Security Documents to which the Lessee shall be a party,
and (1) in the Opinion of Counsel,  (x) such entity shall be bound by all of the
terms  applicable  to the  Lessee  of  this  Agreement  and all  other  Security
Documents to which the predecessor  Lessee shall have been a party, and (y) such
action  does not  legally  impair  the  security  for the  Holders  of the Bonds
afforded  by the  Security  Documents,  and  (2) in the  Opinion  of  Nationally
Recognized Bond Counsel, such merger,  consolidation,  sale or transfer will not
cause the interest on the Bonds to become includable in gross income for Federal
income tax purposes,  and (C) has a net worth (as determined in accordance  with
generally accepted accounting principles after the merger,  consolidation,  sale
or  transfer  at least  equal to that of the  Lessee  immediately  prior to such
merger, consolidation, sale or transfer or otherwise acceptable to a majority in
interest  of  the  Bondholders  Outstanding.   The  Lessee  further  represents,
covenants and agrees that it is and through the term of the Lease Agreement will
(y)  continue  to be duly  qualified  to do  business  in the State and that any
company succeeding to its rights under this Agreement shall be duly qualified to
do business in the State, and (z) not constitute a Prohibited Person.

Section 6.2.         Indemnity.
                     ---------

     (a) The Lessee shall at all times indemnify,  defend (with counsel selected
by the Lessee and  reasonably  approved  by the  Agency),  protect  and hold the
Agency, and any director, member, officer,  employee,  servant, agent (excluding
for this purpose the Lessee,  which is not obligated hereby to indemnify its own
employees,  affiliated companies or affiliated  individuals) thereof and persons
under the Agency's control or supervision,  the Trustee,  the Bond Registrar and
the Paying Agents  (collectively,  the "Indemnified  Parties") harmless of, from
and against any and all claims (whether in tort,  contract or otherwise),  taxes
(of any kind and by whomsoever imposed), demands, penalties, fines, liabilities,
lawsuits,  actions,  proceedings,  settlements,  reasonable  costs and  expenses
(collectively,  "Claims") of any kind for losses,  damage,  injury and liability
(collectively, "Liability") of every kind and nature and however caused, arising
during the period  commencing  from  February  19,  2002,  the date on which the
Lessee  submitted to the Agency its  application for financial  assistance,  and
continuing  until the later of (i) the  expiration  of the period  stated in the
applicable statute of limitations during which a claim or cause of action may be
brought and (ii) payment in full or the  satisfaction  of such claim or cause of
action  and of all  expenses  and  charges  incurred  by the  Indemnified  Party
relating to the enforcement of the provisions herein specified, other than, with
respect to any Indemnified  Party,  losses arising from the gross  negligence or
willful misconduct of such Indemnified Party, arising upon or about the Facility
or resulting from, arising out of, or in any way connected with:

     (i) the financing of the costs of the Project and the marketing,  issuance,
sale and remarketing of the Bonds for such purpose,

     (ii) the planning,  design,  acquisition,  site preparation,  construction,
renovation,  equipping,  installation  or  completion of the Project or any part
thereof  or the  effecting  of any work  done in or about the  Facility,  or any
defects (whether latent or patent) in the Facility,

     (iii)  the  maintenance,  repair,  replacement,   restoration,  rebuilding,
upkeep,  use,  occupancy,  ownership,  leasing,  subletting  or operation of the
Facility or any portion thereof,

     (iv) the execution and delivery by the Indemnified Party, the Lessee or any
other Person of, or  performance  by the  Indemnified  Party,  the Lessee or any
other Person, as the case may be, of, any of their respective obligations under,


                                       17
<PAGE>


this Agreement,  the Indenture or any other Security Document, or other document
or instrument  delivered in connection  herewith or therewith or the enforcement
of any of  the  terms  or  provisions  hereof  or  thereof  or the  transactions
contemplated hereby or thereby,

     (v) any injury to any Person or the  personal  property of any Person in or
on the premises of the Facility,

     (vi) any  imposition  arising  from,  burden  imposed by,  violation of, or
failure to comply with any Legal Requirement,

     (vii) any damage or injury to the person or  property  of (A) the Lessee or
(B) any  other  Person  or  their  respective  officers,  directors,  officials,
partners, members, employees,  attorneys, agents or representatives,  or persons
under the control or supervision of the Lessee,  or (C) any other Person who may
be in or about the premises of the Facility,

     (viii)  the  presence,  disposal,  release,  or  threatened  release of any
Hazardous Materials (as hereinafter defined) that are on, from, or affecting the
Facility;  any personal  injury  (including  wrongful  death) or property damage
(real or personal)  arising out of or related to such Hazardous  Materials;  any
lawsuit brought or threatened,  settlement reached, or government order relating
to such  Hazardous  Materials,  and/or  any  violation  of  Legal  Requirements,
including demands of government authorities,  or any policies or requirements of
the Agency or the  Trustee,  which are based upon or in any way  related to such
Hazardous  Materials  including,  without  limitation,  reasonable  attorney and
consultant fees and expenses,  investigation  and laboratory  fees, court costs,
and litigation expenses, or

     (ix) any Claim commenced  against an Indemnified  Party, or other action or
proceeding taken by an Indemnified Party, in any case with respect to any of the
matters set forth in  subparagraphs  (i) through (viii) of this Section  6.2(a),

     Such  indemnification  set forth above shall be binding upon the Lessee for
any and all Claims set forth herein and shall  survive the  termination  of this
Agreement.

     (b) The Lessee  releases each  Indemnified  Party from,  and agrees that no
Indemnified  Party shall be liable for,  any Claims or  Liability  incurred as a
result of action  taken by such  Indemnified  Party  with  respect to any of the
matters set forth in  subdivision  (i) through  (ix) of Section  6.2(a)  hereof,
excluding any Claims or  Liability,  arising from or incurred as a result of the
gross  negligence or willful  misconduct of such  Indemnified  Party,  or at the
direction of the Lessee or any other obligor under any of the Security Documents
with respect to any of such matters  above  referred  to. An  Indemnified  Party
shall  promptly  notify the  Lessee in  writing  of any claim or action  brought
against such  Indemnified  Party in which  indemnity  may be sought  against the
Lessee  pursuant to this Section 6.2;  such notice shall be given in  sufficient
time to allow the Lessee to defend or participate  in such claim or action,  but
the  failure  to give such  notice in  sufficient  time shall not  constitute  a
defense hereunder nor in any way impair the obligations of the Lessee under this
Section 6.2 if (x) the Indemnified  Party shall not have had knowledge or notice
of such claim or action,  or (y) the  Lessee's  ability to defend  such claim or
action shall not thereby be materially impaired. In the event, however, that (i)
the  Indemnified  Party  shall not have timely  notified  the Lessee of any such
claim or action,  (ii) the  Lessee  shall not have  knowledge  or notice of such
claim or action, and (iii) the Lessee's ability to defend or participate in such
claim or action is materially  impaired by reason of not having  received timely
notice thereof from the Indemnified  Party,  then the Lessee's  obligation to so
defend and  indemnify  shall be qualified to the extent (and only to the extent)
of such material impairment.


                                       18
<PAGE>


(c) (i) In addition to and without limitation of any other representations,
warranties and covenants made by the Lessee under this Agreement, the Lessee
further represents, warrants and covenants that the Lessee has not used
Hazardous Materials on, from, or affecting the Facility in any manner that
violates any material, applicable Legal Requirements governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials, except as provided in Schedule A-3 hereto,
that, to the best of the Lessee's knowledge, prior existing conditions at the
Facility Realty have been accurately described in the Environmental Assessment
Report, dated November 13, 2001, a copy of which has previously provided by the
Company to the Agency.

     (ii) Without  limiting the foregoing,  the Lessee shall not cause or permit
the Facility or any part thereof to be used to  generate,  manufacture,  refine,
transport, treat, store, handle, dispose, transfer, produce or process Hazardous
Materials,  in violation of any material,  applicable  Legal  Requirements,  and
Lessee shall use best efforts to ensure compliance with all material  applicable
Legal  Requirements  regarding  any  release  of  Hazardous  Materials  onto the
Facility or onto any other property.

     (iii)  Except as provided in Schedule  A-3 hereto,  the Lessee shall comply
with and shall use best efforts to ensure compliance,  in all material respects,
by all occupants and users of the Facility  with all material  applicable  Legal
Requirements,  whenever and by whomever  triggered,  and shall obtain and comply
with,  and shall use best efforts to ensure that all  occupants and users of the
Facility obtain and comply with, any and all approvals, registrations or permits
required thereunder;  provided, however, that if any such occupant or user shall
be an Affiliate  of the Lessee,  the  obligations  of the Lessee with respect to
such Persons shall be absolute and not limited to best efforts.

     (iv) The Lessee shall  conduct and complete  all  investigations,  studies,
sampling,  and testing, and all remediation,  removal and other actions required
by the  applicable  governmental  authority  or ageny  to  clean  up and  remove
Hazardous  Materials,  on, from, or affecting  the Facility in  accordance  with
requirements established by such governmental authority or agency.

For  purposes of this  Section 6.2,  the term  "Hazardous  Materials"  includes,
without  limit,  any  flammable  explosives,  radioactive  materials,  hazardous
materials, hazardous wastes, hazardous or toxic substances, or related materials
defined in, and to the extent  prohibited  by, the  Comprehensive  Environmental
Response,  Compensation,  and  Liability  Act of 1980,  as  amended  (42  U.S.C.
Sections 9601, et seq.), the Hazardous Materials  Transportation Act, as amended
(49 U.S.C.  Sections 5101, et seq.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C.  Sections 6901, et seq.),  and in the regulations  adopted
and publications  promulgated  pursuant thereto, or any other federal,  state or
local environmental law, ordinance, rule, or regulation.

     (d) The  indemnifications  and  protections  set forth in this  Section 6.2
shall be  extended,  with  respect to each  Indemnified  Party,  to its members,
directors,  officers, employees, agents (other than the Lessee) and servants and
persons under its control or supervision.

     (e) To effectuate the purposes of this Section 6.2, the Lessee will provide
for and insure, in the public liability policies required in Section 4.5 hereof,
not only its own liability in respect of the matters therein  mentioned but also
the  liability  pursuant  to  this  Section  6.2  (excluding,   however,   those
obligations  of the Lessee  (1)  requiring  payment  of taxes,  (2) set forth in
Section  6.2(a)(i) or (iv) hereof and (3) under Section  6.2(a)(viii)  hereof to
the  extent  not  available  to the Lessee at  commercially  reasonable  rates).
Anything to the contrary in this Agreement notwithstanding, the covenants of the
Lessee contained in this Section 6.2 shall remain in full force and effect after
the  termination of this Agreement  until the later of (i) the expiration of the
period stated in the applicable  statute of limitations  during which a claim or
cause of action may be brought and (ii) payment in full or the  satisfaction  of
such claim or cause of action and of all  expenses  and charges  incurred by the
Indemnified   Party  relating  to  the  enforcement  of  the  provisions  herein
specified.


                                       19
<PAGE>


     (f) For the purposes of this Section 6.2, the Lessee shall not be deemed an
employee,  agent or servant of the Agency or a person under the Agency's control
or supervision.

     (g) The  provisions of this Section 6.2 shall be in addition to any and all
other  obligations and liabilities the Lessee may have to any Indemnified  Party
in any other  agreement or at common law, and shall survive the  termination  of
this Agreement.

     Section 6.3. Compensation and Expenses of Trustee,  Bond Registrar,  Paying
Agents and Agency.  The Lessee shall, to the extent not paid out of the proceeds
of the Bonds as financing  expenses,  pay the following annual fees, charges and
expenses  and other  amounts  (i) the initial and annual fees of the Trustee for
the ordinary services of the Trustee rendered and its ordinary expenses incurred
under the  Indenture,  including  fees and  expenses  as Bond  Registrar  and in
connection  with  preparation of new Bonds upon exchanges or transfers or making
any investments in accordance  with the Indenture,  (ii) the reasonable fees and
charges of the Trustee  and any Paying  Agents on the Bonds for acting as paying
agents as provided in the Indenture,  (iii) the  reasonable  fees and charges of
the Trustee for extraordinary services rendered by it and extraordinary expenses
incurred by it under the Indenture,  including reasonable counsel fees, and (iv)
the fees,  costs and  expenses of the Bond  Registrar,  and the fees,  costs and
expenses (including legal, accounting and other administrative  expenses) of the
Agency.  The Lessee shall further pay the reasonable fees, costs and expenses of
the Agency together with any reasonable fees and  disbursements  incurred by the
Agency's Bond Counsel and General Counsel in performing  services for the Agency
in  connection  with this  Agreement  or the  Indenture  or any  other  Security
Document.

     On the  Commencement  Date,  the Lessee  shall pay to the  Agency,  and the
Agency acknowledges receipt of, a fee in the amount of $155,000.

     In  addition,  the  Lessee  shall pay to the New York State  Department  of
Taxation and Finance the bond issuance charge required  pursuant to Section 2976
of the Public Authorities Law.

     Section 6.4. Retention of Agency's Leasehold Interest in Facility; Grant of
Easements;  Release of Certain Portions of Facility.  The Agency shall not sell,
assign,  encumber  (other  than  Permitted  Encumbrances),  convey or  otherwise
dispose of the Facility or any part thereof or interest  therein during the term
of this Agreement, except as set forth below and in Sections 4.2 and 7.2 hereof,
without  the  prior  written  consent  of the  Lessee  and the  Trustee  and any
purported disposition without such consent shall be void.

          Notwithstanding  any other  provision  of this  Agreement,  so long as
     there  exists no Event of  Default  hereunder,  and with the prior  written
     consent of the Trustee, the Lessee may from time to time request in writing
     to the  Agency the  release  of and  removal  from this  Agreement  and the
     leasehold  estate  created  hereby of any part of the Facility not required
     for the Lessee's  operation provided that such release and removal will not
     adversely  affect  the use or  operation  of the  Facility.  Upon  any such
     request by the Lessee,  the Agency shall,  at the reasonable  sole cost and
     expense of the Lessee, execute and deliver and cause and direct the Trustee
     to execute and deliver any and all instruments  necessary or appropriate to
     so release  and remove  such  portion of the  Facility  and  terminate  the
     Agency's  leasehold  interest  therein,  subject to the following:  (a) any
     liens,  easements,  encumbrances  and  reservations  to which the  Agency's
     leasehold  interest was subject at the time of recording of this Agreement;
     (b) any liens,  easements  and  encumbrances  created at the request of the
     Lessee or to the creation or suffering of which the Lessee  consented;  (c)
     any liens and  encumbrances or  reservations  resulting from the failure of
     the  Lessee  to  perform  or  observe  any of the  agreements  on its  part
     contained in this  Agreement;  (d) Permitted  Encumbrances  (other than the
     lien of this  Agreement);  and (e) any liens for taxes or  assessments  not
     then delinquent.


                                       20
<PAGE>


     No conveyance or release  effected under the provisions of this Section 6.4
shall  entitle the Lessee to any  abatement or  diminution  of the rents payable
under Section 3.3 hereof or the other payments required to be made by the Lessee
under this Agreement.

Section 6.5.         Lessee's Covenant as to Tax Exemption.
                     -------------------------------------

     (a) The  Lessee  covenants  to  comply  with each  requirement  of the Code
necessary to maintain  the  exclusion of interest on the Bonds from gross income
for  federal  income  tax  purposes  pursuant  to  Section  103 of the Code.  In
furtherance  of the covenant  contained in the  preceding  sentence,  the Lessee
agrees to  comply  with the  provisions  of the Tax  Certificate  as a source of
guidance for complying with the Code.

     (b) The Lessee  covenants  that it will not take any action or fail to take
any  action  with  respect  to the Bonds  which  would  cause  such  Bonds to be
"arbitrage bonds", within the meaning of such term as used in Section 148 of the
Code and the regulations promulgated thereunder, as amended from time to time.

     (c) The  Lessee  agrees  that it  shall  promptly  pay to the  Trustee,  as
additional sums under this Agreement,  the amount of any Rebate Requirement,  as
defined  in the Tax  Certificate  the Agency is  obligated  to pay to the United
States Department of the Treasury.

     (d) The obligation of the Lessee to make the payments  provided for in this
Section shall be absolute and unconditional,  and the failure of the Agency, the
Trustee or any other  Person to execute  or deliver or cause to be  executed  or
delivered any documents or to take any action  required  under this Agreement or
otherwise shall not relieve the Lessee of its obligation under this Section.

     (e)  Notwithstanding any other provision of the Indenture or this Agreement
to the  contrary,  so long as necessary  in order to maintain  the  exclusion of
interest on the Bonds from gross  income for federal  income tax  purposes,  the
covenants contained in this Section shall survive the discharge and satisfaction
of the Bonds (in accordance with Section 10.01 of the Indenture) and the term of
this Agreement.

     (f) The  Lessee  will  not  use any of the  funds  provided  by the  Agency
hereunder,  or any other funds,  nor will it permit any of the funds provided by
Agency hereunder,  or any other funds, to be used in a manner which would impair
the exclusion of the interest on the Bonds from gross income for federal  income
tax purposes.  In  furtherance of this covenant the Lessee agrees to comply with
the terms of the Tax  Certificate  executed by the Lessee in connection with the
issuance of the Bonds.

     (g) The Lessee  agrees that none of the  proceeds of the Bonds shall at any
time be used  directly  or  indirectly  for any  purpose  which  would cause any
component of the Project to be financed  with  proceeds of the Bonds to become a
facility that is not an Approved Facility.

     (h) Neither the Lessee nor any related party within the meaning of Treasury
Regulation  Section  1.150-1(b) shall purchase Bonds in an amount related to the
amount of the  proceeds of the Bonds  provided to the Lessee by the Agency under
this Agreement.

     (i)  The   representations,   warranties,   covenants  and   statements  of
expectation  of the  Lessee  set  forth in the Tax  Certificate  (including  the
exhibits  and  other  attachments  thereto)  are  hereby  incorporated  in  this
Agreement as though fully set forth herein.


                                       21
<PAGE>


Section 6.6.         Financial Statements; No-Default Certificates.
                     ----------------------------------------------

     (a) The Lessee agrees to furnish to the Agency, and to the Trustee,  (i) as
soon as available  and in any event within one  hundred-twenty  (120) days after
the close of each  fiscal  year of the  Lessee,  a copy of the annual  unaudited
financial  statements of the Lessee,  including  balance sheets as at the end of
such year, and the related statements of income,  balances,  earnings,  retained
earnings  and changes in financial  position  for such fiscal year,  prepared in
accordance with generally accepted accounting principles and practices, and (ii)
upon request of the Agency and as soon as thereafter  available  after the close
of each of the first three quarters of each fiscal year of the Lessee, a copy of
the unaudited consolidated financial statements of the Lessee, including balance
sheets as at the end of such  quarter,  and the  related  statements  of income,
balances, earnings, retained and changes in financial position for such quarter,
prepared  in  accordance  with  generally  accepted  accounting  principles  and
practices, certified by a member of the Lessee.

     (b) The  Lessee  shall  deliver to the  Agency,  upon  request,  and to the
Trustee with each delivery of annual unaudited financial  statements required by
Section 6.6(a)(i) hereof,  (i) a certificate of an Authorized  Representative of
the  Lessee as to  whether or not,  to the best of its  knowledge  after due and
diligent  inquiry,  as of the close of such preceding Fiscal Year of the Lessee,
and at all times during such Fiscal Year, the Lessee was in compliance  with all
the  provisions  which relate to the Lessee in this  Agreement  and in any other
Security  Document  to which it shall  be a party,  and as to  whether  or not a
Determination of Taxability has occurred, and if such Authorized  Representative
shall have  obtained  knowledge of any default in such  compliance  or notice of
such default or Determination of Taxability,  shall disclose in such certificate
such default or defaults or notice  thereof and the nature  thereof,  whether or
not the same  shall  constitute  an Event of Default  hereunder,  and any action
proposed to be taken by the Lessee with respect  thereto and (ii) a  certificate
of an  Authorized  Representative  of the Lessee that the insurance it maintains
complies  with the  provisions  of  Section  4.5 of this  Agreement,  that  such
insurance  has been in full force and effect at all times  during the  preceding
Fiscal  Year of the  Lessee,  and  that  duplicate  copies  of all  policies  or
certificates  thereof have been filed with the Agency and the Trustee and are in
full force and effect. In addition,  upon twenty (20) days' prior request by the
Agency or the Trustee,  the Lessee will execute,  acknowledge and deliver to the
Agency and the Trustee a  certificate  of an  Authorized  Representative  of the
Lessee  either  stating  that to his  knowledge  no  default  or  breach  exists
hereunder or specifying each such default or breach of which he has knowledge.

     (c) The Lessee shall  immediately  notify the Agency and the Trustee of the
occurrence  of any Event of Default or any event which with notice  and/or lapse
of time would  constitute  an Event of Default  under any  Security  Document of
which  it has  knowledge.  Any  notice  required  to be given  pursuant  to this
subsection shall be signed by an Authorized Representative of the Lessee and set
forth a description  of the default and the steps,  if any,  being taken to cure
said default.  If no steps have been taken,  the Lessee shall state this fact on
the notice.

Section 6.7.         Discharge of Liens.
                     -------------------

     (a) If any  lien,  encumbrance  or  charge  is  filed or  asserted,  or any
judgment,  decree,  order,  levy or process of any court or governmental body is
entered,  made or  issued  or any  claim  (such  liens,  encumbrances,  charges,
judgments,   decrees,   orders,  levies,   processes  and  claims  being  herein
collectively called "Liens"), whether or not valid, is made against the Facility
or any part  thereof or the  interest  therein of the Agency,  the Lessee or the
Trustee  or  against  any of the  rentals or other  amounts  payable  under this
Agreement or the interest of the Lessee  under this  Agreement  other than Liens
for  Impositions  (as  defined  in  Section  4.4)  not  yet  payable,  Permitted
Encumbrances,  or Liens being  contested  as permitted  by Section  6.7(b),  the
Lessee  forthwith  upon  receipt of notice of the  filing,  assertion,  entry or
issuance  of such Lien  (regardless  of the  source of such  notice)  shall give
written  notice  thereof to the Agency and the Trustee  and take all  reasonable
action (including the payment of money and/or the securing of a bond) at its own
cost and expense as may be necessary or  appropriate  to obtain the discharge in
full thereof and to remove or nullify the basis therefor.  Nothing  contained in
this Agreement shall be construed as constituting the express or implied consent
to or permission of the Agency for the  performance  of any labor or services or
the  furnishing  of any  materials  that would give rise to any Lien against the
Agency's interest in the Facility.


                                       22
<PAGE>


     (b) The  Lessee  may at its sole  cost and  expense  contest  (after  prior
written notice to the Agency and the Trustee),  by appropriate  action conducted
in good faith and with due diligence, the amount or validity or application,  in
whole  or in part,  of any  Lien,  if (1)  such  proceeding  shall  suspend  the
execution or  enforcement  of such Lien against the Facility or any part thereof
or interest therein, or in the Lease Agreement, of the Agency, the Lessee or the
Trustee  or  against  any of the  rentals or other  amounts  payable  under this
Agreement,  (2) neither the Facility nor any  interest  therein  would be in any
danger of being sold,  forfeited or lost, (3) neither the Lessee, the Agency nor
the Trustee would be in any danger of any civil or any criminal liability, other
than normal accrual of interest,  for failure to comply  therewith,  and (4) the
Lessee shall have furnished  such  security,  if any, as may be required in such
proceedings  or as may be  reasonably  requested  by the  Trustee to protect the
security intended to be offered by the Indenture.

     Section 6.8. Agency's  Authority;  Covenant of Quiet Enjoyment.  The Agency
covenants  and agrees that it has full right and lawful  authority to enter into
this  Agreement  for the  full  term  hereof,  including  the  right  to grant a
leasehold interest in the Facility to the Agency, and that, subject to the terms
and  provisions  of the Indenture  and  Permitted  Encumbrances,  so long as the
Lessee shall pay the rent and all other sums payable by it under this  Agreement
and shall duly observe all the covenants,  stipulations  and  agreements  herein
contained  obligatory upon it and an Event of Default shall not exist hereunder,
the Lessee shall have, hold and enjoy, during the term hereof,  peaceful,  quiet
and undisputed possession of the Facility,  and the Agency (at the sole cost and
expense of the Lessee) shall from time to time take all necessary action to that
end, subject to Permitted Encumbrances.

     Section 6.9. No Warranty of Condition or  Suitability.  THE AGENCY HAS MADE
AND MAKES NO REPRESENTATION OR WARRANTY  WHATSOEVER,  EITHER EXPRESS OR IMPLIED,
WITH RESPECT TO THE MERCHANTABILITY,  CONDITION,  FITNESS,  DESIGN, OPERATION OR
WORKMANSHIP OF ANY PART OF THE FACILITY, ITS FITNESS FOR ANY PARTICULAR PURPOSE,
THE QUALITY OR CAPACITY OF THE MATERIALS IN THE FACILITY,  OR THE SUITABILITY OF
THE  FACILITY  FOR THE  PURPOSES  OR NEEDS OF THE  LESSEE OR THE EXTENT TO WHICH
PROCEEDS  DERIVED FROM THE SALE OF THE BONDS WILL BE  SUFFICIENT TO PAY THE COST
OF  COMPLETION  OF THE  PROJECT.  THE LESSEE IS  SATISFIED  THAT THE FACILITY IS
SUITABLE AND FIT FOR ITS PURPOSES.  THE AGENCY SHALL NOT BE LIABLE IN ANY MANNER
WHATSOEVER TO THE LESSEE OR ANY OTHER PERSON FOR ANY LOSS,  DAMAGE OR EXPENSE OF
ANY KIND OR NATURE  CAUSED,  DIRECTLY  OR  INDIRECTLY,  BY THE  PROPERTY  OF THE
FACILITY OR THE USE OR MAINTENANCE  THEREOF OR THE FAILURE OF OPERATION THEREOF,
OR THE  REPAIR,  SERVICE OR  ADJUSTMENT  THEREOF,  OR BY ANY DELAY OR FAILURE TO
PROVIDE  ANY  SUCH  MAINTENANCE,  REPAIRS,  SERVICE  OR  ADJUSTMENT,  OR BY  ANY
INTERRUPTION  OF  SERVICE  OR LOSS OF USE  THEREOF  OR FOR ANY LOSS OF  BUSINESS
HOWSOEVER CAUSED.

     Section  6.10.  Amounts  Remaining  in Funds.  It is agreed by the  parties
hereto that any amounts  remaining in the Earnings  Fund,  the Rebate Fund,  the
Bond Fund, the Project Fund or the Renewal Fund upon the expiration or sooner or
later  termination of the term of this Agreement as provided in this  Agreement,
after  payment in full of the Bonds (in  accordance  with  Section  10.01 of the
Indenture),  the reasonable fees, charges and expenses of the Trustee,  the Bond
Registrar, the Paying Agents and the Agency in accordance with the Indenture and
after all rents and all other amounts payable hereunder, shall have been paid in
full,  and after all amounts  required  to be rebated to the Federal  government
pursuant to the Tax Certificate or the Indenture shall have been so paid,  shall
belong to and be paid to the Lessee by the Trustee as overpayment of rents.


                                       23
<PAGE>


     Section  6.11.  Issuance  of  Additional  Bonds.  The Agency and the Lessee
recognize  that under the  provisions of and subject to the conditions set forth
in the Indenture,  the Agency may in its sole discretion  authorize the entering
into a Supplemental  Indenture and issue one or more series of Additional  Bonds
on a parity with the Series 2003A Bonds for the purpose of (i)  providing  funds
in excess  of the Net  Proceeds  of  insurance  or  eminent  domain  to  repair,
relocate,  replace,  rebuild or  restore  the  Facility  in the event of damage,
destruction or taking by eminent domain, (ii) providing extensions, additions or
improvements  to the Facility,  or (iii)  refunding  Outstanding  Bonds.  If the
Lessee is not in default  hereunder,  the Agency will  consider  the issuance of
Additional  Bonds in a principal  amount as is specified in a written request in
accordance with the applicable provisions set forth in the Indenture.

     Any  such  completion,   repair,   relocation,   replacement,   rebuilding,
restoration,  additions,  extensions or improvements  shall become a part of the
Facility  and shall be included  under this  Agreement  to the same extent as if
originally included hereunder.

Section 6.12.        Redemption Under Certain Circumstances; Special Covenants.
                     ---------------------------------------------------------

     (a) Upon the  determination by resolution of the members of the Agency that
the Lessee is operating the Facility or any portion thereof,  or is allowing the
Facility or any portion  thereof to be operated,  (i) in violation of applicable
material law or (ii) not as a qualified "project" in accordance with the Act and
the failure of the Lessee within sixty (60) days,  (or such longer period as may
be  established  pursuant to the proviso to this sentence) of the receipt by the
Lessee of  written  notice of such  noncompliance  from the  Agency to cure such
noncompliance  together  with such  resolution  (a copy of which notice shall be
sent to the  Trustee),  the Lessee  covenants  and agrees that it shall,  on the
immediately  succeeding  Interest Payment Date following the termination of such
sixty  (60) day (or  longer)  period,  as the case  may be,  pay to the  Trustee
advance rentals in immediately available funds in an amount sufficient to redeem
the Bonds  Outstanding  in whole at the  Redemption  Price of 103% the aggregate
principal amount of the Outstanding Bonds together with interest accrued thereon
to such Interest Payment Date,  provided,  however,  that if such  noncompliance
cannot be cured  within  such period of sixty (60) days with  diligence  (and is
capable of being  cured) and the Lessee  promptly  commences  the curing of such
non-compliance  and thereafter  prosecutes the curing thereof with diligence and
to the Agency's  reasonable  satisfaction,  such period of time within which the
Lessee may cure such  failure  shall be extended for such  additional  period of
time as may be  necessary to cure the same with  diligence  and the Agency shall
notify the Trustee and the Bondholders of any such extension.

     (b) The Agency shall give prior written  notice of the meeting at which the
members of the  Agency are to  consider  such  resolution  to the Lessee and the
Trustee,  which notice shall be no less than three (3) Business  Days prior to a
meeting  called to consider  matters set forth in clauses  (a)(i) and (a)(ii) of
this Section. The holders of one hundred percent (100%) of the Bonds Outstanding
shall  have the  right but not the  obligation,  at any time  subsequent  to the
receipt of such notice but prior to the Interest Payment Date referred to above,
to tender to the Trustee all of the Bonds then  Outstanding for  cancellation in
accordance with the Indenture.

     (c) Upon the circumstances set forth in Section 3.01 of the Indenture,  the
Lessee shall pay or cause the prepayment of its lease rental obligation upon the
circumstances and in the manner set forth in the Indenture.

     Section 6.13. Further Assurances. The Lessee will do, execute,  acknowledge
and  deliver or cause to be done,  executed,  acknowledged  and  delivered  such
further acts,  instruments,  conveyances,  transfers and  assurances,  including
Uniform  Commercial Code financing  statements,  at the sole cost and expense of
the Lessee, as the Agency or the Trustee deems reasonably necessary or advisable
for the implementation,  effectuation, correction, confirmation or perfection of
this Agreement and any rights of the Agency or the Trustee  hereunder,  or under
the Indenture.


                                       24
<PAGE>


Section 6.14.        Non-Discrimination; Employment Information, Opportunities
                     and Guidelines.
                     ---------------------------------------------------------

     (a) The Lessee  shall  ensure and cause its  Affiliates  to ensure that all
employees  and  applicants  for  employment  at the Facility are afforded  equal
employment opportunity without discrimination.

     (b) At all times during the construction,  maintenance and operation of the
Facility,  the Lessee shall not  discriminate  against any employee or applicant
for employment  because of race, color,  creed, age, sex or national origin. The
Lessee shall use reasonable  efforts to ensure that employees and applicants for
employment  with the Lessee,  KeySpan,  or any Affiliate or any subtenant of the
Facility are treated  without  regard to their race,  color,  creed,  age,  sex,
sexual  orientation or national origin. As used herein, the term "treated" shall
mean and include,  without  limitation,  the  following:  recruited,  whether by
advertising or other means;  compensated,  whether in the form of rates or other
forms  of  compensation;   selected  for  training,   including  apprenticeship;
promoted; upgraded; downgraded; demoted; transferred; laid off; and terminated.

     (c) The Lessee shall, in all solicitations or advertisements  for employees
placed by or on behalf of the Lessee,  state that all qualified  applicants will
be considered for employment  without regard to race,  color,  creed or national
origin, age, sex or sexual orientation.

     (d) The Lessee  shall  furnish to the  Agency  all  information  reasonably
required by the Agency pursuant to this Section 6.14 and will cooperate with the
Agency for the  purposes of  investigation  to  ascertain  compliance  with this
Section 6.14.

     (e) Except as is otherwise provided by collective  bargaining  contracts or
agreements to which the Lessee is a party, the Lessee shall cause new employment
opportunities  created as a result of the Project to be listed with the New York
State  Department  of  Labor,   Community  Services   Division,   and  with  the
administrative  entity of the service  delivery  area created by the Federal Job
Training  Partnership Act (P.L. 97-300) in which the Project is located.  Except
as is otherwise  provided by  collective  bargaining  contracts or agreements to
which the Lessee is a party, the Lessee covenants and agrees, where practicable,
to first consider  persons eligible to participate in programs under the Federal
Job  Training  Partnership  Act  (P.L.  No.  97-300)  who shall be  referred  to
administrative  entities  or service  delivery  areas  created  pursuant to such
Federal Job Training  Partnership Act or by the Community  Services  Division of
the New York State Department of Labor for such new employment opportunities.

     (f) The  Lessee  hereby  authorizes  any  private or  governmental  entity,
including but not limited to the New York State Department of Labor ("DOL"),  to
release  to  the  Agency  or  its  successors  and  assigns  (collectively,  the
"Information Recipients"),  any and all employment information under its control
and pertinent to Lessee, KeySpan or any Affiliate and their respective employees
at the  Facility.  In  addition,  upon the  Agency's  request,  the Lessee shall
provide to the Agency any  employment  information  in the Lessee's or KeySpan's
possession which is pertinent to the Lessee,  KeySpan or any Affiliate and their
respective  employees  at the  Facility.  Information  released  or  provided to
Information  Recipients by DOL, or by any other  governmental  entity, or by any
private entity, or by the Lessee itself, or any information  previously released
as provided by all or any of the foregoing  parties  (collectively,  "Employment
Information") may be disclosed by the Information  Recipients in connection with
the administration of the programs of the Agency, or its successors and assigns,
and/or  Suffolk  County,  and/or as may be  necessary  to comply with law;  and,
without  limiting the foregoing,  the Employment  Information may be included in
(y) reports  required of the Agency,  and (z) any reports  required by law. This
authorization shall remain in effect throughout the term of this Agreement.

     (g) Annually, by August 1 of each year, commencing on August 1, 2004, until
the  termination  of this  Agreement,  the Lessee  shall submit to the Agency an
employment  report relating to the period commencing July 1 of the previous year


                                       25
<PAGE>


and ending June 30 of the year of the  obligation  of the filing of such report,
substantially in the form of Schedule A-1 hereto, certified as to accuracy by an
Authorized  Representative of the Lessee, and shall attach thereto a copy of the
Lessee's  final payroll  report  evidencing the total number of employees at the
Facility employed by the Lessee during such reporting period. In addition,  upon
a redemption of the Series 2003A Bonds, the Lessee shall submit to the Agency an
employment report,  substantially in the form of Schedule A-2 hereto,  certified
as to accuracy by an Authorized  Representative of the Lessee,  and shall attach
thereto a copy of the Lessee's final payroll report  evidencing the total number
of  employees  at the  Facility  employed  by the Lessee  during the most recent
period  commencing July 1 of the previous year and ending June 30 of the year of
the obligation of filing such report.

     Section 6.15. Recording and Filing. This Agreement originally executed or a
memorandum thereof shall be recorded by the Lessee subsequent to the recordation
of the Indenture,  in the appropriate  office of the Register of Suffolk County,
or in such  other  office as may at the time be  provided  by law as the  proper
place for the recordation  thereof.  The security interest of the Agency created
herein and the  assignment  of such  security  interest to the Trustee  shall be
perfected by the filing of financing statements by the Lessee which fully comply
with the New York State Uniform  Commercial  Code - Secured  Transactions in the
office of the Secretary of State of the State,  in the City of Albany,  New York
and in the  appropriate  office of the  Register of Suffolk  County.  The Lessee
shall  file or cause to be filed  all  necessary  continuation  statements  (and
additional  financing  statements)  within the time  prescribed  by the New York
State Uniform  Commercial  Code - Secured  Transactions in order to continue (or
attach and perfect) the security interest created by this Agreement,  to the end
that the rights of the  Agency,  the Holders of the Bonds and the Trustee in the
Facility shall be fully  preserved as against  creditors or purchasers for value
from the Agency or the Lessee.  The Agency and the Trustee  are  authorized,  if
permitted  by  applicable  law,  to file  one or more  Uniform  Commercial  Code
financing  statements  disclosing  any security  interest in the Facility,  this
Agreement  and the sums due under this  Agreement,  without the signature of the
Lessee  (if  so   required)   or  signed  by  the  Agency  or  the   Trustee  as
attorney-in-fact for the Lessee. The Lessee agrees to furnish the Agency and the
Trustee  with the  Opinion of Counsel  addressed  to the Agency and the  Trustee
referred to in Section 7.08 of the  Indenture  and shall  perform all other acts
(including the payment of all costs)  necessary in order to enable the Agency to
comply with Section 7.08 of the Indenture.

     Section 6.16. Right to Cure Agency  Defaults.  The Agency hereby grants the
Lessee  full  authority  for  account of the Agency to perform  any  covenant or
obligation  the  non-performance  of which is alleged to constitute a default in
any notice  received  by the Lessee,  in the name and stead of the Agency,  with
full power of substitution.

     Section 6.17. Description of Facility Equipment. The Lessee shall file with
the  Agency  by  January  1,  2005 and  every  January  1  thereafter  until the
termination of this Agreement, a certificate of an Authorized  Representative of
the Lessee  certifying as to the deletions and other updates that should be made
to the Appendix B hereof so that such  Description of Facility  Equipment  shall
constitute  (taking into  consideration  such  additions  and  deletions and all
previously   certified   additions  and  deletions)  an  accurate  and  complete
description of the Facility Equipment.

                                  ARTICLE VII.
                           Events Of Default; Remedies

     Section 7.1.  Events of Default.  Any one or more of the  following  events
shall constitute an "Event of Default" hereunder:

     (a) Failure of the Lessee to pay any rental that has become due and payable
by the terms of  Section  3.3 hereof  which  results in a default in the due and
punctual payment of the principal of and redemption premium, if any, or interest
on any Bond;


                                       26
<PAGE>


     (b) Failure of the Lessee to pay any amount  (except the  obligation to pay
rent under Section 3.3 hereof) that has become due and payable or to observe and
perform any covenant,  condition or agreement on its part to be performed  under
Sections  4.4 or 4.5  hereof and  continuance  of such  failure  for a period of
thirty (30) days after receipt by the Lessee of written  notice  specifying  the
nature of such default from the Agency,  the Trustee or the Holders of more than
twenty-five  per  centum  (25%)  in  aggregate  principal  amount  of the  Bonds
Outstanding;

     (c) Failure of the Lessee to observe and perform any covenant, condition or
agreement  hereunder on its part to be performed (except as set forth in Section
7.1(a) or (b) hereof) and (1) continuance of such failure for a period of thirty
(30) days after receipt by the Lessee of written notice specifying the nature of
such  default  from  the  Agency,  the  Trustee  or the  Holders  of  more  than
twenty-five  per  centum  (25%)  in  aggregate  principal  amount  of the  Bonds
Outstanding,  or (2) if by reason of the nature of such  default the same can be
remedied,  but not within the said thirty (30) days, the Lessee fails to proceed
with reasonable diligence after receipt of said notice to cure the same or fails
to continue with reasonable diligence its efforts to cure the same;

     (d) The Lessee or any member  thereof shall (i) apply for or consent to the
appointment of or the taking of possession by a receiver, liquidator,  custodian
or trustee of itself or of all or a substantial part of its property, (ii) admit
in writing its inability, or be generally unable, to pay its debts as such debts
generally  become due,  (iii) make a general  assignment  for the benefit of its
creditors,  (iv) commence a voluntary case under the Federal Bankruptcy Code (as
now or hereafter in effect),  (v) file a petition  seeking to take  advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition  or  adjustment  of debts,  (vi) take any action for the  purpose of
effecting any of the foregoing,  or (vii) be adjudicated a bankrupt or insolvent
by any court;

     (e) A proceeding or case shall be  commenced,  without the  application  or
consent of the Lessee any member thereof in any court of competent jurisdiction,
seeking, (i) liquidation, reorganization, dissolution, winding-up or composition
or adjustment of debts, (ii) the appointment of a trustee, receiver, liquidator,
custodian  or the like of the  Lessee  or any  member  thereof  or of all or any
substantial part of their respective assets,  (iii) similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue undismissed,  or
an order,  judgment or decree approving or ordering any of the foregoing against
the Lessee or any member  thereof shall be entered and continue  unstayed and in
effect,  for a period  of  ninety  (90) days or (iv) the  Lessee  shall  fail to
controvert in a timely or  appropriate  manner,  or acquiesce in writing to, any
petition filed against itself in an involuntary  case under such Bankruptcy Code
or any order for  relief  against  the  Lessee or any  member  thereof  shall be
entered  in an  involuntary  case under  such  Bankruptcy  Code or any order for
relief  against  the  Lessee  or any  member  thereof  shall  be  entered  in an
involuntary  case  under  such  Bankruptcy  Code;  the  terms  "dissolution"  or
"liquidation"  of the  Lessee or any member  thereof as used above  shall not be
construed to prohibit any action otherwise permitted by Section 6.1 hereof;

     (f) Failure of the Lessee to make any payment  when due pursuant to Section
3.3(b)  hereof  and such  failure  continues  for ten (10)  Business  Days after
written notice to the Lessee;

     (g) Any  representation  or warranty made (i) by or on behalf of the Lessee
or its Affiliates in the application,  commitment  letter and related  materials
submitted to the Agency for approval of the Project or its financing, or (ii) by
the  Lessee  herein or in any of the other  Security  Documents  or (iii) in the
Letter of Representation and Indemnity Agreement delivered to the Agency and the
Trustee,  or (iv) in the Tax  Certificate,  or (v) in any  report,  certificate,
financial statement or other instrument  furnished pursuant hereto or any of the
foregoing  shall prove to be false,  misleading  or  incorrect  in any  material
respect as of the date made; or


                                       27
<PAGE>


     (h) An "Event of Default"  under the Indenture or under any other  Security
Document shall occur and be continuing.

     (i) The Lessee or any Affiliate shall become a Prohibited Person.

     Section 7.2. Remedies on Default. Whenever any Event of Default referred to
in Section 7.1 hereof shall have occurred and be continuing,  the Agency, or the
Trustee where so provided,  may, take any one or more of the following  remedial
steps:

     (a) The  Trustee,  as and to the extent  provided  in  Article  VIII of the
Indenture,  may cause all principal  installments  of rent payable under Section
3.3 hereof for the remainder of the term of this Agreement to be immediately due
and payable,  whereupon the same,  together with the accrued  interest  thereon,
shall become  immediately  due and  payable;  provided,  however,  that upon the
occurrence  of an Event of  Default  under  Section  7.1(d) or (e)  hereof,  all
principal  installments  of  rent  payable  under  Section  3.3  hereof  for the
remainder  of the term of this  Agreement,  together  with the accrued  interest
thereon,  shall  immediately  become due and payable  without  any  declaration,
notice or other action of the Agency,  the Trustee,  the Holders of the Bonds or
any other Person being a condition to such acceleration;

     (b) The Agency or the  Trustee,  may  terminate  this  Agreement,  provided
however that no such  termination of this Agreement  shall relieve the Lessee of
its liability and obligations hereunder and such liability and obligations shall
survive any such termination;

     (c) The Agency or the Trustee may take whatever  action at law or in equity
as may appear necessary or desirable to collect the rent then due and thereafter
to become due,  or to enforce  performance  or  observance  of any  obligations,
agreements or covenants of the Lessee under this Agreement;

     (d) The  Trustee may take any action  permitted  under the  Indenture  with
respect to an Event of Default thereunder; and

     (e) The Agency, without the consent of the Trustee or any Bondholder or any
other Person but with notice to the Trustee, may proceed to enforce the Agency's
Reserved   Rights  by  (i)  an  action  for  damages,   injunction  or  specific
performance,  and/or  (ii)  taking  whatever  action  at law or in equity as may
appear  necessary or desirable to collect  payments of amounts due by the Lessee
under the Agency's  Reserved  Rights or to enforce the performance or observance
of any  obligations,  covenants or  agreements  of the Lessee under the Agency's
Reserved Rights and/or (iii) terminating the Agency's  leasehold interest in the
Facility to the Lessee, which termination,  the Lessee hereby irrevocably agrees
to execute and deliver to the Agency.

     In the event that the Lessee fails to make any rental  payment  required in
Section  3.3  hereof,  the  installment  so  in  default  shall  continue  as an
obligation of the Lessee until the amount in default shall have been fully paid.

     No action taken pursuant to this Section 7.2 (including repossession of the
Facility or  termination  of this  Agreement  pursuant to this Section 7.2 or by
operation  of law or  otherwise)  shall,  except as expressly  provided  herein,
relieve the Lessee from the Lessee's obligations  hereunder,  all of which shall
survive any such action.

     Notwithstanding the foregoing,  prior to the earlier of the commencement of
any legal proceedings by the Trustee to foreclose the lien and security interest
of the Indenture in the  Facility,  and if the Event of Default shall be capable
of being  remedied by the Lessee,  the Lessee may, at any time,  pay all accrued
unpaid  rentals  (exclusive  of any such  rentals  accrued  solely  by virtue of
acceleration  of the due date of the Bonds as  provided  in Section  7.01 of the
Indenture), pay such other amounts in default hereunder, render such performance


                                       28
<PAGE>


hereunder and otherwise  fully cure all other  defaults  hereunder;  and in such
event,  this  Agreement  shall  be fully  reinstated,  as if it had  never  been
terminated.

     If this Agreement  shall be fully  reinstated,  upon written request by the
Lessee to the Agency and the Trustee,  the Agency and the Trustee  shall deliver
to the Lessee a written confirmation of such reinstatement.

Section 7.3.          Reserved.
                      --------

     Section 7.4. Remedies Cumulative.  The rights and remedies of the Agency or
the Trustee under this  Agreement  shall be cumulative and shall not exclude any
other  rights  and  remedies  of the Agency or the  Trustee  allowed by law with
respect  to any  default  under  this  Agreement.  Failure  by the Agency or the
Trustee  to insist  upon the  strict  performance  of any of the  covenants  and
agreements  herein set forth or to exercise any rights or remedies  upon default
by the  Lessee  hereunder  shall  not be  considered  or taken  as a  waiver  or
relinquishment  for the  future of the right to insist  upon and to  enforce  by
mandatory  injunction,  specific performance or other appropriate legal remedy a
strict compliance by the Lessee with all of the covenants and conditions hereof,
or of the rights to exercise any such rights or remedies, if such default by the
Lessee be continued or repeated.  Nothing in this Section 7.4 shall be deemed to
restrict  the right of the Lessee to  reinstate  this  Agreement  as provided in
Section 7.2 hereof.

     Section 7.5. No Additional  Waiver Implied by One Waiver.  In the event any
covenant or agreement  contained in this Agreement  should be breached by either
party and thereafter  waived by the other party, such waiver shall be limited to
the  particular  breach  so  waived  and  shall not be deemed to waive any other
breach hereunder.  No waiver shall be binding unless it is in writing and signed
by the party making such waiver.  No course of dealing between the Agency and/or
the  Trustee  and the Lessee or any delay or  omission on the part of the Agency
and/or the Trustee in exercising any rights  hereunder or under the Indenture or
under any other  Security  Document  shall  operate  as a waiver.  To the extent
permitted by applicable  law, the Lessee hereby waives the benefit and advantage
of,  and  covenants  not to  assert  against  the  Agency  or the  Trustee,  any
valuation,  inquisition,  stay,  appraisement,  extension or redemption laws now
existing or which may hereafter exist which,  but for this  provision,  might be
applicable to any sale or reletting made under the judgment,  order or decree of
any court or under the powers of sale and reletting  conferred by this Agreement
or otherwise.

     Section  7.6.  Effect  on  Discontinuance  of  Proceedings.   In  case  any
proceeding  taken by the Trustee under the Indenture or this  Agreement or under
any other  Security  Document  on account of any Event of Default  hereunder  or
under the Indenture shall have been  discontinued or abandoned for any reason or
shall have been  determined  adversely to the Trustee,  then,  and in every such
case,  the Agency,  the Trustee and the Holders of the Bonds shall be  restored,
respectively, to their former positions and rights hereunder and thereunder, and
all  rights,  remedies,  powers and duties of the Trustee  shall  continue as in
effect prior to the commencement of such proceedings.

     Section 7.7.  Agreement to Pay Attorneys'  Fees and Expenses.  In the event
the Lessee should default under any of the provisions of this Agreement, and the
Agency,  the Trustee or any  Bondholder  should employ  attorneys or incur other
expenses for the collection of rentals or other amounts payable hereunder or the
enforcement  of  performance or observance of any obligation or agreement on the
part of the Lessee herein contained or contained in any other Security Document,
the Lessee agrees that it will on demand therefor pay to the Agency, the Trustee
or such Bondholder the reasonable fees and  disbursements  of such attorneys and
such other expenses so incurred.


                                       29
<PAGE>


                                 ARTICLE VIII.
                                     Options

Section 8.1.         Options.
                     -------

     (a) The Lessee has the option to make advance  rental  payments for deposit
in the Redemption Account of the Bond Fund to effect the retirement of the Bonds
in whole or the  redemption in whole or in part of the Bonds,  all in accordance
with the terms of the Indenture;  provided,  however, that no partial redemption
of the Bonds may be effected through advance rental payments  hereunder if there
shall exist and be continuing an Event of Default. The Lessee shall exercise its
option to make such advance rental payments by delivering a written notice of an
Authorized  Representative  of the Lessee to the Trustee in accordance  with the
Indenture,  with a copy to the  Agency,  at least  twenty (20) days prior to the
date upon which the  Trustee is to mail  notice of  redemption  to  Bondholders,
setting forth (i) the amount of the advance rental  payment,  (ii) the principal
amount of Bonds  Outstanding  requested to be redeemed with such advance  rental
payment  (which  principal  amount shall be in such  minimum  amount or integral
multiple of such amount as shall be permitted in the  Indenture),  and (iii) the
date on which such  principal  amount of Bonds are to be redeemed.  Such advance
rental  payment  shall be paid to the  Trustee in legal  tender on or before the
redemption  date and  shall be an  amount  which,  when  added to the  amount on
deposit in the Bond Fund and available  therefor,  will be sufficient to pay the
Redemption  Price of the Bonds to be redeemed,  together with interest to accrue
to the date of redemption  and all expenses of the Agency,  the Bond  Registrar,
the Trustee and the Paying Agents in  connection  with such  redemption.  In the
event the Bonds are to be redeemed  in whole or  otherwise  retired,  the Lessee
shall further pay on or before such  redemption  date,  in legal tender,  to the
Agency,  the Trustee,  the Bond Registrar and the Paying Agents, as the case may
be, all fees and expenses  owed such party or any other party  entitled  thereto
under this  Agreement or the  Indenture  together with (i) all other amounts due
and payable under this Agreement and the other Security Documents,  and (ii) any
amounts  required  to be  rebated  to the  Federal  government  pursuant  to the
Indenture or the Tax Certificate.

     (b) The Lessee  shall have the option to terminate  the Agency's  leasehold
interest in the Facility  commencing on that date upon which the Bonds may first
optionally be redeemed in whole and on any date thereafter permitted therefor as
provided in the Indenture.

     (c) The  Lessee  shall  also have the  option  to  terminate  the  Agency's
leasehold interest in the Facility on any date during the term of this Agreement
within ninety (90) days of the occurrence of any of the following events:

          (i) The  Facility  shall have been damaged or destroyed to such extent
     that as evidenced by a certificate  of an  Independent  Engineer filed with
     the Agency and the Trustee (A) the Facility  cannot be reasonably  restored
     within a period of one year from the date of such damage or  destruction to
     the condition thereof immediately preceding such damage or destruction, (B)
     the Lessee is thereby  prevented or likely to be prevented from carrying on
     its normal operation of the Facility for a period of one year from the date
     of such damage or destruction,  or (C) the restoration cost of the Facility
     would  exceed the total amount of all  insurance  proceeds,  including  any
     deductible amount, in respect of such damage or destruction; or

          (ii) Title to, or the  temporary use of, all or  substantially  all of
     the Facility  shall have been taken or  condemned by a competent  authority
     which taking or condemnation results, or is likely to result, in the Lessee
     being  thereby  prevented  or likely to be prevented  from  carrying on its
     normal  operation of the Facility for a period of one year from the date of
     such  taking  or  condemnation,   as  evidenced  by  a  certificate  of  an
     Independent Engineer filed with the Agency and the Trustee; or

          (iii) As a result of changes in the  Constitution of the United States
     of America or of the State or of  legislative  or  executive  action of the
     State or any  political  subdivision  thereof  or of the  United  States of


                                       30
<PAGE>


     America  or by final  decree or  judgment  of any court  after the  contest
     thereof by the Lessee,  this  Agreement  becomes void or  unenforceable  or
     impossible of performance in accordance  with the intent and purpose of the
     parties  as  expressed   herein  or   unreasonable   burdens  or  excessive
     liabilities  are imposed upon the Lessee by reason of the  operation of the
     Facility.

     (d) The Lessee,  in  terminating  the  Agency's  leasehold  interest in the
Facility  pursuant to Section 8.1(c) hereof,  shall file with the Agency and the
Trustee the certificate prescribed by Section 8.1(c) (i) or (ii) hereof together
with a certificate of an Authorized  Representative  of the Lessee stating that,
as a result of the  occurrence  of the event giving rise to the exercise of such
option to terminate the Agency's leasehold interest in the Facility,  the Lessee
has  discontinued,  or at the earliest  practicable date will  discontinue,  the
operation of the Facility for its intended purposes,  and in the case of Section
8.1(b) or 8.1(c)  hereof,  the Lessee  shall pay to the Trustee as the  purchase
price, in legal tender,  advance rental  payments,  for deposit in the Bond Fund
(if payment in full of the principal of or the Redemption  Price, if any, as the
case may be, of, and interest on, all the  Outstanding  Bonds,  and the interest
thereon at maturity or upon earlier  redemption  has not yet been made) equal to
the sum of the following:

          (i) an amount  which,  when added to the amount on deposit in the Bond
     Fund and available  therefor,  will be sufficient to pay, retire and redeem
     the  Outstanding  Bonds in accordance with the provisions of the Indenture,
     including, without limitation, the principal of or the Redemption Price (as
     the case may be) of,  together with interest to maturity or redemption date
     (as the case may be) on, the Outstanding Bonds;

          (ii) expenses of redemption,  the fees and expenses of the Agency, the
     Trustee, the Bond Registrar and the Paying Agents and all other amounts due
     and payable under this Agreement and the Indenture;

          (iii) any amounts  required  to be rebated to the  Federal  government
     pursuant to the Indenture or the Tax Certificate; and

          (iv) one dollar.

     (e)  Upon the  payment  in full of the  principal  of and  interest  on the
Outstanding Bonds (whether at maturity or earlier redemption),  the Lessee shall
have the option to terminate the Agency's leasehold interest in the Facility and
shall  exercise such option by (1) delivering to the Agency prior written notice
of an  Authorized  Representative  of the Lessee no more than  thirty  (30) days
after  the  payment  in full of the  Bonds of the  exercise  of such  option  to
purchase, which notice shall set forth a requested closing date for the purchase
of the Facility  which shall be not later than sixty (60) days after the payment
in full of the Bonds, and (2) paying on such closing date a purchase price equal
to the sum of one dollar, the fees and expenses of the Agency, the Trustee,  the
Bond Registrar and the Paying Agents and all other amounts due and payable under
this  Agreement  or the  Indenture,  together  with any  amounts  required to be
rebated  to the  Federal  government  pursuant  to  the  Indenture  or  the  Tax
Certificate.  Upon the written request of the Lessee, the Agency may approve the
extension or waiver of any of the time periods set forth in this paragraph.

     (f) The Lessee  shall not, at any time,  assign or  transfer  its option to
purchase the Facility as contained in this Section 8.1 separate and apart from a
permitted  assignment of this  Agreement  pursuant to Section 9.3 hereof without
the prior written consent of the Agency and the Trustee.

     Section 8.2. Conveyance on Exercise of Option to Terminate.  At the closing
of any termination of the Agency's  leasehold  interest in the Facility pursuant
to Section 8.1 hereof, the Agency and/or the Trustee, as applicable,  will, upon
receipt  of  payment  of the  purchase  price,  deliver  to the  Lessee (i) such
documents  necessary or  appropriate  to terminate  the  interests of the Agency
and/or the Trustee in and to the  Facility,  subject to the  following:  (1) the
nature,  quality and extent of the Agency's  leasehold interest in said property
shall have been conveyed to the Agency;  (2) any Permitted  Encumbrances  to the


                                       31
<PAGE>


Agency's  leasehold  interest in said property when conveyed to the Agency;  (3)
any liens,  easements,  security  interests,  claims,  charges and  encumbrances
created at the request of the Lessee or to the  creation or  suffering  of which
the Lessee consented;  (4) any liens,  security interests,  claims,  charges and
encumbrances  resulting from the failure of the Lessee to perform or observe any
of the  agreements on its part  contained in this  Agreement;  (5) any liens for
taxes or  assessments  not  then  delinquent;  (6) the  rights,  if any,  of any
condemning  authority;  (ii) documents releasing and conveying to the Lessee all
of the  Agency's  rights and  interests  in and to any rights of action,  or any
insurance  proceeds or  condemnation  award,  with respect to the Facility,  and
(iii) a  release  of the  Lessee's  obligations  under  the  Payment  Agreement.
Concurrently  with the delivery of such  documents,  there shall be delivered by
the Agency to the  Trustee any  instructions  or other  instruments  required by
Section 10.01 of the Indenture to defease and pay the Bonds.

     Upon  termination  of the  Agency's  leasehold  interest  in  the  Facility
pursuant to this Section 8.2, this  Agreement and all  obligations of the Lessee
hereunder shall be terminated except the obligations of the Lessee under Section
6.2,  6.3 and 9.17  shall  survive  such  termination.

     Section  8.3.  Option to  Purchase or Invite  Tenders of Bonds.  The Lessee
shall  have the  option,  at any time  during  the  term of this  Agreement,  to
purchase  Bonds for its own account,  whether by direct  negotiation,  through a
broker or dealer, or by making a tender offer to the Holders thereof.  The Bonds
so purchased by the Lessee or by any Affiliate thereof shall be delivered to the
Trustee for cancellation  within fifteen (15) days of the date of purchase.  The
Agency shall at all times make  available  or cause to be made  available to the
Lessee its  registration  books  (maintained  at the principal  corporate  trust
office of the Trustee)  containing the names and addresses of the Bondholders if
known.

     Section 8.4.  Termination of Agreement.  After full payment of the Bonds or
provision for the payment in full thereof  having been made in  accordance  with
Section  10.01 of the  Indenture,  the Lessee may  terminate  this  Agreement by
paying the  reasonable  fees and  expenses  of the  Agency,  the  Agency's  Bond
Counsel,  the Trustee,  the Bond  Registrar,  the Tender Agent,  the Remarketing
Agent and the Paying  Agents and all other  amounts due and  payable  under this
Agreement, the other Security Documents, the Remarketing Agreement together with
any amounts required to be paid to the United States government  pursuant to the
Indenture or the Tax Certificate,  and by giving the Agency notice in writing of
such  termination  and  thereupon  such   termination   shall  forthwith  become
effective,  subject,  however,  to the survival of the obligations of the Lessee
under  Sections 3.3, 4.3, 6.2, 6.3, 9.17 and 9.18 hereof.  Upon  termination  of
this Agreement as set forth herein,  the Agency shall execute and deliver to the
Lessee a termination of lease in recordable form.

     Section 8.5. Mode Change Notice.  No later fifty (50) days (or such shorter
time as may be agreed to by the Agency,  the  Trustee,  the  Lessee,  the Paying
Agent and the  Remarketing  Agent in writing)  preceding a proposed  Mode Change
Date,  the Lessee shall  provide the Agency  written  notice of its intention to
effect a change in the Mode from the Mode then  prevailing (for purposes of this
Section,  the "Current Mode") to another Mode (for purposes of this Section, the
"New Mode")  specified in such written  notice,  and, if the change is to a Term
Rate Mode,  the length of the  initial  Interest  Period and  whether or not the
Bonds to be  converted  to the Term Rate Mode will be  covered  by the Letter of
Credit (if they will be covered,  then the initial Interest Rate Period for such
Bonds selected by the Lessee cannot extend beyond the  Expiration  Tender Date).
The Agency may, in its sole and absolute  discretion,  waive the  requirement of
such notice to be delivered by the Lessee pursuant to this Section 8.5.

                                  ARTICLE IX.
                                  Miscellaneous

     Section 9.1. Indenture;  Amendment.  The Lessee shall have and may exercise
all the rights, powers and authority stated to be in the Lessee in the Indenture
and in the Bonds, and the Indenture and the Bonds shall not be modified, altered


                                       32
<PAGE>


or  amended  in any manner  which  adversely  affects  such  rights,  powers and
authority  so stated to be in the  Lessee or  otherwise  adversely  affects  the
Lessee without the written consent of the Lessee.

     Section 9.2. Force Majeure. In case by reason of force majeure either party
hereto shall be rendered  unable wholly or in part to carry out its  obligations
under this  Agreement,  then  except as  otherwise  expressly  provided  in this
Agreement,  if such party shall give notice and full  particulars  of such force
majeure in writing to the other party within a reasonable time after  occurrence
of the event or cause relied on, the obligations of the party giving such notice
(other than the  obligations of the Lessee to make the rental  payments or other
payments  required under the terms hereof, or to comply with Sections 4.5 or 6.2
hereof),  so far as they are affected by such force majeure,  shall be suspended
during the  continuance  of the  inability  then claimed  which shall  include a
reasonable time for the removal of the effect thereof, but for no longer period,
and such party  shall  endeavor to remove or overcome  such  inability  with all
reasonable dispatch.  The term "force majeure",  as employed herein, shall mean,
without  limitation,   acts  of  God,  strikes,  lockouts  or  other  industrial
disturbances,  terrorism,  acts of the public  enemy,  orders of any kind of the
Government  of the  United  States  or of the  State or any  civil  or  military
authority,  insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, hurricanes,  storms, floods, washouts,  droughts,  arrest, restraining of
government and people, civil disturbances, explosions, partial or entire failure
of utilities,  shortages of labor, material, supplies or transportation,  or any
other similar or different cause not reasonably  within the control of the party
claiming  such  inability.  It is understood  and agreed that the  settlement of
existing or impending strikes,  lockouts or other industrial  disturbances shall
be entirely  within the  discretion of the party having the  difficulty and that
the above  requirements  that any force majeure  shall be reasonably  beyond the
control of the party and shall be remedied with all reasonable dispatch shall be
deemed to be fulfilled even though such existing or impending strikes,  lockouts
and other industrial disturbances may not be settled but could have been settled
by acceding to the demands of the opposing person or persons.

     Section 9.3. Assignment or Sublease.  The Lessee may not at any time assign
or  transfer  this  Agreement,  or sublet the whole or any part of the  Facility
without  the prior  written  consent  of the Agency  and the  Trustee;  provided
further,  that if the Agency  and the  Trustee  consent to any such  assignment,
transfer or subletting,  (1) the Lessee shall nevertheless  remain liable to the
Agency for the  payment of all rent and for the full  performance  of all of the
terms,  covenants  and  conditions of this  Agreement and of any other  Security
Document to which it shall be a party,  (2) any  assignee or  transferee  of the
Lessee in whole of the Facility shall have assumed in writing and have agreed to
keep and perform all of the terms of this Agreement on the part of the Lessee to
be kept and performed, shall be jointly and severally liable with the Lessee for
the  performance  thereof,  shall be subject to service of process in the State,
and shall be  qualified  to do  business  in the  State,  (3) in the  Opinion of
Counsel,  such assignment,  transfer or sublease shall not legally impair in any
respect the  obligations  of the Lessee for the payment of all rents nor for the
full performance of all of the terms, covenants and conditions of this Agreement
or of any other  Security  Document  to which the Lessee  shall be a party,  nor
impair or limit in any respect the  obligations  of any obligor  under any other
Security Document,  (4) any assignee,  transferee or sublessee shall utilize the
Facility  as an Approved  Facility,  (5) such  assignment,  transfer or sublease
shall not violate any  provision of this  Agreement,  the Indenture or any other
Security Document,  (6) with respect to any subletting in part, the term of each
such sublease does not exceed five (5) years and at any given date, no more than
an  aggregate  of twenty  percent  (20%) of such space would be subleased by the
Lessee (excluding  Affiliates of the Lessee),  (7) such assignment,  transfer or
sublease shall in no way diminish or impair the Lessee's obligation to carry the
insurance  required  under  Section 4.5 of this  Agreement  and the Lessee shall
furnish  written  evidence  satisfactory to the Agency and the Trustee that such
insurance  coverage shall in no manner be limited by reason of such  assignment,
transfer or sublease,  (8) each such assignment,  transfer or sublease  contains
such other provisions as the Agency or the Trustee may reasonably  require,  and
(9) in the opinion of  Nationally  Recognized  Bond  Counsel,  such  assignment,
transfer or sublease  shall not cause the interest on the Bonds to be includable
in gross income for Federal  income tax  purposes.  The Lessee shall  furnish or
cause  to be  furnished  to the  Agency  and  the  Trustee  a copy  of any  such
assignment,  transfer or sublease in  substantially  final form at least  twenty
(20) days prior to the date of execution thereof.


                                       33
<PAGE>


     Any consent by the Agency or the Trustee to any act of assignment, transfer
or  sublease  shall be held to apply only to the  specific  transaction  thereby
authorized.  Such consent  shall not be construed as a waiver of the duty of the
Lessee,  or the  successors or assigns of the Lessee,  to obtain from the Agency
and the  Trustee  consent to any other or  subsequent  assignment,  transfer  or
sublease,  or as  modifying  or limiting the rights of the Agency or the Trustee
under the foregoing covenant by the Lessee.

     If the  Facility  or any part  thereof be sublet or  occupied by any Person
other than the Lessee,  the Agency,  in the event of the Lessee's default in the
payment of rent may, and is hereby  empowered  to, and the Lessee  hereby grants
the Agency an  irrevocable  power of  attorney  (coupled  with an  interest  to)
collect rent from the undertenant or occupant during the continuance of any such
default.  In either of such events, the Agency may apply the net amount received
by it to the rent  herein  provided,  and no such  collection  shall be deemed a
waiver of the covenant herein against  assignment,  transfer or sublease of this
Agreement,  or  constitute  the  acceptance of the  under-tenant  or occupant as
tenant, or a release of the Lessee from the further performance of the covenants
herein contained on the part of the Lessee.

     Section 9.4. Priority of Indenture.  Pursuant to the Indenture,  the Agency
will pledge and assign the rentals and certain  other  moneys  receivable  under
this  Agreement  to the Trustee as  security  for  payment of the  principal  or
Redemption  Price,  if  applicable,  of and  interest  on the  Bonds,  and  this
Agreement  shall be subject and  subordinate  to the Indenture and such mortgage
lien, security interest, pledge and assignment thereunder.

     Section 9.5. Benefit of and Enforcement by Bondholders.  The Agency and the
Lessee  agree that this  Agreement is executed in part to induce the purchase by
others of the Bonds and for the further  securing of the Bonds,  and accordingly
all  covenants  and  agreements  on the part of the Agency and the Lessee as set
forth in this Agreement are hereby declared to be for the benefit of the Holders
from time to time of the Bonds and may be enforced  as provided in Article  VIII
of the Indenture on behalf of the Bondholders by the Trustee.

     Section  9.6.  Amendments.  This  Agreement  may be  amended  only with the
concurring  written  consent  of  the  Trustee  given  in  accordance  with  the
provisions  of the  Indenture and only if the Lessee shall assume in writing the
obligations of such amended Agreement.

     Section 9.7.  Notices.  All notices,  certificates or other  communications
hereunder  shall be sufficient if sent by registered or certified  United States
mail,  postage  prepaid,  addressed,  if to the  Agency,  to the  Administrative
Director,   Suffolk  County  Industrial  Development  Agency,  H.  Lee  Dennison
Building,  100 Veterans Memorial Highway,  Hauppauge,  New York 11788, if to the
Lessee, KeySpan-Port Jefferson Energy Center, LLC, c/o KeySpan Corporation,  One
MetroTech Center, Brooklyn, New York 11021, Attention:  Treasurer, and if to the
Trustee,  to The Bank of New York, 101 Barclay  Street,  21W, New York, New York
10286,  Attention:  New York Municipal Finance Unit. The Agency,  the Lessee and
the Trustee may, by like notice, designate any further or different addresses to
which subsequent notices,  certificates or other  communications  shall be sent.
Any notice,  certificate or other  communication  hereunder shall, except as may
expressly be provided  herein,  be deemed to have been  delivered or given as of
the date it shall have been mailed.

     Section 9.8. Prior Agreements  Superseded.  This Agreement shall completely
and fully supersede all other prior  understandings or agreements,  both written
and oral (other than any Security Documents),  between the Agency and the Lessee
relating to the Facility.


                                       34
<PAGE>


     Section  9.9.  Severability.  If any clause,  provision  or section of this
Agreement  be  ruled  invalid  by  any  court  of  competent  jurisdiction,  the
invalidity  of such  clause,  provision  or section  shall not affect any of the
remaining provisions hereof.

     Section 9.10.  Inspection  of Facility.  The Lessee will permit the Agency,
the Trustee,  or their duly  authorized  agents,  at all  reasonable  times upon
written  notice to enter  upon the  Facility  and to  examine  and  inspect  the
Facility and exercise their rights hereunder,  under the Indenture and under the
other Security  Documents with respect to the Facility.  The Lessee will further
permit the Agency,  or its duly  authorized  agent,  at all reasonable  times to
enter upon the Facility  but solely for the purpose of assuring  that the Lessee
is operating  the  Facility,  or is causing the  Facility to be  operated,  as a
qualified  "project" under the Act consistent with the purposes set forth in the
recitals to this  Agreement and with the public  purposes of the Agency,  and to
verify employment and other  obligations  hereunder and under the other Security
Documents,  and not for any purpose of assuring the proper maintenance or repair
of the  Facility  as such  latter  obligation  is and shall  remain  solely  the
obligation of the Lessee.

     Section 9.11.  Effective  Date;  Counterparts.  This Agreement shall become
effective  upon its  delivery.  It may be  simultaneously  executed  in  several
counterparts,  each  of  which  shall  be an  original  and all of  which  shall
constitute but one and the same instrument.

     Section 9.12. Binding Effect. This Agreement shall inure to the benefit of,
and  shall be  binding  upon,  the  Agency,  the  Lessee  and  their  respective
successors and assigns.

     Section 9.13.  Net Lease.  It is the  intention of the parties  hereto that
this  Agreement be a "net lease" and that all of the rent be available  for debt
service on the Bonds,  and this  Agreement  shall be  construed  to effect  such
intent.

     Section  9.14.  Law  Governing.  THIS  AGREEMENT  SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF THE STATE WITHOUT REGARD OR REFERENCE
TO CONFLICTS OF LAWS PRINCIPLES.

     Section 9.15.  Investment  of Funds.  Any moneys held as part of the Rebate
Fund,  the Earnings Fund, the Project Fund, the Bond Fund or the Renewal Fund or
in any special  fund  provided for in this  Agreement or in the  Indenture to be
invested in the same manner as in any said Fund shall, at the written request of
an Authorized  Representative  of the Lessee,  be invested and reinvested by the
Trustee as provided in the Indenture  (but subject to the  provisions of the Tax
Certificate).  Neither the Agency nor the  Trustee  nor any of their  respective
members,  directors,  officers,  agents  (other  than the  Lessee),  servants or
employees  shall  be  liable  for any  depreciation  in the  value  of any  such
investments or for any loss arising therefrom.

     Interest  and profit  derived from such  investments  shall be credited and
applied  as  provided  in the  Indenture,  and  any  loss  resulting  from  such
investments shall be similarly charged.

     Section  9.16.  Investment  Tax Credit.  It is the intention of the parties
that any investment tax credit or comparable  credit which may ever be available
accrue to the  benefit of the Lessee and the Lessee  shall,  and the Agency upon
advice of counsel may,  make any  election  and take other action in  accordance
with the Code as may be necessary to entitle the Lessee to have such benefit.

     Section  9.17.  Waiver of Trial by Jury.  THE  PARTIES DO HEREBY  EXPRESSLY
WAIVE ALL RIGHTS TO TRIAL BY JURY ON ANY CAUSE OF ACTION  DIRECTLY OR INDIRECTLY
INVOLVING THE TERMS,  COVENANTS OR CONDITIONS OF THIS  AGREEMENT OR THE FACILITY
OR ANY  MATTERS  WHATSOEVER  ARISING  OUT OF OR IN ANY WAY  CONNECTED  WITH THIS
AGREEMENT.


                                       35
<PAGE>


     The provision of this Agreement  relating to waiver of a jury trial and the
right of re-entry or  re-possession  shall survive the termination or expiration
of this Agreement.

Section 9.18.        Consent to Jurisdiction; Service of Process.
                     -------------------------------------------

     (a) The Lessee  represents  that it is subject to service of process in the
State and  covenants  that it will  remain so  subject  during  the term of this
Agreement. If for any reason the Lessee should cease to be so subject to service
of process in the State,  the Lessee hereby  designates  and  appoints,  without
power of  revocation,  John J. Bishar,  Jr.,  Esq.,  as its agent for service of
process,  and, if such agent shall cease to act or otherwise cease to be subject
to service of process in the State, the Lessee hereby irrevocably designates and
appoints  the  Secretary  of State of the  State of New York as the agent of the
Lessee upon whom may be served all process,  pleadings,  notices or other papers
which may be served upon the Lessee as a result of any of its obligations  under
this  Agreement or any other  Security  Document;  provided,  however,  that the
serving of such process, pleadings, notices or other papers shall not constitute
a  condition  to any the  Lessee's  obligations  hereunder  or under  any  other
Security Document.

     (b) The Lessee  irrevocably and  unconditionally  (a) agrees that any suit,
action or other  legal  proceeding  arising out of this  Agreement  or any other
Security  Document  may be  brought  in the courts of record of the State of New
York in Suffolk County or the courts of the United States,  Eastern  District of
New York; (b) consents to the  jurisdiction of each such court in any such suit,
action or  proceeding;  and (c)  waives any  objection  which it may have to the
laying of venue of any such suit,  action or  proceeding  in any of such courts.
The Lessee  shall accept and  acknowledge  service of any and all process in any
such suit, action or proceeding brought in any such court. The Lessee agrees and
consents  that  any such  service  of  process  upon  such  agent  set  forth in
subsection  (a) above and written  notice of such service to the Lessee shall be
taken and held to be valid personal  service upon the Lessees whether or not the
Lessee shall then be doing, or at any time shall have done,  business within the
State  and that any such  service  of  process  shall be of the same  force  and
validity  as if  service  were  made  upon  the  Lessees  according  to the laws
governing the validity and requirements of such service in the State. Such agent
shall not have any power or  authority to enter into any  appearance  or to file
any pleadings in  connection  with any suit,  action or other legal  proceedings
against  the Lessee or to conduct  the  defense of any such suit,  action or any
other legal proceeding except as expressly authorized by the Lessee.

Section 9.19.        No Recourse Under This Agreement or on Bonds.
                     --------------------------------------------

     (a) All covenants,  stipulations,  promises,  agreements and obligations of
the Agency  contained  in this  Agreement  shall be deemed to be the  covenants,
stipulations, promises, agreements and obligations of the Agency, and not of any
member,  director,  officer,  employee or agent of the Agency in his  individual
capacity,  and no  recourse  shall be had for the payment of the  principal  of,
redemption  premium,  if any,  or  interest  on the Bonds or for any claim based
thereon or hereunder against any member,  director,  officer,  employee or agent
(other than the Lessee) of the Agency or any natural person executing the Bonds.

     (b) Anything in this Agreement, the Bonds or any other Security Document to
the contrary notwithstanding, any obligations of the Agency under this Agreement
or the Bonds or under any other  Security  Document or related  document for the
payment  of money  shall  not  subject  the  Agency  to any  pecuniary  or other
liability nor create a debt of the State or the County and neither the State nor
the  County  shall  be  liable  on any  obligation  so  incurred,  but any  such
obligation  shall be a special  obligation  of the Agency  secured  and  payable
solely as provided in the Indenture


                                       36
<PAGE>


     Section 9.20.  Date of Agreement for Reference  Purposes  Only. The date of
this Agreement  shall be for reference  purposes only and shall not be construed
to imply that this Agreement was executed on the date first above written.  This
Agreement was executed and delivered on the Commencement Date.





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                                       37
<PAGE>





     IN WITNESS WHEREOF, the Agency has caused its corporate name to be hereunto
subscribed by its duly authorized Chairman,  Vice Chairman,  Executive Director,
or  Administrative  Director and the Lessee has caused its name to be subscribed
hereto by a Member, all being done as of the year and day first above written.

                                             SUFFOLK COUNTY INDUSTRIAL
                                             DEVELOPMENT AGENCY



                                         By: /s/
                                             ---------------------------
                                             Bruce E. Ferguson
                                             Administrative Director


                                             KEYSPAN-PORT JEFFERSON ENERGY
                                             CENTER, LLC



                                         By: /s/
                                             ---------------------------
                                             Michael Nilsen
                                             Vice President and Treasurer














                                       38
<PAGE>




                                                                     APPENDIX A

                             DESCRIPTION OF FACILITY
                             -----------------------

     The  Facility  means the  refinancing  and  reimbursing  of  certain  costs
incurred by the Lessee in connection with the acquisition and construction of an
approximately  5,390 square foot building and the acquisition  and  installation
therein of two single  cycle  generating  units to be used by the Lessee for the
purpose of providing an aggregate of  approximately 79 megawatts to the existing
Long Island electric grid.

     Said building and  generating  units are located on that certain lot, piece
and parcel of land described in the legal description attached hereto.
















                                       39
<PAGE>



                                   APPENDIX B

                        DESCRIPTION OF FACILITY EQUIPMENT
                        ---------------------------------



                           [To be provided by Lessee]
















                                       40
<PAGE>


                                  Schedule A-1

                                                        Annual Employment Report
                                               For the Year Ending June 30, ____

     In order to comply with Local and State employment reporting  requirements,
the Suffolk County Industrial Development Agency must require all of its project
companies  to complete  and return the Report to the Agency no later than August
1, ____.

KeySpan-Port Jefferson Energy Center, LLC
c/o KeySpan Corporation
One MetroTech Center
Brooklyn, New York 11201

Telephone #          __________________________________________

Tax ID #             __________________________________________

Please provide  information as of June 30th of jobs at the Project  Location(s).
Do not include any  subcontractors  and consultants.  Include only employees and
owners/principals on your payroll at the Project Location.

Number of existing FULL TIME JOBS _______________

Number of existing PART TIME JOBS _______________

Attached  hereto is a copy of the  Lessee's  final  payroll  report (or  similar
report)  evidencing  the total  number of  employees  employed by the  Sublessee
during the reporting period.

Certification:  I, the  undersigned,  hereby certify to the best of my knowledge
and belief, that all information  contained in this report is true and complete,
and that I understand it is submitted pursuant to agreement.  The Company hereby
authorizes any private or governmental entity,  including but not limited to The
New York State  Department of Labor  ("DOL"),  to release to the Suffolk  County
Industrial  Development  Agency  (the  "Agency")  and/or to the  successors  and
assigns  thereof  (collectively,  the  "Information  Recipients"),  any  and all
employment information under DOL's control which is pertinent to the Company and
the Company's  employees.  In addition,  upon the Agency's request,  the Company
shall  provide  to the  Agency  any  employment  information  in  the  Company's
possession  which is  pertinent  to the  Company  and the  Company's  employees.
Information  released or provided to  Information  Recipients  by DOL, or by any
other  governmental  entity, or by any private entity, or by the Company itself,
or  any  information  previously  released  as  provided  by  all  or any of the
foregoing parties (collectively,  "Employment  Information") may be disclosed by
the Information Recipients in connection with the administration of the programs
of the Agency and/or the successors and assigns thereof,  and/or Suffolk County,
and/or  as may be  necessary  to comply  with law;  and,  without  limiting  the
foregoing, the Employment Information may be included in (y) reports required of
the Agency, and (z) any other reports required by law. This authorization  shall
remain in effect throughout the term of this transaction.

Principal/Owner/Chief Financial Officer_____________________________________
                                                  (Please Print)

Signature__________________               Date____________

                       Please send the completed form to:
                  Suffolk County Industrial Development Agency
                            H. Lee Dennison Building
                          100 Veterans Memorial Highway
                            Hauppauge, New York 11788


                                       41
<PAGE>


                                                                   SCHEDULE A-2

                                          FOR BOND REDEMPTIONS AND TERMINATIONS

                                                        Annual Employment Report
                                               For the Year Ending June 30, ____


In order to comply with Local and State employment reporting  requirements,  the
Suffolk  County  Industrial  Development  Agency must require all of its project
companies  to complete  and return the Report to the Agency no later than August
1, ____.

KeySpan-Port Jefferson Energy Center, LLC
c/o KeySpan Corporation
One MetroTech Center
Brooklyn, New York 11201

Telephone #          __________________________________________

Tax ID #             __________________________________________

Please provide  information as of June 30th of jobs at the Project  Location(s).
Do not include any  subcontractors  and consultants.  Include only employees and
owners/principals on your payroll at the Project Location.

Number of existing FULL TIME JOBS _______________

Number of existing PART TIME JOBS _______________

Attached  hereto is a copy of the  Lessee's  final  payroll  report (or  similar
report)  evidencing  the total  number of  employees  employed by the  Sublessee
during the reporting period.

Certification:  I, the  undersigned,  hereby certify to the best of my knowledge
and belief, that all information  contained in this report is true and complete,
and that I understand it is submitted pursuant to agreement.  The Company hereby
authorizes any private or governmental entity,  including but not limited to The
New York State  Department of Labor  ("DOL"),  to release to the Suffolk  County
Industrial  Development  Agency  (the  "Agency")  and/or to the  successors  and
assigns  thereof  (collectively,  the  "Information  Recipients"),  any  and all
employment information under DOL's control which is pertinent to the Company and
the Company's  employees.  In addition,  upon the Agency's request,  the Company
shall  provide  to the  Agency  any  employment  information  in  the  Company's
possession  which is  pertinent  to the  Company  and the  Company's  employees.
Information  released or provided to  Information  Recipients  by DOL, or by any
other  governmental  entity, or by any private entity, or by the Company itself,
or  any  information  previously  released  as  provided  by  all  or any of the
foregoing parties (collectively,  "Employment  Information") may be disclosed by
the Information Recipients in connection with the administration of the programs
of the Agency and/or the successors and assigns thereof,  and/or Suffolk County,
and/or  as may be  necessary  to comply  with law;  and,  without  limiting  the
foregoing, the Employment Information may be included in (y) reports required of
the Agency, and (z) any other reports required by law. This authorization  shall
remain in effect throughout the term of this transaction.

Principal/Owner/Chief Financial Officer _________________________________
                                                (Please Print)

Signature______________________            Date__________

                       Please send the completed form to:
                  Suffolk County Industrial Development Agency
                            H. Lee Dennison Building
                          100 Veterans Memorial Highway
                            Hauppauge, New York 11788


                                       42
<PAGE>



                                  SCHEDULE A-3





The Facility is currently  operating  during  startup and shutdown  periods in a
manner  that  technically  exceeds  its air  permit  limits.  The New York State
Department  of  Environmental  Conservation  ("DEC") is  planning  to revise the
Facility's  Title V permit  to  include  special  conditions  that  specifically
address  startup  and  shutdown  operations  as part of a  statewide  effort for
similar units.  EPA does not allow state agencies to include any condition in an
operating permit that allows a wholesale  exemption from normal operating limits
for specific time periods  attributable  to startup and shutdown.  Instead,  EPA
recommends the establishment of specific startup and shutdown limits for periods
determined to be appropriate  for each specific  source or process.  Discussions
are pending  with the DEC to issue final Title V permits for the Port  Jefferson
79 MW combustion  turbines to establish  permit  conditions  that are based on a
reasonable  review of Facility  data and  reflect  actual  experience  operating
emission units in startup and shutdown mode using both fuel types.












                                       43