Document:

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                                                                     Exhibit 4.2

                                                                  EXECUTION COPY

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                               HOMER CITY OL1 LLC

                $__________ 8.137% Series A Lessor Notes due 2019

                $__________ 8.734% Series B Lessor Notes due 2026

                    INDENTURE OF TRUST AND SECURITY AGREEMENT

                          Dated as of December __, 2001

                              THE BANK OF NEW YORK,
                           as Lease Indenture Trustee

                                       and

                              THE BANK OF NEW YORK,
                                as Security Agent

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                                TABLE OF CONTENTS

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              ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1    DEFINITIONS....................................................8
SECTION 1.2    OTHER DEFINITIONS.............................................13
SECTION 1.3    OTHER DEFINITIONS.............................................14
SECTION 1.4    ONE CLASS OF SECURITIES.......................................14

               ARTICLE II THE LESSOR NOTES

SECTION 2.1    LIMITATION ON LESSOR NOTES....................................14
SECTION 2.2    INITIAL LESSOR NOTES..........................................14
SECTION 2.3    EXECUTION AND AUTHENTICATION OF LESSOR NOTES..................15
SECTION 2.4    ISSUANCE AND TERMS OF THE INITIAL LESSOR NOTES................15
SECTION 2.5    PAYMENTS FROM INDENTURE ESTATE ONLY; NO PERSONAL LIABILITY OF
               THE OWNER PARTICIPANT SECURITY AGENT OR THE LEASE INDENTURE
               TRUSTEE.......................................................16
SECTION 2.6    SUBSEQUENT LESSOR NOTES.......................................17
SECTION 2.7    PAYMENT OF EXPENSES ON TRANSFER...............................18
SECTION 2.8    RESTRICTIONS OF TRANSFER RESULTING FROM FEDERAL SECURITIES
               LAWS; LEGEND..................................................19
SECTION 2.9    SECURITY FOR AND PARITY OF LESSOR NOTES.......................19
SECTION 2.10   ACCEPTANCE OF THE LEASE INDENTURE TRUSTEE AND APPOINTMENT OF
               THE SECURITY AGENT............................................19
SECTION 2.11   PAYING AGENT..................................................20
SECTION 2.12   PAYING AGENT TO HOLD MONEY IN TRUST...........................20
SECTION 2.13   [RESERVED]....................................................21
SECTION 2.14   REPLACEMENT LESSOR NOTES......................................21
SECTION 2.15   OUTSTANDING LESSOR NOTES......................................21
SECTION 2.16   TREASURY LESSOR NOTES.........................................22
SECTION 2.17   [RESERVED]....................................................22
SECTION 2.18   CANCELLATION..................................................22
SECTION 2.19   DEFAULTED INTEREST............................................22
SECTION 2.20   [RESERVED]....................................................23
SECTION 2.21   ASSUMPTION OF LESSOR NOTES....................................23

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           ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
                             FROM INDENTURE ESTATE

SECTION 3.1     DISTRIBUTION PRIOR TO LEASE INDENTURE EVENT OF DEFAULT.......25
SECTION 3.2     PAYMENTS FOLLOWING EVENT OF LOSS OR OTHER EARLY TERMINATION..26
SECTION 3.3     PAYMENTS AFTER LEASE INDENTURE EVENT OF DEFAULT..............27
SECTION 3.4     CERTAIN PAYMENTS.............................................28
SECTION 3.5     OTHER PAYMENTS...............................................29
SECTION 3.6     MANNER OF PAYMENT TO THE OWNER LESSOR........................29
SECTION 3.7     ESTABLISHMENT OF THE NOTE ACCOUNTS;  AND LIEN AND SECURITY
                INTEREST; ETC................................................30
SECTION 3.8     THE ACCOUNT BANK; LIMITED RIGHTS OF THE OWNER LESSOR.........31
SECTION 3.9     EXERCISE OF POWERS; INSTRUCTIONS OF REQUIRED LEASE INDENTURE
                SECURED PARTIES..............................................33
SECTION 3.10    INVESTMENT OF AMOUNTS HELD BY LEASE INDENTURE TRUSTEE........33

                      ARTICLE IV REDEMPTION AND PREPAYMENT

SECTION 4.1     NOTICES TO LEASE INDENTURE TRUSTEE...........................34
SECTION 4.2     SELECTION OF LESSOR NOTES TO BE REDEEMED.....................34
SECTION 4.3     NOTICE OF REDEMPTION.........................................35
SECTION 4.4     EFFECT OF NOTICE OF REDEMPTION...............................36
SECTION 4.5     DEPOSIT OF REDEMPTION PRICE..................................36
SECTION 4.6     LESSOR NOTES REDEEMED IN PART................................36
SECTION 4.7     OPTIONAL REDEMPTION..........................................37
SECTION 4.8     MANDATORY REDEMPTION.........................................37

                               ARTICLE V COVENANTS

SECTION 5.1     PAYMENT OF LESSOR NOTES......................................37
SECTION 5.2     STAY, EXTENSION AND USURY LAWS...............................38
SECTION 5.3     PAYMENTS FOR CONSENT.........................................39
SECTION 5.4     DEBT SERVICE RESERVE ACCOUNT.................................39

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                              ARTICLE VI SUCCESSORS

SECTION 6.1     LIMITATION ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY
                ALL ASSETS...................................................39

                  ARTICLE VII LEASE INDENTURE EVENTS OF DEFAULT

SECTION 7.1     LEASE INDENTURE EVENTS OF DEFAULT............................40
SECTION 7.2     CERTAIN RIGHTS TO CURE.......................................42
SECTION 7.3     ACCELERATION.................................................44
SECTION 7.4     OTHER REMEDIES...............................................44
SECTION 7.5     TAKING POSSESSION OF INDENTURE ESTATE........................45
SECTION 7.6     WAIVER OF PAST LEASE INDENTURE DEFAULTS......................46
SECTION 7.7     CONTROL BY MAJORITY..........................................47
SECTION 7.8     [RESERVED]...................................................47
SECTION 7.9     RIGHTS OF HOLDERS OF LESSOR NOTES TO RECEIVE PAYMENT.........47
SECTION 7.10    COLLECTION SUIT BY LEASE INDENTURE TRUSTEE...................47
SECTION 7.11    [RESERVED]...................................................47
SECTION 7.12    NO ACTION CONTRARY TO THE FACILITY LESSEE'S RIGHTS UNDER THE
                FACILITY LEASE...............................................47

             ARTICLE VIII LEASE INDENTURE TRUSTEE AND SECURITY AGENT

SECTION 8.1     DUTIES OF LEASE INDENTURE TRUSTEE AND SECURITY AGENT.........48
SECTION 8.2     RIGHTS OF LEASE INDENTURE TRUSTEE............................49
SECTION 8.3     INDIVIDUAL RIGHTS OF SECURITY AGENT..........................50
SECTION 8.4     LEASE INDENTURE TRUSTEE'S DISCLAIMER.........................51
SECTION 8.5     NOTICE OF LEASE INDENTURE DEFAULTS...........................51
SECTION 8.6     GENERAL AUTHORITY OF THE SECURITY AGENT OVER THE INDENTURE
                ESTATE.......................................................51
SECTION 8.7     COMPENSATION.................................................52
SECTION 8.8     REPLACEMENT OF LEASE INDENTURE TRUSTEE.......................52
SECTION 8.9     SUCCESSOR LEASE INDENTURE TRUSTEE BY MERGER, ETC.............54
SECTION 8.10    ELIGIBILITY; DISQUALIFICATION................................54
SECTION 8.11    OTHER CAPACITIES.............................................54

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                            ARTICLE IX SHARED RIGHTS

SECTION 9.1     CERTAIN RIGHTS OF OWNER LESSOR AND OWNER PARTICIPANT.........55
SECTION 9.2     NO REPRESENTATIONS OR WARRANTIES AS TO THE PROPERTY INTEREST.58

               ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS LEASE
                         INDENTURE AND OTHER DOCUMENTS

SECTION 10.1    WITHOUT CONSENT OF NOTEHOLDERS OR REQUIRED NOTEHOLDERS.......58
SECTION 10.2    WITH CONSENT OF REQUIRED NOTEHOLDERS; LIMITATIONS............61
SECTION 10.3    DOCUMENTS FURNISHED TO NOTEHOLDERS...........................62
SECTION 10.4    LEASE INDENTURE TRUSTEE AND SECURITY AGENT PROTECTED.........62
SECTION 10.5    REVOCATION AND EFFECT OF CONSENTS............................63
SECTION 10.6    NOTATION ON OR EXCHANGE OF LESSOR NOTES......................63
SECTION 10.7    LEASE INDENTURE TRUSTEE TO SIGN AMENDMENTS, ETC..............63

               ARTICLE XI LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 11.1    OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.....64
SECTION 11.2    LEGAL DEFEASANCE AND DISCHARGE...............................64
SECTION 11.3    COVENANT DEFEASANCE..........................................64
SECTION 11.4    CONDITIONS TO LEGAL OR COVENANT DEFEASANCE...................65
SECTION 11.5    DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
                OTHER MISCELLANEOUS PROVISIONS...............................67
SECTION 11.6    REPAYMENT TO OWNER LESSOR....................................67
SECTION 11.7    REINSTATEMENT................................................68

                 ARTICLE XII MISCELLANEOUS

SECTION 12.1    TERMINATION OF INDENTURE.....................................68
SECTION 12.2    NOTICES......................................................69
SECTION 12.3    RULES BY LEASE INDENTURE TRUSTEE AND AGENTS..................70

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SECTION 12.4    NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
                SHAREHOLDERS.................................................70
SECTION 12.5    GOVERNING LAW................................................71
SECTION 12.6    NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS................71
SECTION 12.7    SUCCESSORS...................................................71
SECTION 12.8    SEVERABILITY.................................................71
SECTION 12.9    COUNTERPART ORIGINALS........................................71
SECTION 12.10   TABLE OF CONTENTS, HEADINGS, ETC.............................71
SECTION 12.11   CONCERNING THE OWNER MANAGER.................................72
SECTION 12.12   ACKNOWLEDGEMENT..............................................72

EXHIBITS:

A        Form of Lessor Note
B        Form of Mortgage

SCHEDULES:

I        Schedule of Scheduled Payments of Principal
II       Participation Agreements
III      List of Note Accounts

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                    INDENTURE OF TRUST AND SECURITY AGREEMENT

                  This INDENTURE OF TRUST AND SECURITY AGREEMENT (LI1) (as
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof, this "LEASE Indenture"), dated as of December __, 2001,
among Homer City OL1 LLC, a Delaware limited liability company created for the
benefit of the Owner Participant referred to below, as grantor (the "OWNER
LESSOR" or the "MORTGAGOR"), The Bank of New York, as grantee and as successor
in interest to United States Trust Company of New York (the "LEASE INDENTURE
TRUSTEE" or the "MORTGAGEE") and The Bank of New York, as Security Agent (the
"SECURITY AGENT").

                                   WITNESSETH:

                  WHEREAS, this Lease Indenture is executed pursuant to the
Participation Agreement as of the date hereof set forth on Schedule II hereto
among the Owner Lessor, the Owner Manager, the Owner Participant, EME Homer City
Generation L.P. ("HOMER CITY"), Homer City Funding LLC ("LENDER"), the Lease
Indenture Trustee, and the Bondholder Trustee (as defined herein);

                  WHEREAS, by a Facility Deed of even date intended to be
recorded in the office of the Recorder of Deeds of Indiana County, Pennsylvania,
Homer City will convey to the Owner Lessor an Undivided Interest Percentage in
the Facility, which is more particularly described in Exhibit A attached hereto
and made a part hereof and is located on the Facility Site in Indiana County,
Pennsylvania;

                  WHEREAS, the Owner Lessor and Homer City (the "FACILITY
LESSEE") will, pursuant to the Participation Agreement, enter into the Facility
Lease Agreement (FL1), dated as of December __, 2001 (as amended, supplemented
or otherwise modified from time to time in accordance with the provisions
thereof, the "FACILITY LEASE"), pursuant to which the Owner Lessor will lease to
the Facility Lessee and the Facility Lessee will lease from the Owner Lessor for
a term of 33 3/4 years all of the Owner Lessor's interest in and to the Facility
with the right to nonexclusive possession thereof;

                  WHEREAS, a Memorandum of the Facility Lease executed by the
Owner Lessor and Homer City is intended to be recorded as aforesaid;

                  WHEREAS, Homer City will lease to the Owner Lessor a
corresponding undivided interest equal to the Undivided Interest Percentage in
and to the Facility Site described in Exhibit B attached hereto and made a part
hereof with the right to nonexclusive possession thereof and has granted certain
non-exclusive easements (such undivided leasehold interest, together with such
non-exclusive easements, the "GROUND INTEREST") pursuant to a Facility Site
Lease between Homer City and the Owner Lessor (the "FACILITY SITE LEASE") as of
the date hereof;
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                  WHEREAS, a Memorandum of the Facility Site Lease executed by
Homer City and the Owner Lessor is intended to be recorded prior to this Lease
Indenture;

                  WHEREAS, the Owner Lessor will sublease the Ground Interest
back to Homer City pursuant to a Sublease of even date herewith (the "FACILITY
SITE SUBLEASE"), a memorandum of which is intended to be recorded;

                  WHEREAS, the Facility is more particularly described in
Exhibit A attached hereto and made a part hereof and is located on the Facility
Site located in Indiana County, in the Commonwealth of Pennsylvania, which,
together with certain easements, are more particularly described in Exhibit B
attached hereto and made a part hereof;

                  WHEREAS, the Owner Lessor was authorized and directed in the
LLC Agreement (LA1), effective as of December __, 2001 (as amended, supplemented
or otherwise modified from time to time in accordance with the provisions
thereof, the "LESSOR LLC AGREEMENT"), between Wells Fargo Bank Northwest,
National Association, as independent manager (the "TRUST COMPANY"), and General
Electric Capital Corporation (the "OWNER PARTICIPANT"), a copy of which is
recorded contemporaneously herewith, to execute and deliver this Lease
Indenture;

                  WHEREAS, in connection with the transactions contemplated by
the Lessor LLC Agreement, the Owner Lessor entered into the Participation
Agreement;

                  WHEREAS, by entering into an Assumption Agreement, dated
December __, 2001, between Homer City and Edison Mission Holdings Co., Homer
City will assume all obligations of Edison Mission Holdings Co. on the Existing
Debt;

                  WHEREAS, the Owner Lessor, pursuant to the Facility Deed and
Bill of Sale, will purchase the Undivided Interest from the Facility Lessee, the
purchase price for which will include assumption of the Existing Debt from Homer
City, and concurrently therewith will lease such Undivided Interest to the
Facility Lessee pursuant to the Facility Lease;

                  WHEREAS, the holders of the Existing Debt have consented to
the amendments and waivers to the Bondholder Indenture;

                  WHEREAS, in accordance with this Lease Indenture, the Owner
Lessor will execute and deliver the Initial Lessor Notes, in consideration of
the assumption of certain indebtedness by the initial Noteholders which
constitutes a portion of the Purchase Price, and will grant to the Security
Agent the Mortgage and the other liens and security interests herein provided;

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                  WHEREAS, in accordance with this Lease Indenture, the Owner
Lessor will execute and deliver an open-end mortgage, leasehold mortgage,
assignment of leases and rents and fixture filing (the "Mortgage") in the form
attached as Exhibit B hereto;

                  WHEREAS, this Lease Indenture is intended to be a security
agreement under the Uniform Commercial Code of the State of New York;

                  WHEREAS, the Owner Lessor, the Security Agent and the Lease
Indenture Trustee desire to enter into this Lease Indenture, to, among other
things, provide for (a) the issuance by the Owner Lessor of the Lessor Notes in
two series, and (b) creation of the liens and security interests in favor of the
Security Agent as security for, INTER ALIA, the Owner Lessor's obligations to
and for the benefit of the Debt Service Reserve Letter of Credit Secured Parties
and for the benefit and security of such Noteholders; and

                  WHEREAS, in order to simplify the administration of the common
collateral, the Lease Indenture Trustee and the Owner Lessor desire to appoint
the Security Agent to serve as a common representative and to hold the Indenture
Estate for the benefit of the Lease Indenture Secured Parties.

                  NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreement herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                GRANTING CLAUSE:

                  As collateral to secure the prompt payment of the principal of
and interest on, and all other amounts due with respect to, the Lessor Notes
from time to time outstanding hereunder, and all other amounts owing hereunder
by the Owner Lessor and the performance and observance by the Owner Lessor of
all the agreements, covenants and provisions contained in the Operative
Documents, and the prompt payment of all amounts from time to time due or to
become due to any Lease Indenture Secured Party under the Operative Documents
(collectively, the "LESSOR SECURED OBLIGATIONS"), and for the uses and purposes
and subject to the terms and provisions hereof, and in consideration of the
premises and of the covenants herein contained, and of the acceptance of the
Lessor Notes by the Noteholders thereof, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Owner Lessor does
hereby pledge and grant a first priority security interest in, and by the
execution and delivery of the Mortgage shall grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and warrant, unto and for the security and
benefit of, the Security Agent acting for and on behalf of the Lease Indenture
Secured Parties, a first priority mortgage lien on, all estate, right, title and
interest now held or hereafter acquired by the Owner Lessor in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments (such property, rights,
interests and

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privileges as are conveyed pursuant to this granting clause, but excluding
Excepted Payments and the rights to enforce and collect the sums as set forth
herein, being hereinafter referred to as the "INDENTURE ESTATE"):

                  (1) the Undivided Interest, the Owner Lessor's interest in all
         goods (as defined in the Uniform Commercial Code as in effect in the
         State of New York from time to time) constituting the Facility; all
         Components; the Owner Lessor's interest in any Improvements; the Owner
         Lessor's interest in any Project Document now or hereinafter acquired
         by pledge, assignment or otherwise; the Facility Site Lease and the
         Ground Interest thereunder; the Facility Lease and all payments of any
         kind by the Facility Lessee thereunder (including Rent); the Facility
         Site Sublease and the Sublease Ground Interest thereunder and all
         payments of any kind by the Facility Lessee thereunder; Owner Lessor's
         interest in all tangible property located on or at or attached to the
         Facility Land that an interest in such tangible property arises under
         applicable real estate law ("FIXTURES"); the Facility Deed, the Bill of
         Sale, the Ownership and Operation Agreement, the Lessor LLC Agreement,
         and all and any interest in any property now or hereafter granted to
         the Owner Lessor pursuant to any provision of the Facility Site Lease,
         Facility Lease or the Facility Site Sublease; the Security Depositary
         Agreement, the Debt Service Reserve Letter of Credit, the Pledge and
         Collateral Agreement and each other Operative Document to which the
         Owner Lessor is a party (the Undivided Interest, the Owner Lessor's
         interest in any Components, the Owner Lessor's interest in any
         fixtures, Improvements and the Ground Interest are collectively
         referred to as the "PROPERTY INTEREST" and the documents, specifically
         referred to above in this paragraph (1) are collectively referred to as
         the "INDENTURE ESTATE DOCUMENTS"), including, without limitation, (x)
         all rights of the Owner Lessor or the Facility Lessee (to the extent
         assigned by the Facility Lessee to the Owner Lessor) to receive any
         payments or other amounts or to exercise any election or option or to
         make any decision or determination or to give or receive any notice,
         consent, waiver or approval or to make any demand or to take any other
         action under or in respect of any such document, to accept surrender or
         redelivery of the Property Interest or any part thereof, as well as all
         the rights, powers and remedies on the part of the Owner Lessor or the
         Facility Lessee (to the extent assigned by the Facility Lessee to the
         Owner Lessor), whether acting under any such document or by statute or
         at law or in equity or otherwise, arising out of any Lease Default or
         Lease Event of Default and (y) any right to restitution from the
         Facility Lessee, any sublessee or any other Person in respect of any
         determination of invalidity of any such document;

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                  (2) all rents, royalties, issues, profits, revenues, proceeds,
         damages, claims and other income from the property described in this
         Granting Clause, including, without limitation, all payments or
         proceeds payable to the Owner Lessor as the result of the sale of the
         Property Interest or the lease or other disposition of the Property
         Interest, and all estate, right, title and interest of every nature
         whatsoever of the Owner Lessor in and to such rents, issues, profits,
         revenues and other income and every part thereof (the "LEASE
         REVENUES");

                  (3) all condemnation proceeds with respect to the Property
         Interest or any part thereof (to the extent of the Owner Lessor's
         interest therein), and all proceeds (to the extent of the Owner
         Lessor's interest therein) of all insurance maintained pursuant to
         Section 11 of the Facility Lease or otherwise;

                  (4) all other property of every kind and description and
         interests therein now held or hereafter acquired by the Owner Lessor
         pursuant to the terms of any Operative Document, wherever located;

                  (5) all damages resulting from breach (including, without
         limitation, breach of warranty or misrepresentation) or termination of
         any of the Indenture Estate Documents or arising from bankruptcy,
         insolvency or other similar proceedings involving any party to the
         Indenture Estate Documents;

                  (6) the Debt Service Reserve Account and all amounts on
         deposit therein; and

                  (7) all proceeds of the foregoing;

                  BUT EXCLUDING from the Indenture Estate all Excepted Payments,
any and all rights to enforce and collect the same, and SUBJECT TO the rights of
the Owner Lessor and the Owner Participant hereunder.

                  Concurrently with the delivery hereof, the Owner Lessor is
delivering to the Security Agent on behalf of the Lease Indenture Secured
Parties, from time to time the original executed counterpart of the Facility
Lease to which a chattel paper receipt is attached and the Mortgage.

                  The Mortgage will be recorded in the Office of the Recorder of
Deeds of Indiana County, Pennsylvania, and is intended (i) to constitute an
open-end mortgage and leasehold mortgage and fixture filing under the laws of
the Commonwealth of Pennsylvania and (ii) to be consistent with the terms and
conditions of this Lease Indenture.

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                  The Mortgage is intended to constitute an open-end mortgage
and leasehold mortgage under the laws of the Commonwealth of Pennsylvania and
this Lease Indenture is intended to constitute a security agreement as required
under the Uniform Commercial Code of the State of New York. This Lease Indenture
and the Mortgage are given to secure the payment and performance of the Lessor
Secured Obligations.

                  PROVIDED, HOWEVER, that if the principal, interest and any
other amounts due in respect of all the Lessor Notes, all other amounts due to
the Noteholders at the time and in the manner required hereby and by the Lessor
Notes, the Facility Lease and the Participation Agreement (but not including
Excepted Payments) and any other Lessor Secured Obligations shall have been
paid, then this Lease Indenture and the Mortgage shall be surrendered and
cancelled and upon such surrender and cancellation the rights hereby and thereby
granted and assigned shall terminate and cease and the Security Agent shall take
such actions as are required to be taken by it to evidence such termination and
cancellation pursuant to and as directed under Section 12.1.

                  Subject to the terms and conditions hereof, the Lease
Indenture Secured Parties do hereby irrevocably constitute and appoint the
Security Agent as their true and lawful attorney (which appointment is coupled
with an interest) with full power (in the name of each Lease Indenture Secured
Party, as applicable) to ask, require, demand and receive any and all moneys and
claims for moneys (in each case, including, without limitation, insurance and
requisition proceeds to the extent of the Owner Lessor's interest therein but
excluding in all cases Excepted Payments) due and to become due under or arising
out of the Indenture Estate Documents and all other property which now or
hereafter constitutes part of the Indenture Estate and, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or to
take any action or to institute any proceedings (other than in connection with
the enforcement or collection of Excepted Payments) which the Security Agent may
deem to be necessary or advisable. Pursuant to the Facility Lease, the Facility
Lessee is directed to make all payments of Rent required to be paid or deposited
with the Owner Lessor (other than Excepted Payments) and all other amounts which
are required to be paid to or deposited with the Owner Lessor pursuant to the
Facility Lease (other than Excepted Payments) directly to the Security Agent at
such address or addresses as the Security Agent shall specify, for application
as provided in this Lease Indenture. Further, the Owner Lessor agrees that
promptly on receipt thereof, it will transfer to the Security Agent any and all
moneys from time to time received by it constituting part of the Indenture
Estate, whether or not expressly referred to in the immediately preceding
sentence, for distribution pursuant to this Lease Indenture.

                  It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Lessor shall remain liable under the
Indenture Estate Documents to perform all of the obligations assumed by it
thereunder, all in accordance with and pursuant to the terms and provisions
thereof, and the Lease Indenture Trustee and the Noteholders shall have no
obligation or liability under any term or provision

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thereof by reason of or arising out of the assignment hereunder, nor shall the
Lease Indenture Trustee or the Noteholders be required or obligated in any
manner, except as herein expressly provided, to perform or fulfill any
obligations of the Owner Lessor under or pursuant to any of the Indenture Estate
Documents to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

                  The Owner Lessor agrees that at any time and from time to
time, upon the written request of the Lease Indenture Trustee (acting on the
instruction of any Noteholder) or any Noteholder, the Owner Lessor will promptly
and duly execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents necessary to obtain the full benefits
of the assignment hereunder and of the rights and powers herein granted;
PROVIDED, HOWEVER, that the Owner Lessor shall have no obligation to execute or
deliver or to cause to be executed or delivered any further instruments or
documents that would give the Lease Indenture Trustee, the Security Agents or
the Lease Indenture Secured Parties Reserve Letter of Credit greater rights and
powers than the rights and powers of the Owner Lessor which have been granted
herein or intended to be granted herein.

                  The Owner Lessor does hereby warrant and represent that it has
not assigned, pledged or granted a lien or security interest in, to or under,
and hereby covenants that, so long as this Lease Indenture shall remain in
effect and the lien hereof and of the Mortgage shall not have been released
pursuant to Section 7.1 hereof, it will not assign, pledge or grant a lien or
security interest in any of its estate, right, title or interest in, to or
under, the Indenture Estate to anyone other than the Security Agent for the
benefit of the Lease Indenture Secured Parties. The Owner Lessor hereby further
covenants that with respect to its estate, right, title and interest in, to or
under the Indenture Estate, it will not, except as provided in this Lease
Indenture and except as to Excepted Payments, (i) accept any payment from the
Facility Lessee or any sublessee or enter into any agreement amending, modifying
or supplementing any of the Indenture Estate Documents, execute any waiver or
modification of, or consent under, the terms of any of the Indenture Estate
Documents or revoke or terminate any of the Indenture Estate Documents, (ii)
settle or compromise any claim arising under any of the Indenture Estate
Documents, or (iii) submit or consent to the submission of any dispute,
difference or other matter arising under or in respect of any of the Indenture
Estate Documents to arbitration thereunder.

                  Except as provided herein, the Owner Lessor hereby ratifies
and confirms its obligations under the Indenture Estate Documents and does
hereby agree that it will not take or omit to take any action, the taking or
omission of which might result in an alteration or impairment of any of the
Indenture Estate Documents or of any of the rights created by any such Indenture
Estate Document or the assignment (subject to the previous paragraph) hereunder.

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                  The Security Agent, for itself and its successors and
permitted assigns, hereby agrees that it shall hold the Indenture Estate, in
trust for the benefit and security of (i) the Noteholders of the Lessor Notes
from time to time outstanding, without any priority of any one Lessor Note over
any other except as herein otherwise expressly provided, (ii) the Lease
Indenture Trustee, and for the uses and purposes and subject to the terms and
provisions set forth in this Lease Indenture and (iii) the Debt Service Reserve
Letter of Credit Secured Parties.

                  Accordingly, the Owner Lessor, for itself and its successors
and permitted assigns, agrees that all Lessor Notes are to be issued and
delivered and that all property subject or to become subject hereto is to be
held subject to the further covenants, conditions, uses and trusts hereinafter
set forth, and the Owner Lessor, for itself and its successors and permitted
assigns, hereby covenants and agrees with the Security Agent, for the benefit
and security of the Noteholders from time to time of the Lessor Notes from time
to time outstanding and the Debt Service Letter of Credit Secured Parties and to
protect the security of this Lease Indenture, and the Lease Indenture Trustee
and the Security Agent agree to accept the trusts and duties hereinafter set
forth, as follows:

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1       DEFINITIONS

                  "ACCEPTABLE CREDIT SUPPORT" means an irrevocable letter of
credit from an Acceptable Credit Provider. In the event that (a) such letter of
credit will expire or otherwise terminate, substitute Acceptable Credit Support
must be provided at least 30 days prior to the applicable expiration or
termination date or (b) a downgrade of any Acceptable Credit Provider by Moody's
or S&P to below the minimum criteria specified in the definition thereof,
substitute Acceptable Credit Support must be provided within 30 days of such
event. Otherwise, in either such case above the Security Agent shall draw down
the then outstanding amount of the Acceptable Credit Support and deposit such
monies into the Debt Service Reserve Account.

                  "AGENT" means any Paying Agent, authenticating agent or
securities custodian.

                  "ASSUMPTION EVENT" means the election by the Facility Lessee
to assume the Lessor Notes pursuant to Section 10.2(b) or Section 13.4 of the
Facility Lease.

                   "BONDHOLDER INDENTURE" means the Indenture dated May 27, 1999
between Edison Mission Holdings Co. and The Bank of New York, as Trustee, as
amended and restated.

                                       8
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                  "BOARD RESOLUTION" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person or the general partner, in the case of a limited partnership, of such
Person (or, if such Person is a partnership, one of its general partners) to
have been duly adopted by the Board of Directors of such Person or the general
partner, in the case of a limited partnership, of such Person (or, if such
Person is a partnership, one of its general partners) and to be in full force
and effect on the date of such certification, and delivered to the Lease
Indenture Trustee.

                  "BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banking institutions are authorized or required by
law, regulation or executive order to be closed in New York, New York or the
city and state in which the office of the Lease Indenture Trustee is located.

                  "CAPITAL LEASE OBLIGATION" means, as to any Person, all
monetary obligations of such Person under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of the Lease Indenture, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.

                  "CLOSING DATE" means the date of issuance and delivery of the
Initial Lessor Notes.

                  "COLLATERAL" means the collective reference to all assets,
whether now owned or hereafter acquired, upon which a lien is created or granted
from time to time pursuant to any Security Document.

                  "CORPORATE TRUST OFFICE OF THE LEASE INDENTURE TRUSTEE" shall
be at the address of the Lease Indenture Trustee specified in Section 13.2
hereof or such other address as to which the Lease Indenture Trustee may give
notice to the Owner Lessor.

                  "CUSTODIAN" means the Lease Indenture Trustee, as custodian
with respect to the Lessor Notes in global form, or any successor entity
thereto.

                  "DEBT SERVICE RESERVE ACCOUNT" has the meaning set forth in
Section 5.4 hereof.

                  "DEBT SERVICE RESERVE LETTER OF CREDIT SECURED PARTIES" means
the Reimbursement Agreement Agent, the DSR Noteholder and the Issuer of the Debt
Service Reserve Letter of Credit.

                  "DEPOSITARY" means, with respect to the Lessor Notes issuable
or issued in whole or in part in global form, the Person specified in Section
2.11 hereof as the Depositary with respect to the Lessor Notes, and any and all
successors thereto appointed

                                       9
<Page>

as depositary hereunder and having become such pursuant to the applicable
provision of this Lease Indenture.

                  "DSR NOTEHOLDER"shall have the meaning set forth in the
Reimbursement Agreement.

                  DSR NOTES" shall have the meaning set forth in the
Reimbursement Agreement.

                  "DUFF & PHELPS" means Duff & Phelps Credit Rating Co. and its
successors and assigns.

                  "EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.

                  "FINANCING DOCUMENTS" has the meaning set forth in the
Security Deposit Agreement.

                  "GOVERNMENT SECURITIES" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.

                  "INDEPENDENT ENGINEER" means Stone and Webster Management
Consultants, Inc. or another nationally recognized independent engineering and
consulting firm which, as Independent Engineer, will independently review the
technical aspects of the project, analyze the contractual structure and create
financial projections for the benefit of the Noteholders.

                  "INDEPENDENT MANAGER" means Wells Fargo Bank Northwest,
National Association, a Delaware corporation or its successors and assigns.

                  "ISSUER OF THE DEBT SERVICE RESERVE LETTER OF CREDIT" has the
meaning set forth in the Reimbursement Agreement.

                  "LEASE INDENTURE DEFAULT" means an event or condition that,
with the giving of notice or the lapse of time, or both, would become a Lease
Indenture Event of Default.

                  "LEASE INDENTURE SECURED PARTY" means each Noteholder, the
Security Agent, the Lease Indenture Trustee and the Reimbursement Agreement
Agent, the DSR Noteholder and the Issuer of the Debt Service Reserve Letter of
Credit.

                                       10
<Page>

                  "LESSOR NOTES" means the Series A Lessor Notes and the Series
B Lessor Notes.

                  "MAKE-WHOLE PREMIUM" means, with respect to any Lessor Note to
be redeemed on any Redemption Date, an amount calculated by the Owner Lessor as
of such date equal to the excess, if any, of (i) the net present value of the
then remaining scheduled installments of principal and payments of interest (but
excluding that portion of any scheduled installment of principal or payment of
interest that is actually due and paid on the Redemption Date) in respect of
such Lessor Note calculated using a discount factor equal to the sum of the
Treasury Yield plus 50 basis points, over (ii) the unpaid principal amount of
such Lessor Note. Such Yield Maintenance Premium shall be determined in
accordance with the following provisions:

         (a) the average life of the remaining scheduled installments of
principal in respect of such Lessor Note (the "Remaining Average Life") shall be
calculated as of such Redemption Date; and

         (b) the "Treasury Yield" shall be calculated for the United States
Treasury security having an average life equal to the Remaining Average Life and
trading in the secondary market at the price closest to par (the "Primary
Issue"); PROVIDED, HOWEVER, that, if no United States Treasury security has an
average life equal to the Remaining Average Life, the yields (the "Other
Yields") for maturities of the two United States Treasury securities having
average lives most closely corresponding to such Remaining Average Life and
trading in the secondary market at the price closest to par shall be calculated,
and the yield to maturity for the Primary Issue shall be the yield interpolated
or extrapolated from such Other Yields on a straight-line basis, rounding in
each of such relevant periods to the nearest month.

                  "MANAGER'S CERTIFICATE" means a certificate signed by the
Independent Manager of the Owner Lessor.

                  "MOODY'S" means Moody's Investors Service, Inc., a division of
Moody's Corporation, and its successors and assigns.

                  "NEW LESSOR NOTES" has the meaning set forth in Section 2.6(a)
to this Lease Indenture.

                  "NOTEHOLDER" means a Person in whose name a Lessor Note is
registered.

                  "OFFERING" means the offering of the Initial Lessor Notes by
the Owner Lessor.

                  "OPINION OF COUNSEL" means a written opinion of counsel for
any Person either expressly referred to in the Lease Indenture or otherwise
reasonably satisfactory to

                                       11
<Page>

the Lease Indenture Trustee which may include, without limitation, counsel for
the Owner Lessor, whether or not such counsel is an employee of the Owner
Lessor.

                  "POWER MARKET CONSULTANT" means PHB Hagler Bailly, Inc. or
another nationally recognized power market consulting firm which, as Power
Market Consultant, will perform a market study of certain markets relating to
the Facility and develop independent electricity price forecasts for the benefit
of the Noteholders.

                   "RECOVERY EVENT" means any settlement of or payment of
$5,000,000 or more in respect of (i) any property or casualty insurance claim
relating to the Facility or (ii) any seizure, condemnation, confiscation or
taking of, or requisition of title or use of, the Facility or any part thereof
by any Governmental Authority.

                  "REDEMPTION DATE" means a date set forth for redemption of
Lessor Notes pursuant to this Lease Indenture.

                  "REDEMPTION PRICE" means the price to be paid by the Owner
Lessor for the Lessor Notes that are redeemed pursuant to this Lease Indenture.

                  "REIMBURSEMENT AGREEMENT" means the Debt Service Reserve
Letter of Credit and Reimbursement Agreement, dated as of December __, 2001, by
and among the Owner Lessor, Westdeutsche Landesbank Girozentrale, New York
Branch and Credit Suisse First Boston, New York Branch.

                  "REIMBURSEMENT AGREEMENT AGENT" means the Agent as defined in
the Reimbursement Agreement.

                  "RENT DEFAULT REMEDY DATE" means the earlier to occur of the
date on which (i) the Existing Debt is retired or (ii) there is an acceleration
under Section 7.3 hereof so long as such acceleration is not rescinded.

                  "REQUIRED LEASE INDENTURE SECURED PARTIES" means, at any time,
holders of debt that at such time hold greater than 50% of the sum of (i) the
Lessor Notes outstanding at such time (disregarding for such computation any
Lessor Notes held directly or beneficially by the Facility Lessee, the Owner
Lessor, the Owner Participant, or any of their respective Affiliates, unless
such Person owns all of the Lessor Notes in accordance with the provisions of
this Lease Indenture) and (ii) in the case of the Debt Service Reserve Letter of
Credit, the commitments with respect thereto at such time.

                  "RESPONSIBLE OFFICER," when used with respect to the Lease
Indenture Trustee, means any officer within the Corporate Trust Office of the
Lease Indenture Trustee (or any successor group of the Lease Indenture Trustee)
or any other officer of the Lease Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular

                                       12
<Page>

corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

                  "RULE 144" means Rule 144 promulgated under the Securities
Act.

                  "RULE 144A" means Rule 144A promulgated under the Securities
Act.

                  "RULE 903" means Rule 903 promulgated under the Securities
Act.

                  "RULE 904" means Rule 904 promulgated under the Securities
Act.

                  "S&P" means Standard & Poor's Rating Services.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SENIOR RENT" has the meaning set forth in the Security
Deposit Agreement.

                  "SERIES A LESSOR NOTES" has the meaning set forth in Section
2.2.

                  "SERIES B LESSOR NOTES" " has the meaning set forth in Section
2.2.

SECTION 1.2       OTHER DEFINITIONS

                                                                      Defined in
         Term                                                           Section

         "AUTHENTICATION ORDER"............................................2.2
         "COVENANT DEFEASANCE".............................................2.3
         "DTC".............................................................2.3
         "EVENT OF LEASE INDENTURE DEFAULT"................................6.1
         "INCUR"...........................................................4.9
         "INITIAL LESSOR NOTES"............................................2.2
         "LEASE INDENTURE EVENT OF DEFAULT"................................7.1
         "LEGAL DEFEASANCE"................................................8.2
         "LESSOR NOTES PAYMENT ACCOUNT"....................................3.7
         "LESSOR SECURED OBLIGATIONS"..........................Granting Clause
         "NOTE ACCOUNTS"...................................................3.7
         "NOTE ACCOUNTS COLLATERAL.........................................3.7
         "NOTICE OF ACTION"................................................3.9
         "PAYING AGENT"....................................................2.3
         "PERMITTED INDEBTEDNESS"..........................................4.9
         "PERMITTED LIENS"................................................4.13
         "SECTION 9.1 RIGHTS"..............................................9.1
         "SECURITY AGENT'S ACCOUNT"........................................3.7

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<Page>

SECTION 1.3       OTHER DEFINITIONS

                  Unless otherwise defined in SECTION 1.1 hereof (including
Annex A hereto), each capitalized term used in this Lease Indenture and not
otherwise defined herein shall have the respective meaning set forth in Appendix
A to the Participation Agreement (PA1) dated as of December __, 2001 (as
amended, supplemented or otherwise modified from time to time in accordance with
the provisions thereof, the "PARTICIPATION AGREEMENT") among the Facility
Lessee, the Owner Manager, the Owner Lessor, the Owner Participant, the Lease
Indenture Trustee, the Lender and the Bondholder Lease Indenture Trustee, unless
the context hereof shall otherwise require. The general provisions of Appendix A
to the Participation Agreement shall apply to terms used in this Lease Indenture
and specifically defined herein.

SECTION 1.4       ONE CLASS OF SECURITIES

                  The Series A Lessor Notes and Series B Lessor Notes (and any
Subsequent Lessor Notes issued pursuant to Section 2.6 hereof) shall vote and
consent together on all matters as one class and none of the Series A Lessor
Notes or Series B Lessor Notes shall have the right to vote or consent as a
separate class on any matter.

                                   ARTICLE II
                                THE LESSOR NOTES

SECTION 2.1       LIMITATION ON LESSOR NOTES

                  No Lessor Notes may be issued under the provisions of, or
become secured by, this Lease Indenture except in accordance with the provisions
of this Section 2. The aggregate principal amount of the Lessor Notes which may
be authenticated and delivered and outstanding at any one time under this Lease
Indenture shall be limited to the aggregate principal amount of the Initial
Lessor Notes issued on the Closing Date to the Lender plus the aggregate
principal amount of Additional Lessor Notes issued pursuant to Section 2.6
hereof.

SECTION 2.2       INITIAL LESSOR NOTES

                  There are hereby created and established hereunder two series
of Lessor Notes consisting of the Series A Lessor Notes (the "Series A Lessor
Notes") and the Series B Lessor Notes (the "Series B Lessor Notes"), each in
substantially the form set forth in Exhibit A to this Lease Indenture and each
such series in the aggregate principal amount, having installments payable on
the dates and in the amounts and having the final maturity date and interest
rate set forth in Schedule I to this Lease Indenture (the Series A

                                       14
<Page>

Lessor Notes and the Series B Lessor Notes, collectively, the "INITIAL LESSOR
NOTES" or, individually, an "INITIAL LESSOR NOTE").

SECTION 2.3       EXECUTION AND AUTHENTICATION OF LESSOR NOTES

                  Each Lessor Note issued hereunder shall be executed and
delivered on behalf of the Owner Lessor by one of its authorized signatories, be
in fully registered form, be dated the date of original issuance of such Lessor
Note and be in denominations of not less than $1,000. Any Lessor Note may be
signed by a Person who, at the actual date of the execution of such Lessor Note,
is an authorized signatory of the Owner Lessor although at the nominal date of
such Lessor Note such Person may not have been an authorized signatory of the
Owner Lessor. No Lessor Note shall be secured by or be entitled to any benefit
under this Lease Indenture or be valid or obligatory for any purpose unless
there appears thereon a certificate of authentication substantially in the form
set forth in Exhibit D to this Lease Indenture (or in the appropriate form
provided for in any supplement hereto executed pursuant to Section 2.6 hereof),
executed by the Lease Indenture Trustee by the manual signature of one of its
authorized officers, and such certificate upon any Lessor Note shall be
conclusive evidence that such Lessor Note has been duly authenticated and
delivered hereunder. The Lease Indenture Trustee shall authenticate and deliver
the Initial Lessor Notes for original issue in the respective aggregate
principal amounts specified in Schedule I to this Lease Indenture, upon a
written order of the Owner Lessor signed on its behalf by the Owner Manager. The
Lease Indenture Trustee shall authenticate and deliver Subsequent Lessor Notes,
upon a written order of the Owner Lessor executed on its behalf by the Owner
Manager and satisfaction of the conditions specified in Section 2.6 hereof. Such
order shall specify the principal amount of the Subsequent Lessor Notes to be
authenticated and the date on which the original issue of Subsequent Lessor
Notes is to be authenticated.

SECTION 2.4       ISSUANCE AND TERMS OF THE INITIAL LESSOR NOTES

         (a) There shall be issued to the Lender the Initial Lessor Notes, dated
the Closing Date. The aggregate amount of the Initial Lessor Notes shall be in
the principal amount equal to the aggregate principal amount of the Lessor Notes
purchased by the Lender from the Owner Lessor pursuant to Section 2.1(b) of the
Participation Agreement.

         (b) Interest, including post-petition interest in any proceeding under
any Bankruptcy Code (computed on the basis of a 360-day year of twelve 30-day
months) on any overdue principal and, to the extent permitted by Requirements of
Law, on overdue interest or Make-Whole Premium shall be paid on demand at a rate
that is 1% per annum in excess of the rate then in effect.

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<Page>

SECTION 2.5       PAYMENTS FROM INDENTURE ESTATE ONLY; NO PERSONAL LIABILITY OF
                  THE OWNER PARTICIPANT SECURITY AGENT OR THE LEASE INDENTURE
                  TRUSTEE

                  Except as may otherwise specifically be provided in this Lease
Indenture or in the Participation Agreement, all payments to be made in respect
of the Lessor Notes or under this Lease Indenture shall be made only from the
Indenture Estate, and the Owner Lessor shall have no obligation for the payment
thereof except to the extent that there shall be sufficient income or proceeds
from the Indenture Estate to make such payments in accordance with the terms of
Section 3 hereof, and the Owner Participant shall not have any obligation for
payments in respect of the Lessor Notes or under this Lease Indenture. The Lease
Indenture Trustee, the Security Agent, each Noteholder and the Debt Service
Reserve Letter of Credit Secured Parties, by its acceptance thereof, agrees that
it will look solely to the income and proceeds from the Indenture Estate to the
extent available for distribution to the Lease Indenture Trustee, the Security
Agent, or such Noteholder or the Debt Service Reserve Letter of Credit Secured
Parties, as the case may be, as herein provided and that, except as expressly
provided in this Lease Indenture or the Participation Agreement, (x) none of the
Owner Participant, the Trust Company, the Security Agent, or the Lease Indenture
Trustee, or any Affiliate of any thereof, shall be personally liable to such
Noteholder or the Debt Service Reserve Letter of Credit Secured Parties for any
amounts payable hereunder, under such Lessor Note or for any performance to be
rendered under any Indenture Estate Document or for any liability under any
Indenture Estate Document, and (y) such amounts shall be non-recourse to the
assets of each of the Owner Participant, the Security Agent, the Trust Company
or the Lease Indenture Trustee or the Debt Service Reserve Letter of Credit
Secured Parties, or any Affiliate of any thereof. Without prejudice to the
foregoing, the Owner Lessor will duly and punctually pay or cause to be paid the
principal of, premium (including, without limitation, Make-Whole Premium), if
any, and interest on all Lessor Notes according to their terms and the terms of
this Lease Indenture. Nothing contained in this Section 2.5 limiting the
liability of the Owner Lessor shall derogate from the right of the Lease
Indenture Trustee the Security Agent, the Noteholders and the Debt Service
Reserve Letter of Credit Secured Parties to proceed against the Indenture Estate
to secure and enforce all payments and obligations due hereunder and under the
Indenture Estate Documents and the Lessor Notes.

                  In furtherance of the foregoing, to the fullest extent
permitted by law, each Noteholder (and each assignee of such Person) and each
Debt Service Reserve Letter of Credit Secured Party, by their acceptance
thereof, agrees, as a condition to its being secured under this Lease Indenture,
that neither they nor the Lease Indenture Trustee will exercise any statutory
right to negate the agreements set forth in this Section 2.5.

                  Nothing herein contained shall be interpreted as affecting the
representations, warranties or agreements of the Owner Lessor expressly made set
forth in the Participation Agreement or the Lessor LLC Agreement.

                                       16
<Page>

SECTION 2.6      SUBSEQUENT LESSOR NOTES

         (a) The Owner Lessor may, subject to the conditions hereafter provided
in this Section 2.6, issue additional Lessor Notes ("SUBSEQUENT LESSOR NOTES")
under and secured by this Lease Indenture, at any time or from time to time for
the purpose of (i) providing funds for a Supplemental Financing pursuant to
Section 12.1 of the Participation Agreement (Subsequent Lessor Notes issued for
such purpose, the "ADDITIONAL LESSOR NOTES") or (ii) refinancing the Lessor
Notes or other Subsequent Lessor Notes pursuant to Section 12.2 of the
Participation Agreement (Subsequent Lessor Notes issued for such purpose, the
"NEW LESSOR NOTES").

         (b) Before any Subsequent Lessor Notes shall be issued under the
provisions of this Section 2.6, the Owner Lessor shall have delivered to the
Lease Indenture Trustee, not less than 5 (15 days in the case of New Lessor
Notes) days nor more than 60 days (or in the case of a Supplemental Financing
under Section 12.1 of the Participation Agreement, 90 days) prior to the
proposed date of issuance of such Subsequent Lessor Notes, a request and
authorization to issue such Subsequent Lessor Notes, which request and
authorization shall (i) contain the proposed date of issuance of such Lessor
Notes and the terms thereof and (ii) include a certification by the Facility
Lessee that the terms of such Lessor Notes are in compliance with this Section
2.6 and Section 12.1 or 12.2 of the Participation Agreement, as the case may be.
Such Subsequent Lessor Notes shall have a designation so as to distinguish such
Subsequent Lessor Notes from the Lessor Notes theretofore issued, be dated their
respective dates of issuance, bear interest at such rates (which may be either
fixed or floating) as shall be agreed between the Facility Lessee and the Owner
Lessor, and shall be stated to be payable by their terms not later than the
latest date permitted therefore under Section 12.1 or 12.2 of the Participation
Agreement, as the case may be.

         (c) Except as to any differences in the maturity dates of the
Subsequent Lessor Notes or the rate or rates of interest thereon, such
Subsequent Lessor Notes shall be on a parity with, and shall be entitled to the
same benefits and security of this Lease Indenture, and shall be subject to the
same terms hereof, as the other Lessor Notes issued pursuant to the terms
hereof.

         (d) The terms, provisions and designations of such Subsequent Lessor
Notes shall be set forth in a supplement to this Lease Indenture executed by the
Owner Lessor, the Lease Indenture Trustee and the Security Agent. Such
Subsequent Lessor Notes shall be executed, delivered and registered as provided
in this Lease Indenture, but before such Subsequent Lessor Notes shall be
delivered and registered there shall be delivered to the Lease Indenture Trustee
and the Security Agent, in addition to other documents and certificates required
by this Section 2.6, the following, all of which shall be dated as of the date
of the supplement to this Lease Indenture:

                                       17
<Page>

                  (i) a copy of such supplement (which shall include the form of
         such series of Subsequent Lessor Notes);

                  (ii) unless the Subsequent Lessor Notes will upon issuance be
         the only Lessor Notes outstanding, evidence of the filing of record of
         such supplement, together with UCC lien searches, supplemental title
         reports, opinions, title insurance endorsements and such other evidence
         that may be reasonably required by the Lease Indenture Trustee or the
         Security Agent, as applicable, demonstrating that this Lease Indenture
         and such supplement provide a first-priority perfected lien and
         security interest, subject to Permitted Liens, in the Indenture Estate
         for the full amount of all Lessor Notes outstanding, including all
         Subsequent Lessor Notes described in such supplement and the Debt
         Service Reserve Letter of Credit Secured Parties;

                  (iii) an officer's certificate of an Authorized Officer of the
         Facility Lessee stating that (A) no Lease Default or Lease Event of
         Default has occurred and is continuing, (B) the conditions in respect
         of the issuance of such Subsequent Lessor Notes contained in this
         Section 2.6 have been satisfied, (C) the Basic Lease Rent and the
         Termination Value are calculated to be sufficient to pay all the
         outstanding Lessor Notes, after taking into account the issuance of
         such Subsequent Lessor Notes and any related prepayment of Lessor Notes
         theretofore outstanding and (D) all conditions to the Supplemental
         Financing or refinancing contained in Section 12.1 or 12.2 of the
         Participation Agreement or in any other provision of the Operative
         Documents have been satisfied;

                  (iv) a Manager's Certificate of the Owner Lessor stating that
         no Lease Indenture Default has occurred and is continuing; and

                  (v) an opinion of counsel to the Owner Lessor that the
         Subsequent Lessor Notes and the supplement to this Lease Indenture have
         been duly authorized, executed and delivered by the Owner Lessor and
         constitute the legal, valid and binding obligations of the Owner Lessor
         enforceable in accordance with their terms.

SECTION 2.7      PAYMENT OF EXPENSES ON TRANSFER

                  Upon the issuance of a new Lessor Note or Lessor Notes
pursuant to Section 2.14 or 2.6 hereof, the Owner Lessor or the Lease Indenture
Trustee may require from the party requesting the issuance of such new Lessor
Note or Lessor Notes payment of a sum to reimburse the Owner Lessor and the
Lease Indenture Trustee for, or to provide funds for, the payment on an
After-Tax Basis to the Owner Lessor, Lease Indenture Trustee, Security Agent,
Owner Participant and any OP Member of any tax or other governmental charge,
legal fees and expenses in connection therewith or any

                                       18
<Page>

charges and expenses connected with such tax or governmental charge paid or
payable by the Owner Lessor or the Lease Indenture Trustee.

SECTION 2.8       RESTRICTIONS OF TRANSFER RESULTING FROM FEDERAL SECURITIES
                  LAWS; LEGEND

                  Each Lessor Note shall be delivered to the initial Noteholder
thereof without registration of such Lessor Note under the Securities Act and
without qualification of this Lease Indenture under the Trust Indenture Act of
1939, as amended. Prior to any transfer of any such Lessor Note, in whole or in
part, to any Person, the Noteholder thereof shall furnish to the Facility
Lessee, the Lease Indenture Trustee and the Owner Lessor an opinion of counsel,
which opinion and which counsel shall be reasonably satisfactory to the Lease
Indenture Trustee, the Owner Lessor and the Facility Lessee, to the effect that
such transfer will not violate the registration provisions of the Securities Act
or require qualification of this Lease Indenture under the Trust Indenture Act
of 1939, as amended, and all Lessor Notes issued hereunder shall be endorsed
with a legend which shall read substantially as follows:

         THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
         MAY NOT BE TRANSFERRED, SOLD OR OFFERED FOR SALE OR OTHERWISE DISPOSED
         OF EXCEPT WHILE SUCH REGISTRATION IS IN EFFECT OR PURSUANT TO AN
         EXEMPTION FROM REGISTRATION UNDER SAID ACT.

SECTION 2.9       SECURITY FOR AND PARITY OF LESSOR NOTES

                  All Lessor Notes issued and outstanding hereunder shall rank
on a parity with each other and with each Debt Service Reserve Letter of Credit
Secured Party and shall as to each other be secured equally and ratably by this
Lease Indenture, without preference, priority or distinction of any thereof over
any other by reason of difference in time of issuance or otherwise.

SECTION 2.10      ACCEPTANCE OF THE LEASE INDENTURE TRUSTEE AND APPOINTMENT OF
                  THE SECURITY AGENT

         (a) Each Noteholder, by its acceptance of a Lessor Note, shall be
deemed to have consented to the appointment of the Lease Indenture Trustee.

         (b) Each of the Lease Indenture Secured Parties or their
representatives hereby designates and appoints The Bank of New York as the
security agent for such Lease Indenture Secured Parties under the Lease
Indenture and the Mortgage, and authorizes The Bank of New York in such capacity
to take such action on its behalf under the provisions of the Lease Indenture
and to exercise such powers and perform such

                                       19
<Page>

duties as are expressly delegated to it by the terms of this Lease Indenture,
together with such other powers as are incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Lease Indenture, the Security Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Lease Indenture or otherwise
exist against the Security Agent.

SECTION 2.11      PAYING AGENT

         (a) The Owner Lessor shall maintain in the Borough of Manhattan, the
City of New York, an office or agency where Lessor Notes must be presented for
registration of transfer and payment by a paying agent ("PAYING AGENT"). The
Paying Agent shall keep a register of the Lessor Notes both as to principal and
stated interest thereon and of their transfer. The Owner Lessor shall cause the
Paying Agent to ensure that the transfer of any Lessor Notes will be effected
only by the surrender of the old instrument and either (i) the reissuance by the
Paying Agent of the old instrument to the new holder or (ii) the issuance by the
Paying Agent of a new instrument to the new holder. The Owner Lessor shall also
cause the Paying Agent to ensure that the right to the principal of, and stated
interest on, any Lessor Notes will be transferred only through the book entry
system maintained by the Paying Agent. The Owner Lessor may appoint one or more
additional paying agents. The term Paying Agent includes any additional paying
agent. The Owner Lessor may change any Paying Agent without notice to any
Noteholder. The Owner Lessor shall notify the Security Agent and the Lease
Indenture Trustee in writing of the name and address of any Paying Agent not a
party to this Lease Indenture. If the Owner Lessor fails to appoint or maintain
another entity as Paying Agent, the Lease Indenture Trustee shall act as such.

         (b) The Owner Lessor initially appoints the Lease Indenture Trustee to
act as the Paying Agent and to act as Custodian with respect to the Lessor
Notes.

         (c) The Security Agent shall deposit with the Lease Indenture Trustee
for as long as the Lessor Note Indenture is outstanding, (or to the Paying Agent
if applicable) a sum sufficient to pay such principal and interest, and premium,
if any, when so becoming due. The Owner Lessor shall require each Paying Agent
(other than the Lease Indenture Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Noteholders or the Lease Indenture
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Lessor Notes and shall notify the Lease Indenture Trustee of any
default by the Security Agent in making any such payment.

SECTION 2.12      PAYING AGENT TO HOLD MONEY IN TRUST

                  The Owner Lessor shall require each Paying Agent other than
the Lease Indenture Trustee to agree in writing that the Paying Agent will hold
in trust for the benefit of Noteholders or the Debt Service Reserve Letter of
Credit Secured Parties, as

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applicable, and all money held by the Paying Agent for the payment of principal
on, premium, if any, or interest on the Lessor Notes, and will notify the Lease
Indenture Trustee in writing of any default by the Security Agent in making any
such payment. While any such default continues, the Lease Indenture Trustee may
require a Paying Agent to pay all money held by it to the Lease Indenture
Trustee. The Owner Lessor at any time may require a Paying Agent to pay all
money held by it to the Lease Indenture Trustee. Upon payment over to the Lease
Indenture Trustee, the Paying Agent shall have no further liability for the
money.

SECTION 2.13      [RESERVED]

SECTION 2.14      REPLACEMENT LESSOR NOTES

                  If any mutilated Lessor Note is surrendered to the Lease
Indenture Trustee or the Owner Lessor and the Lease Indenture Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Lessor
Note, the Owner Lessor shall issue and the Lease Indenture Trustee, upon receipt
of an Authentication Order, shall authenticate a replacement Lessor Note and
deliver in lieu of such Lessor Note, a new Lessor Note, dated the same date as
such Lessor Note and of like tenor and principal amounts. If required by the
Lease Indenture Trustee or the Owner Lessor, an indemnity Lessor Note must be
supplied by the Noteholder that is sufficient in the judgment of the Lease
Indenture Trustee and the Owner Lessor to protect the Owner Lessor, the Lease
Indenture Trustee, any Agent and any authenticating agent from any loss that any
of them may suffer if a Lessor Note is replaced. The Owner Lessor and the Lease
Indenture Trustee may charge for their expenses in replacing a Lessor Note.

                  Every replacement Lessor Note is an additional obligation of
the Owner Lessor and shall be entitled to all of the benefits of this Lease
Indenture equally and proportionately with all other Lessor Notes duly issued
hereunder.

SECTION 2.15      OUTSTANDING LESSOR NOTES

                  The Lessor Notes outstanding at any time are all the Lessor
Notes authenticated by the Lease Indenture Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding. Except as set forth in Section 2.16 hereof, a Lessor Note
does not cease to be outstanding because the Owner Lessor or an Affiliate of the
Owner Lessor holds the Lessor Note.

                  If a Lessor Note is replaced pursuant to Section 2.14 hereof,
it ceases to be outstanding unless the Lease Indenture Trustee receives proof
satisfactory to it that the replaced Lessor Note is held by a bona fide
purchaser.

                  If the principal amount of any Lessor Note is considered paid
under Section 5.1 hereof, it ceases to be outstanding and interest on it ceases
to accrue.

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                  If the Paying Agent holds, on a redemption date or maturity
date, money sufficient to pay Lessor Notes payable on that date, then on and
after that date such Lessor Notes shall be deemed to be no longer outstanding
and shall cease to accrue interest.

SECTION 2.16      TREASURY LESSOR NOTES

                  In determining whether the Noteholders of the required
principal amount of Lessor Notes have concurred in any direction, waiver or
consent, Lessor Notes owned by the Owner Lessor, or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Owner Lessor shall be considered as though not outstanding,
except that for the purposes of determining whether the Lease Indenture Trustee
shall be protected in relying on any such direction, waiver or consent, only
Lessor Notes that the Lease Indenture Trustee knows are so owned shall be so
disregarded.

SECTION 2.17      [RESERVED]

SECTION 2.18      CANCELLATION

                  The Owner Lessor at any time may deliver Lessor Notes to the
Lease Indenture Trustee for cancellation. The Paying Agent shall forward to the
Lease Indenture Trustee any Lessor Notes surrendered to it for registration of
transfer, exchange or payment. The Lease Indenture Trustee and no one else shall
cancel all Lessor Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy canceled Lessor Notes
(subject to the record retention requirement of the Exchange Act). Certification
of the destruction of all canceled Lessor Notes shall be delivered (at the
expense of the Owner Lessor) to the Owner Lessor. The Owner Lessor may not issue
New Lessor Notes to replace Lessor Notes that it has paid or that have been
delivered to the Lease Indenture Trustee for cancellation.

SECTION 2.19      DEFAULTED INTEREST

                  If the Owner Lessor defaults in a payment of interest on the
Lessor Notes, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the
Noteholders on a subsequent special record date, in each case at the rate
provided in the Lessor Notes and in Section 5.1 hereof. The Owner Lessor shall
notify the Security Agent and the Lease Indenture Trustee in writing of the
amount of defaulted interest proposed to be paid on each Lessor Note and the
date of the proposed payment. The Owner Lessor shall fix or cause to be fixed
each such special record date and payment date, PROVIDED that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Owner Lessor (or, upon the written request of the Owner Lessor, the Lease
Indenture Trustee in the name and at the expense of the Owner

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<Page>

Lessor) shall mail or cause to be mailed to Noteholders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.

SECTION 2.20      [RESERVED]

SECTION 2.21      ASSUMPTION OF LESSOR NOTES

         (a) Upon the occurrence of an Assumption Event, the Facility Lessee may
notify the Security Agent and the Lease Indenture Trustee of its intention to
assume all of the Lessor Notes in whole (but not in part) pursuant to and in
accordance with this Section 2.21. In the event of the occurrence of an
Assumption Event and provided each of the conditions set forth below have been
satisfied, all of the obligations and liabilities of the Owner Lessor under this
Lease Indenture and each Lessor Note shall be assumed by the Facility Lessee and
the Owner Lessor shall be released and discharged without further act or
formality whatsoever from all obligations and liabilities under this Lease
Indenture and each Lessor Note:

                  (i) no Lease Event of Default shall have occurred and be
         continuing after giving effect to such assumption;

                  (ii) the Lease Indenture Trustee shall have received a
         supplement to this Lease Indenture which shall, among other things, (A)
         confirm the release of the Owner Lessor thereby effected and (B)
         contain provisions appropriately amending this Lease Indenture: (1) to
         reflect the fact that the obligations of the Owner Lessor under this
         Lease Indenture have been assumed directly by the Facility Lessee, (2)
         to incorporate herein such provisions from the Facility Lease, the
         Facility Site Lease and the Participation Agreement as shall be
         appropriate, including covenants substantially identical to those set
         forth in the Facility Lease and (3) as otherwise necessary to reflect
         the foregoing provisions and preserve, protect and maintain the Lien on
         the Indenture Estate (such supplement, the "ASSUMPTION AGREEMENT");

                  (iii) the Lease Indenture Trustee shall have received an
         opinion of counsel to the Facility Lessee (with customary
         qualifications and limitations and otherwise reasonably satisfactory to
         the Lease Indenture Trustee), addressed to the Lease Indenture Trustee
         and the Noteholders of the Lessor Notes, to the effect that (A) the
         Assumption Agreement and each other instrument, document or agreement
         executed and delivered by the Facility Lessee in connection with the
         assumption contemplated by the Assumption Agreement (collectively, the
         "ASSUMPTION DOCUMENTS") have been duly authorized, executed and
         delivered by the Facility Lessee, (B) each Assumption Document and the
         assumption contemplated thereby do not contravene (1) the Organic
         Documents of the Facility Lessee, (2) any contractual obligation of the
         Facility Lessee or (3) Requirements of Law, (C) no Governmental
         Approval is necessary or required in

                                       23
<Page>

         connection with any Assumption with any Assumption Document or the
         assumption contemplated thereby (or, if any such Governmental Approval
         is necessary or required that the same has been duly obtained and is
         final and in full force and effect and any period for the filing of
         notice of rehearing or application for judicial review of the issuance
         of such Governmental Approval has expired without any such notice or
         application having been made), (D) each Assumption Document is a legal,
         valid and binding obligation of the Facility Lessee, enforceable in
         accordance with its terms (except as limited by bankruptcy, insolvency
         or similar laws of general application affecting the enforcement of
         creditors' rights generally and equitable principles), (E) unless the
         Facility Lessee has elected to provide to the Lease Indenture Trustee
         an indemnity against the risk that such assumption of the Lessor Notes
         will cause a Tax Event to occur as to any direct or indirect holder of
         a Lessor Note (including any holder of the Bonds), such Assumption
         Agreement and the assumption of the Notes thereunder shall not cause a
         Tax Event to occur as to any direct or indirect holder of any Lessor
         Note (including any Fundco Bondholders) and (F) the lien of this Lease
         Indenture will continue to be a first priority perfected lien on the
         Indenture Estate;

                  (iv) the Lease Indenture Trustee shall have received copies of
         all Governmental Approvals (if any) referred to in the opinion of
         counsel referred to in clause (iii) above;

                  (v) the Lease Indenture Trustee shall have received UCC lien
         searches, supplemental title reports, opinions and such other evidence
         as may reasonably be required by the Lease Indenture Trustee
         demonstrating that no impairment exists or will exist to the first
         priority perfected lien and security interest in the Undivided
         Interest; and

                  (vi) the Lease Indenture Trustee shall have received ratings
         letters from each of Moody's and S&P to the effect that the then
         existing rating of the Bonds will not be downgraded as a result of such
         assumption.

         (b) Notice of any assumption of the Lessor Notes shall be given by the
Lease Indenture Trustee to the Noteholders as promptly as practicable after the
Lease Indenture Trustee has received notice thereof in accordance with the first
sentence of section 2.21(a) hereof.

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<Page>

                                   ARTICLE III
                      RECEIPT, DISTRIBUTION AND APPLICATION
                         OF INCOME FROM INDENTURE ESTATE

SECTION 3.1       DISTRIBUTION PRIOR TO LEASE INDENTURE EVENT OF DEFAULT

                  Except as otherwise provided in Section 3.2 or 3.3 of this
Lease Indenture, each installment of Basic Lease Rent and any payment of
Supplemental Lease Rent constituting interest on overdue installments of Basic
Lease Rent or constituting reimbursement for any drawing under the Debt Service
Reserve Letter of Credit received by the Security Agent, or otherwise payable to
the Owner Lessor pursuant to Sections 10, 13 or 14 of the Facility Lease shall
be deposited into the Security Agent's Account and distributed in the following
order of priority:

                           FIRST, ratably to (i) so much of such amounts as
                  shall be required to pay in full the aggregate principal,
                  accrued interest and other fees and expenses (as well as any
                  interest on overdue principal and, to the extent permitted by
                  Requirements of Law, on overdue interest) then due and payable
                  under the Lessor Notes issued under this Lease Indenture shall
                  be deposited into the Lessor Notes Payment Account and
                  distributed by the Lease Indenture Trustee or by each Paying
                  Agent and shall be distributed to the Noteholders ratably,
                  without priority of any Noteholder over any other Noteholder,
                  in the proportion that the amount of such payment then due and
                  payable under each such Lessor Note bears to the aggregate
                  amount of the payments then due and payable under all such
                  Lessor Notes and (ii) so much of such amounts as shall be
                  required to reimburse the Issuer of the Debt Service Reserve
                  Letter of Credit for any amount drawn thereunder or to pay in
                  full the aggregate principal, accrued interest and other fees
                  and expenses (as well as any interest on overdue principal
                  and, to the extent permitted by Requirements of Law, on
                  overdue interest) then due and payable under the DSR Notes;

                           SECOND, so much of such amounts as shall be required
                  to meet the required balance in the Debt Service Reserve
                  Account pursuant to Section 5.4 shall be distributed to the
                  Debt Service Reserve Account; and

                           THIRD, the balance, if any, of such amounts remaining
                  in the Lessor Notes Payment Account shall be distributed to
                  the Owner Lessor for distribution by it in accordance with the
                  terms of the Lessor LLC Agreement; PROVIDED, HOWEVER, that if
                  a Lease

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<Page>

                  Indenture Event of Default shall have occurred and be
                  continuing, then such balance shall not be distributed as
                  provided in this clause "THIRD" but shall be held by the Lease
                  Indenture Trustee or the Security Agent, as applicable, as
                  part of the Indenture Estate until the earliest to occur of
                  (i) receipt by the Security Agent of a Notice of Action
                  stating that all Lease Indenture Events of Default shall have
                  been cured or waived, in which event such balance shall be
                  distributed as provided in this clause "THIRD," or (ii)
                  receipt by the Security Agent of a Notice of Action stating
                  that Section 3.3 hereof shall be applicable, in which event
                  such balance shall be distributed in accordance with the
                  provisions of said Section 3.3.

SECTION 3.2       PAYMENTS FOLLOWING EVENT OF LOSS OR OTHER EARLY TERMINATION

         (a) Except as otherwise provided in Section 3.3 hereof, any payment
received by the Security Agent and deposited into the Security Agent's Account
on account of a redemption of the Lessor Notes shall then be deposited into the
Lessor Notes Payment Account and distributed by the Lease Indenture Trustee or
by each Paying Agent with respect to such redemption arising pursuant to Article
4 hereof in the following order of priority: FIRST, as provided in clause
"SECOND" of Section 3.3 hereof; (but including all Make-Whole Premium (if any)
due in respect thereof required to be paid in accordance with Section 4.7
hereof); SECOND, to reimburse the applicable Noteholders (to the extent not
previously reimbursed) for any reasonable out-of-pocket costs or expenses
incurred in connection with such prepayment (including payments provided for in
clause "THIRD" of Section 3.3 hereof); and THIRD, as provided in clause "FOURTH"
of Section 3.3 hereof.

         (b) Except as otherwise provided in Section 3.2(a) or 3.3 hereof, any
amounts received directly or indirectly from any Governmental Authority or
insurer or other party not as a result of an Event of Loss or pursuant to any
provision of Section 10.3, Section 10.5 or Section 11 of the Facility Lease
shall be applied as provided in the applicable provisions of the Facility Lease
and, if and to the extent that any portion of such amounts are required to be
held for the account of the Facility Lessee and are not at the time required to
be paid to the Facility Lessee pursuant to the applicable provisions of the
Facility Lease, shall be promptly paid to (if not initially paid directly to the
Security Agent) and, thereafter, held by, the Security Agent as security for the
obligations of the Facility Lessee under the Facility Lease, and at such time as
the Security Agent shall have received written notice from the Facility Lessee
(i) stating that the conditions specified in the Facility Lease for payment of
such amounts to the Facility Lessee shall have been satisfied and (ii) setting
out the portion of such amounts so held by the Security Agent to be paid to the
Facility Lessee, the Security Agent shall pay to the Facility Lessee the amount
specified in such notice.

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<Page>

SECTION 3.3       PAYMENTS AFTER LEASE INDENTURE EVENT OF DEFAULT

                  If, during the continuance of a Lease Indenture Event of
Default, (a) the Security Agent has elected to pursue remedies in respect
thereof or (b) the entire principal amount of the Lessor Notes shall have become
due and payable as provided herein, all payments (other than Excepted Payments)
received by the Security Agent or the Lease Indenture Trustee or by each Paying
Agent in respect of all amounts (other than Excepted Payments) held or realized
by the Security Agent or the Lease Indenture Trustee upon, and all other
payments or amounts (other than Excepted Payments) held by the Security Agent or
the Lease Indenture Trustee or by each Paying Agent as part of the Indenture
Estate shall be promptly distributed in the following order of priority:

                           FIRST, to the Lease Indenture Trustee and the
                  Security Agent, so much of such payments or amounts as shall
                  be required to reimburse the Lease Indenture Trustee and the
                  Security Agent for any amounts payable to them under Section
                  8.7 hereof and Section 10.1 of the Participation Agreement and
                  not previously paid;

                           SECOND, ratably paid to (i) so much of such payments
                  or amounts remaining as shall be required to pay in full the
                  aggregate unpaid principal amount of all Lessor Notes and
                  accrued but unpaid interest and premium, if any, thereon to
                  the date of distribution (as well as any interest on overdue
                  principal and, to the extent permitted by Requirements of Law,
                  overdue interest as provided in Section 5.1(b) hereof), shall
                  be distributed to the Noteholders, (ii) all amounts as shall
                  be required to reimburse to the Issuer of the Debt Service
                  Reserve Letter of Credit for any drawings thereunder that are
                  due and payable or to pay in full the aggregate principal,
                  accrued interest and other fees and expenses (as well as any
                  interest on overdue principal and, to the extent permitted by
                  Requirements of Law, on overdue interest) then due and payable
                  under the DSR Notes, and if the aggregate amount shall be
                  insufficient to pay all such amounts of (i) and (ii) above in
                  full, such amounts shall be distributed ratably, without
                  priority of any Lease Indenture Secured Party over any other
                  Lease Indenture Secured Party, in the proportion that the
                  aggregate amount due to each such Lease Indenture Secured
                  Party under this clause "SECOND" bears to the aggregate amount
                  due to all such Noteholders under this clause "SECOND"; and if
                  the aggregate amount so to be distributed shall be
                  insufficient to pay in full as aforesaid, then such
                  distribution shall be made, ratably, without priority of one
                  Lease Indenture Secured Party over any other Lease Indenture
                  Secured Party, in the proportion that the aggregate amount due
                  to each such Lease Indenture Secured Party, plus the

                                       27
<Page>

                  accrued but unpaid interest or fees thereon to the date of
                  distribution, bears to the aggregate unpaid principal amount
                  due to each such Lease Indenture Secured Party, plus the
                  accrued but unpaid interest or fees thereon to the date of
                  distribution;

                           THIRD, to the Noteholders, so much of such payments
                  or amounts as shall be required to reimburse each such
                  Noteholder, in each case to the extent the Facility Lessee has
                  an obligation to indemnify under the Participation Agreement,
                  for any tax, expense, charge or other loss (including, without
                  limitation, all amounts to be expended at the expense of, or
                  charged upon, the tolls, rents, revenues, issues, products and
                  profits of the Indenture Estate pursuant to Section 7.5(b)
                  hereof) incurred by such Noteholder (to the extent
                  reimbursable and not previously reimbursed) under the
                  Operative Documents, including, without limitation, the
                  expenses of any sale, taking or other proceeding, reasonable
                  attorneys' fees and expenses, court costs, and any other
                  expenditures incurred or expenditures or advances made by such
                  Noteholder in the protection, exercise or enforcement of any
                  right, power or remedy or any damages sustained by such
                  Noteholder, liquidated or otherwise, upon such Lease Indenture
                  Event of Default shall be applied by such Noteholder in
                  reimbursement of such expenses; and

                           FOURTH, the balance, if any, of such payments or
                  amounts remaining thereafter shall be paid to the Owner Lessor
                  for distribution in accordance with the terms of the Lessor
                  LLC Agreement.

SECTION 3.4      CERTAIN PAYMENTS

         (a) Except as otherwise provided in this Lease Indenture, any payments
received by the Lease Indenture Trustee or the Security Agent for which
provision as to the application thereof is made in any other Operative Document
shall be applied forthwith to the purpose for which such payment was made in
accordance with the terms of such Operative Document.

         (b) The Owner Lessor hereby agrees that if, at any time during the term
of this Lease Indenture, it receives from the Facility Lessee or any Affiliate
of the Facility Lessee any amount or payment (other than Excepted Payments)
described in Section 3.4(c) hereof, it shall hold such amount of payment in
trust for the benefit of the Security Agent and promptly pay such amount of
payment to the Security Agent. The Owner Lessor further aggress that the
obligation to remit such amount or payment shall be secured by this Lease
Indenture.

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<Page>

         (c) Any payment of Supplemental Lease Rent received by the Owner
Participant or the Security Agent pursuant to the fourth sentence of Section 7.2
hereof shall, so long as no Lease Indenture Event of Default shall have occurred
and be continuing, and except to the extent applied as provided in Section 3.3
hereof, be retained by, or promptly distributed to, the Owner Participant.
Notwithstanding anything to the contrary in this Section 3 or any of the
Operative Documents and without regard to whether a Lease Indenture Event of
Default shall have occurred and be continuing, all Excepted Payments received by
the Security Agent shall be paid by the Security Agent forthwith to the Person
or Persons entitled thereto.

SECTION 3.5       OTHER PAYMENTS

                  Any payments in respect of the Indenture Estate received by
the Security Agent no provision for the application of which is made in the
Facility Lease or in another Operative Document or elsewhere in this Indenture
shall (i) to the extent received or realized at any time prior to the payment in
full of all obligations to the Noteholders or to the Debt Service Reserve Letter
of Credit Secured Parties, as applicable, secured by the lien of this Lease
Indenture, be deposited into the Lease Indenture Trustee's Account, and
thereafter applied to the payment of principal, interest, Make-Whole Premium or
other amounts as and when such principal, interest, Make-Whole Premium or other
amounts come due pursuant to priority "FIRST" specified in Section 3.1 hereof
or, if applicable at such time, pursuant to Section 3.2 or 3.3 hereof and (ii)
to the extent received or realized at any time after payment in full of all
obligations to the Noteholders and to the Debt Service Reserve Letter of Credit
Secured Parties, as applicable, secured by the lien of this Lease Indenture, in
the following order of priority: FIRST, to reimburse the Lease Indenture Trustee
and the Security Agent (to the extent not previously reimbursed) for any
reasonable out-of-pocket costs or expenses to which it is entitled to
reimbursement pursuant to an Operative Document; and SECOND, in the manner
provided in clause "FOURTH" of Section 3.3 hereof.

SECTION 3.6       MANNER OF PAYMENT TO THE OWNER LESSOR

                  Any amounts distributed hereunder by the Security Agent to the
Owner Lessor shall be paid by the Security Agent to the Owner Lessor by wire
transfer of funds of the type received by the Security Agent at such offices and
to such account or accounts of such entity or entities as shall be designated in
advance by written notice from the Owner Lessor to the Security Agent from time
to time. The Security Agent shall, whether or not the lien of this Lease
Indenture shall have been discharged in accordance herewith, act as paying agent
for the Owner Lessor, in connection with the Security Agent's duties to make
distributions to or for the benefit of the Owner Lessor pursuant to this Section
3 and to accept all revenues, payments, securities, investments and other
amounts received by the Security Agent and to be distributed to the Owner Lessor
pursuant thereto or held in trust for the benefit of the Owner Lessor pursuant
to the terms of this Lease Indenture. The Owner Lessor hereby notifies and
instructs the Security

                                       29
<Page>

Agent that unless and until the Security Agent receives written notice to the
contrary from the Owner Lessor, all amounts to be distributed to the Owner
Lessor pursuant to clause "SECOND" of Section 3.1 hereof shall be distributed by
wire transfer of funds of the type received by the Security Agent to the Owner
Participant. In the event that the Security Agent is unable to distribute any
amounts to the Owner Lessor or the Owner Participant on the same day such
amounts are received by the Security Agent, the Security Agent agrees that such
amounts shall be held in trust for the benefit of the Owner Lessor or the Owner
Participant, as the case may be, and shall be invested by the Security Agent for
and at the expense and risk of the Owner Lessor or the Owner Participant, as the
case may be, in Permitted Investments identified in written instructions to the
Security Agent from the Owner Lessor or the Owner Participant, as the case may
be, if such investments are reasonably available.

SECTION 3.7       ESTABLISHMENT OF THE NOTE ACCOUNTS;
                  AND LIEN AND SECURITY INTEREST; ETC.

         (a) The Security Agent hereby confirms that it has established
securities accounts entitled the "SECURITY AGENT'S ACCOUNT" (the "SECURITY
AGENT'S ACCOUNT") and "LESSOR NOTES PAYMENT ACCOUNT" (the "LESSOR NOTES PAYMENT
ACCOUNT", collectively with the Security Agent's Accounts, the "NOTE ACCOUNTS")
which Note Accounts shall be maintained by the Account Bank until the date this
Lease Indenture is terminated pursuant to Section 12.1 hereof. The account
number of the Note Accounts established hereunder is specified in Schedule III
hereto. The Note Accounts shall not be evidenced by passbooks or similar
writings.

         (b) All amounts from time to time held in the Note Accounts shall be
maintained (i) in the name of the Owner Lessor subject to the lien and security
interest of the Security Agent for the benefit of the Lease Indenture Secured
Parties as set forth herein and (ii) in the custody of the Security Agent for
and on behalf of the Security Agent for the benefit of the Secured Parties for
the purposes and on the terms set forth in this Lease Indenture. All such
amounts shall constitute a part of the Note Accounts Collateral and shall not
constitute payment of any Indebtedness or any other obligation of the Owner
Lessor until applied as hereinafter provided.

         (c) As collateral security for the prompt payment in full when due of
the Lessor's Secured Obligations owed to the Lease Indenture Secured Parties,
the Owner Lessor hereby pledges, assigns, hypothecates and transfers to the
Security Agent for the benefit of the Lease Indenture Secured Parties, and
hereby grants to the Security Agent for the benefit of the Lease Indenture
Secured Parties, a lien on and security interest in and to (i) the Note Accounts
and any successor account thereto and (ii) all cash, investments, investment
property, securities or other property at any time on deposit in or credited to
the Note Accounts, including all income or gain earned thereon and any proceeds
thereof (the "NOTE ACCOUNTS COLLATERAL").

                                       30
<Page>

SECTION 3.8       THE ACCOUNT BANK; LIMITED RIGHTS OF THE OWNER LESSOR

         (a) THE ACCOUNT BANK.

                  (i) ESTABLISHMENT OF SECURITIES ACCOUNT. The Security Agent
         hereby agrees and confirms that (A) that it has established the Note
         Accounts as set forth in Section 3.7, (B) Note Accounts are and each
         will be maintained as a "SECURITIES ACCOUNT" (within the meaning of
         Section 8-501 (a) of the UCC), (C) the Owner Lessor is the "ENTITLEMENT
         HOLDER" (within the meaning of Section 8-102(a)(7) of the UCC) in
         respect of the "FINANCIAL ASSETS" (within the meaning of Section
         8-102(a)(9) of the UCC) credited to each Note Account, (D) all property
         delivered to the Security Agent pursuant to this Lease Indenture or any
         other Operative Document will be held by the Security Agent and
         promptly credited to each Note Account by an appropriate entry in its
         records in accordance with this Lease Indenture, (E) all "FINANCIAL
         ASSETS" (within the meaning of Section 8-102(a)(9) of the UCC) in
         registered form or payable to or to the order of and credited to each
         Note Account shall be registered in the name of, payable to or to the
         order of, or indorsed to, the Security Agent or in blank, or credited
         to another securities account maintained in the name of the Security
         Agent, and in no case will any financial asset credited to any of the
         Note Accounts be registered in the name of, payable to or to the order
         of, or indorsed to, the Owner Lessor except to the extent the foregoing
         have been subsequently indorsed by the Owner Lessor to the Account Bank
         or in blank and (F) the Security Agent shall not change the name or
         account number of the Security Agent's Account without the prior
         written consent of the Security Agent.

                  (ii) FINANCIAL ASSETS ELECTION. The Security Agent agrees that
         each item of property (including any security, instrument or
         obligation, share, participation, interest or other property
         whatsoever) credited to the Security Agent's Account shall be treated
         as a "FINANCIAL ASSET" within the meaning of Section 8-102(a)(9) of the
         UCC.

                  (iii) ENTITLEMENT ORDERS. Notwithstanding anything in this
         Lease Indenture to the contrary, if at any time the Security Agent
         shall receive any "ENTITLEMENT ORDER" (within the meaning of Section
         8-102(a)(8) of the UCC) or any other order directing the transfer or
         redemption of any financial asset relating to the Security Agent's
         Account, the Security Agent shall comply with such entitlement order or
         other order without further consent by the Owner Lessor or any other
         Person. The parties hereto hereby agree that the Security Agent shall
         have "CONTROL" (within the meaning of Section 8-106(d) of the UCC) of
         the Owner Lessor's "SECURITY ENTITLEMENTS" (within the meaning of
         Section 8-102(a)(17) of the UCC) with respect to the financial assets
         credited to the Security Agent's Account and the Owner Lessor hereby
         disclaims any entitlement to claim

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<Page>

         "CONTROL" of such "SECURITY entitlements". Unless a Lease Indenture
         Event of Default shall have occurred and is continuing, the Lease
         Indenture Trustee shall not deliver any entitlement order directing the
         transfer or redemption of any financial asset relating to the Security
         Agent's Account.

                  (iv) SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event
         that the Security Agent has or subsequently obtains by agreement,
         operation of law or otherwise a lien or security interest in the
         Security Agent's Account or any security entitlement credited thereto,
         the Security Agent agrees that such lien or security interest shall be
         subordinate to the lien and security interest of the Security Agent for
         the benefit of the Lease Indenture Secured Parties. The financial
         assets standing to the credit of the Lease Indemnitee's Lease Indenture
         Trustee's Account will not be subject to deduction, set-off, banker's
         lien, or any other right in favor of any Person other than the Security
         Agent for the benefit of the Lease Indenture Secured Parties (except
         for the face amount of any checks which have been credited to the Note
         Accounts but are subsequently returned unpaid because of uncollected or
         insufficient funds).

                  (v) NO OTHER AGREEMENTS. The Security Bank and the Owner
         Lessor have not entered into any agreement with respect to the Note
         Accounts or any financial assets credited to the Note Accounts other
         than this Lease Indenture. The Security Agent has not entered into any
         agreement with the Owner Lessor or any other Person purporting to limit
         or condition the obligation of the Security Agent to comply with
         entitlement orders originated by the Security Agent in accordance with
         Section 3.8(a)(iii) hereof. In the event of any conflict between this
         Section 3.8 or any other agreement now existing or hereafter entered
         into, the terms of this Section 3.8 shall prevail.

                  (vi) NOTICE OF ADVERSE CLAIMS. Except for the claims and
         interest of the Security Agent for the benefit of the Lease Indenture
         Secured Parties and the Owner Lessor in the Note Accounts, the Security
         Agent does not know of any claim to, or interest in, the Note Accounts
         or in any financial asset credited thereto. If any Person asserts any
         lien, encumbrance or adverse claim (including any writ, garnishment,
         judgment, warrant of attachment, execution or similar process) against
         the Note Accounts or in any financial asset credited thereto, the
         Security Agent will promptly notify the Security Agent and the Owner
         Lessor in writing thereof.

                  (vii) RIGHTS AND POWERS OF THE SECURITY AGENT. The rights and
         powers granted by the Lease Indenture Secured Parties to the Security
         Agent have been granted in order to perfect its lien and security
         interests in the Security Agent's Account, are powers coupled with an
         interest and will neither be affected by the bankruptcy of the Owner
         Lessor nor the lapse of time.

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<Page>

         (b) LIMITED RIGHTS OF THE OWNER LESSOR. The Owner Lessor shall not have
any rights against or to monies held in the Note Accounts, as third party
beneficiary or otherwise, or any right to direct the Security Agent or the
Security Agent to apply or transfer monies in the Note Accounts, except the
right to receive or make requisitions of monies held by the Security Agent and
to direct investments of monies as provided in Section 3.10 hereof, as provided
in this Lease Indenture. Except as provided in this Lease Indenture, in no event
shall any amounts or Cash Equivalent Investments deposited in or credited to the
Note Accounts be registered in the name of the Owner Lessor, payable to the
order of the Owner Lessor or specially indorsed to the Owner Lessor except to
the extent that the foregoing have been specially indorsed to the Security Agent
or in blank.

SECTION 3.9       EXERCISE OF POWERS; INSTRUCTIONS OF REQUIRED LEASE INDENTURE
                  SECURED PARTIES.

         (a) All of the powers, remedies and rights of the Security Agent set
forth in or contemplated by this Agreement may be exercised by the Security
Agent as though set forth in full herein, and all of the powers, remedies and
rights of the Security Agent and the Lease Indenture Secured Parties as set
forth herein.

         (b) Following the delivery of a direction of acceleration under Section
7.4 hereof to the Security Agent, during any Event of Default, the Required
Lease Indenture Secured Parties may deliver a "NOTICE OF ACTION" to the Security
Agent directing the Security Agent to exercise one or more of the rights and
remedies available to the Security Agent under this Lease Indenture and under
the Security Deposit Agreement. The Security Agent shall deliver to each Lease
Indenture Secured Party a copy of such Notice of Action promptly after receipt
thereof. The Security Agent shall exercise the rights and remedies and take the
other actions described in such Notice of Action at the time or times specified
in such Notice of Action.

         (c) All Proceeds of the Indenture Estate received by the Security Agent
from the exercise of its rights and remedies under this Lease Indenture or under
the Mortgage shall be applied as set forth in Article 3 hereof.

SECTION 3.10      INVESTMENT OF AMOUNTS HELD BY LEASE INDENTURE TRUSTEE.

                  Any amounts held by the Security Agent pursuant to the proviso
to clause "SECOND" of Section 3.1 hereof, pursuant to Section 3.2 or Section 3.3
hereof, or pursuant to Section 10 or 11 of the Facility Lease shall be invested
by the Security Agent from time to time in Permitted Investments identified in
written instructions to the Security Agent from the Owner Lessor, at the expense
of the Owner Lessor, if such investments are reasonably available. Unless
otherwise expressly provided in this Lease Indenture, any income realized as a
result of any such investment, net of the Security Agent's

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<Page>

reasonable fees and expenses in making such investment, shall be held and
applied by the Security Agent in the same manner as the principal amount of such
investment is to be applied, and any losses, net of earnings and such reasonable
fees and expenses, shall be charged against the principal amount invested. The
Security Agent shall not be liable for any loss resulting from any investment
required to be made by it under this Lease Indenture other than by reason of its
willful misconduct or gross negligence as determined by a court of competent
jurisdiction in receiving, handling or disbursing funds, and any such investment
may be sold (without regard to its maturity) by the Security Agent without
instructions whenever it reasonably believes such sale is necessary to make a
distribution required by this Lease Indenture.

                                   ARTICLE IV
                            REDEMPTION AND PREPAYMENT

SECTION 4.1       NOTICES TO LEASE INDENTURE TRUSTEE

                  If the Owner Lessor elects to redeem Lessor Notes pursuant to
the redemption provisions of Section 4.7 or 4.8 hereof, it shall furnish to the
Lease Indenture Trustee, the Security Agent, and for so long as the Bonds are
outstanding, the Bondholder Trustee at least 30 days but not more than 60 days
before a redemption date, an Officer's Certificate setting forth (i) the clause
of this Lease Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Lessor Notes to be redeemed and
(iv) the redemption price.

SECTION 4.2       SELECTION OF LESSOR NOTES TO BE REDEEMED

                  If less than all of the Lessor Notes are to be redeemed at any
time, the Lease Indenture Trustee shall select the Lessor Notes to be redeemed
among the Noteholders of the Lessor Notes in compliance with the requirements of
the principal national securities exchange, if any, on which the Lessor Notes
are listed or, if the Lessor Notes are not so listed, on a PRO RATA basis,
between the Series A Lessor Notes and the Series B Lessor Notes. In the event of
partial redemption, the particular Lessor Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Lease Indenture Trustee from the
outstanding Lessor Notes not previously called for redemption.

                  The Lease Indenture Trustee shall promptly notify the Owner
Lessor and the Security Agent of the Lessor Notes selected for redemption and,
in the case of any Lessor Note selected for partial redemption, the principal
amount thereof to be redeemed. Lessor Notes and portions of Lessor Notes
selected shall be in amounts of $100,000 or whole multiples of $1,000 in excess
thereof; except that if all of the Lessor Notes of a Noteholder are to be
redeemed, the entire outstanding amount of Lessor Notes held by such Noteholder,
even if not in the amount of $100,000 or a multiple of $1,000 in excess thereof,
shall be redeemed. Except as provided in the preceding sentence, provisions of

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<Page>

this Lease Indenture that apply to Lessor Notes called for redemption also apply
to portions of Lessor Notes called for redemption.

SECTION 4.3       NOTICE OF REDEMPTION

                  At least 30 days but not more than 60 days before a redemption
date, the Owner Lessor shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Noteholder whose Lessor Notes are to be redeemed at
its registered address and, for as long as the Bonds are outstanding, the
Bondholder Trustee and each holder of the Bonds corresponding to the tenor and
the principal amount of the Lessor Notes being redeemed.

                  The notice shall identify the Lessor Notes to be redeemed and
shall state:

         (a) the redemption date;

         (b) the redemption price;

         (c) if any Lessor Note is being redeemed in part, the portion of the
principal amount of such Lessor Note to be redeemed and that, after the
redemption date upon surrender of such Lessor Note, a new Lessor Note or Lessor
Notes in principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Lessor Note;

         (d) the name and address of the Paying Agent;

         (e) that Lessor Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;

         (f) that, unless the Owner Lessor defaults in making such redemption
payment, interest on Lessor Notes called for redemption ceases to accrue on and
after the redemption date;

         (g) the paragraph of the Lessor Notes and/or Section of this Lease
Indenture pursuant to which the Lessor Notes called for redemption are being
redeemed; and

         (h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Lessor Notes.

                  At the Owner Lessor's request, the Lease Indenture Trustee
shall give the notice of redemption in the Owner Lessor's name and at its
expense; PROVIDED, HOWEVER, that the Owner Lessor shall have delivered to the
Lease Indenture Trustee, at least 45 days prior to the redemption date (or such
shorter time period acceptable to the Lease Indenture Trustee), an Officer's
Certificate requesting that the Lease Indenture Trustee

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<Page>

give such notice and setting forth the information to be stated in such notice
as provided in the preceding paragraph.

SECTION 4.4       EFFECT OF NOTICE OF REDEMPTION

                  Once notice of redemption is mailed in accordance with Section
4.3 hereof, Lessor Notes (and the Bonds corresponding to the tenor and principal
amount of such Lessor Notes) called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of redemption
may not be conditional.

SECTION 4.5       DEPOSIT OF REDEMPTION PRICE

                  One Business Day prior to the redemption date, the Security
Agent shall deposit with the Lease Indenture Trustee or with the Paying Agent
into the Lessor Notes Payment Account money sufficient to pay the redemption
price of and accrued interest on all Lessor Notes to be redeemed on that date.
The Lease Indenture Trustee or the Paying Agent shall promptly return to the
Owner Lessor any money deposited with the Lease Indenture Trustee or the Paying
Agent by the Owner Lessor in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Lessor Notes to be redeemed.

                  If the Owner Lessor complies with the provisions of the
preceding paragraph, on and after the redemption date, interest shall cease to
accrue on the Lessor Notes or the portions of Lessor Notes called for
redemption. If a Lessor Note is redeemed on or after an interest record date but
on or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Lessor Note was
registered at the close of business on such record date. If any Lessor Note
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Owner Lessor to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Lessor Notes and
in Section 5.1 hereof.

SECTION 4.6       LESSOR NOTES REDEEMED IN PART

                  Upon surrender of a Lessor Note that is redeemed in part, the
Owner Lessor shall issue and, upon receipt of an Authentication Order, the Lease
Indenture Trustee shall authenticate for the Noteholder at the expense of the
Owner Lessor a new Lessor Note equal in principal amount to the unredeemed
portion of the Lessor Note surrendered.

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<Page>

SECTION 4.7       OPTIONAL REDEMPTION

                  The Lessor Notes shall be subject to optional redemption at
any time at a Redemption Price equal to the outstanding principal amount of the
Lessor Notes to be redeemed plus all accrued and unpaid interest thereon to the
Redemption Date, plus the Make-Whole Premium, if any.

SECTION 4.8       MANDATORY REDEMPTION

                  The Lessor Notes will be subject to mandatory redemption upon
the occurrence of a Recovery Event with respect to the Facility, other than with
respect to amounts received by the Owner Lessor in connection with a Recovery
Event for which the Facility Lessee elects to restore or replace the asset or
assets in respect of which such Recovery Event occurred and a Reinvestment
Notice is provided by the Facility Lessee to the Owner Participant, the
Collateral Agent and the Lease Indenture Trustee within 45 days of such Recovery
Event (provided that, with respect to any Recovery Event of $50 million or more,
the Independent Engineer shall have certified as to the reasonableness, in light
of Prudent Industry Practice, of the Facility Lessee's repair and replacement
plans as set forth in the Facility Lessee's Reinvestment Notice relating to such
Recovery Event). Any mandatory redemption of the Lessor Notes will be without
premium or penalty at a Redemption Price equal to the unpaid principal amount
thereof plus accrued and unpaid interest thereon to the Redemption Date.

                                    ARTICLE V
                                    COVENANTS

SECTION 5.1       PAYMENT OF LESSOR NOTES

                  The Owner Lessor hereby covenants and agrees as follows:

         (a) The Owner Lessor will duly and punctually pay the principal of and
interest on and other amounts (including any Make-Whole Premium) due under the
Lessor Notes and this Lease Indenture in accordance with the terms hereof and
thereof and all amounts payable by it to the Lease Indenture Trustee, the
Noteholders and the Debt Service Reserve Letter of Credit Secured Parties, as
applicable, under any other Operative Document. Principal, premium, if any, and
interest shall be considered paid on the date due if the Security Agent holds as
of 10:00 A.M. Eastern time on the due date, money deposited by, or at the
direction of the Owner Lessor, in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due;

         (b) The Owner Lessor shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Code) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate on
the Lessor Notes to the extent

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<Page>

lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Code) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.

         (c) In the event that the Independent Manager of the Owner Lessor shall
have actual knowledge of a Lease Indenture Event of Default or a Lease Indenture
Default, the Owner Lessor will give prompt written notice of such Lease
Indenture Event of Default or Lease Indenture Default to the Facility Lessee,
the Owner Participant, the Lease Indenture Trustee (and the Lease Indenture
Trustee shall thereupon promptly deliver a copy of such notice to each
Noteholder and the Security Agent); and

                  (i) in the event that an Authorized Officer of the Owner
         Lessor shall have actual knowledge of an Event of Loss, then, to the
         extent that the Facility Lessee is not required, pursuant to the
         Facility Lease, to give notice of such event to the Lease Indenture
         Trustee and the Security Agent, the Owner Lessor will give prompt
         written notice of such Event of Loss to the Lease Indenture Trustee
         (and the Lease Indenture Trustee shall thereupon promptly deliver a
         copy of such notice to each Noteholder) and the Security Agent; and

                  (ii) the Owner Lessor will furnish to the Lease Indenture
         Trustee and the Security Agent true and correct duplicates or copies of
         all reports, notices, requests, demands, certificates, financial
         statements and other instruments furnished to the Owner Lessor under
         the Facility Lease, to the extent that the same shall not have been (or
         are not required to be) furnished to the Lease Indenture Trustee, the
         Noteholders, or the Security Agent pursuant to the Facility Lease or
         the Participation Agreement.

         (d) Except as contemplated by the Operative Documents, the Owner Lessor
will not incur any Indebtedness or engage in any business activity except with
the prior written consent of the Lease Indenture Trustee and acting on the
instructions of the Required Holders.

SECTION 5.2       STAY, EXTENSION AND USURY LAWS

                  The Owner Lessor covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Lease Indenture; and the Owner
Lessor (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Security Agent or the Lease Indenture Trustee, but shall suffer
and permit the execution of every such power as though no such law had been
enacted.

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<Page>

SECTION 5.3       PAYMENTS FOR CONSENT

                  The Owner Lessor shall not directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Noteholder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Lease Indenture or the
Lessor Notes unless such consideration is offered to be paid or is paid to all
Noteholders of the Lessor Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.

SECTION 5.4       DEBT SERVICE RESERVE ACCOUNT

                  The Owner Lessor shall establish and, so long as any Lessor
Notes and Bonds remain outstanding, maintain with the Security Agent the Debt
Service Reserve Account (the "DEBT SERVICE RESERVE ACCOUNT"). On the Closing
Date and on any date on which a payment is made pursuant to Section 6.9 of the
Participation Agreement, the Debt Service Reserve Amount on such date of
determination will be 100% of the projected debt service on the Lessor Notes for
the succeeding six-month period, and may be satisfied by one or a combination of
the following: (i) cash or (ii) a letter of credit issued by a bank or trust
company that constitutes Acceptable Credit Support. The Security Agent is hereby
authorized to withdraw funds from the Debt Service Reserve Account or draw on
such letter of credit to make any payments, to the extent the amounts on deposit
in the Note Accounts are insufficient, due to the Noteholders in the manner
provided in Article III hereof. Withdrawal of funds from the Debt Service
Reserve Account or a draw on such letter of credit issued pursuant to this
Section 5.4 following a Lease Event of Default resulting from failure to pay any
Basic Lease Rent or Supplemental Lease Rent when due, shall be deemed to be an
exercise by the Owner Lessor of its rights under Section 7.2 hereof (other than
clause (i) of the last proviso of the last sentence of Section 7.2). Any deposit
made by the Owner Lessor into the Debt Service Reserve Account and any
reinstatement of the Debt Service Reserve Letter of Credit other than in
connection with the payment by the Facility Lessee of the related overdue Rent
shall be deemed to be an exercise by the Owner Lessor of its rights under
Section 7.2 hereof for purposes of clause (i) of the last proviso of the last
sentence of Section 7.2.

                                   ARTICLE VI
                                   SUCCESSORS

SECTION 6.1       LIMITATION ON MERGER, CONSOLIDATION AND SALE OF SUBSTANTIALLY
                  ALL ASSETS

                  The Owner Lessor shall not, directly or indirectly,
consolidate or merge with or into any other person (whether or not the Owner
Lessor is the surviving corporation), or sell, assign, convey, lease, transfer
or otherwise dispose of, all or

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<Page>

substantially all of its properties or assets in one or a series of
transactions, to any Person or Persons.

                                   ARTICLE VII
                        LEASE INDENTURE EVENTS OF DEFAULT

SECTION 7.1       LEASE INDENTURE EVENTS OF DEFAULT

                  "LEASE INDENTURE EVENT OF DEFAULT" means any of the following
events (whatever the reason for such Lease Indenture Event of Default and
whether such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority):

         (a) any Lease Event of Default (other than with respect to (x) a Rent
Default Event, (y) Excepted Payments unless the Facility Lease has been declared
in default by the Owner Lessor or (z) the failure of the Facility Lessee to
maintain insurance in the amounts and on the terms set forth in the Operative
Documents so long as the insurance actually maintained by the Facility Lessee is
in accordance with Prudent Industry Practice, so long as such Lease Event of
Default is waived by the Owner Lessor and the Owner Participant) shall have
occurred and be continuing; or

         (b) default of the Owner Lessor in the payment when due of any (i)
payment of principal of, premium (including, without limitation, Make-Whole
Premium), if any, or interest on, or any scheduled fees within 5 Business Days
after the same shall become due or (ii) other amounts due and payable by the
Owner Lessor under or with respect to, any Lessor Note and such failure shall
continue for thirty days after receipt by the Owner Lessor of written demand
therefore from the Security Agent; or

         (c) any material representation or warranty made by the Owner
Participant or the Owner Lessor in this Lease Indenture or in any other
Operative Document to which it is a party shall prove to have been inaccurate
when made or deemed made in any material respect or by any OP Guarantor in its
OP Guaranty (provided the OP Guaranty shall not have been terminated or
released), as the case may be, and such misrepresentation or breach of warranty
remains material and shall not have been corrected within a period of 30 days
following written notice thereof being given to the Owner Lessor and the Owner
Participant or such OP Guarantor, as the case may be, by any Noteholder (through
the Lease Indenture Trustee); PROVIDED that, if such misrepresentation or breach
of warranty is capable of correction but cannot with diligence be corrected
within such 30-day period, such failure will not constitute a Lease Indenture
Event of Default so long as the party whose representation or warranty was
inaccurate promptly institutes corrective action within such 30-day period and
diligently pursues such corrective action (but in no event shall the total
period permitted to correct such misrepresentation or breach of warranty extend
beyond 120 days from the date such notice was provided); or

                                       40
<Page>

         (d) any failure (i) by the Owner Lessor to observe, perform or comply
with the provisions of any material covenant or obligation of the Owner Lessor
contained in this Lease Indenture or in any Operative Document to which it is a
party (other than as provided in clause (a) above) in any material respect or
(ii) by the Owner Participant to observe or perform any material covenant or
obligation of the Owner Participant contained in any Operative Document (other
than the Tax Indemnity Agreement) to which it is a party or (iii) by any OP
Guarantor to observe or any material covenant or obligation of such OP Guarantor
contained in any OP Guaranty (provided the OP Guaranty shall not have been
terminated or released); and such covenant remains material and such failure
shall not have been cured within a period of 30 days following written notice
thereof being given to the Owner Lessor and the Owner Participant, as the case
may be, by any Noteholder (through the Lease Indenture Trustee); PROVIDED that,
if such failure is capable of cure but cannot with diligence be cured within
such 30-day period, such failure will not constitute a Lease Indenture Event of
Default so long as the party failing to observe or perform such covenant
promptly institutes corrective action within such 30-day period and diligently
pursues such corrective action (but in no event shall the total period permitted
to cure such failure extend beyond 180 days from the date such notice was
provided); or

         (e) the Owner Participant, any OP Guarantor (provided the OP Guaranty
shall not have been terminated or released) or the Owner Lessor shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency or
similar law, (ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Owner Lessor, such OP
Guarantor (provided the OP Guaranty shall not have been terminated or released)
the Owner Participant or any substantial part of the property of any of the
foregoing, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due, or (vii) take corporate action
for the purpose of effecting any of the foregoing; or

         (f) an involuntary proceeding is commenced or an involuntary petition
is filed in a court of competent jurisdiction seeking (i) relief in respect of
the Owner Participant, any OP Guarantor (provided the OP Guaranty shall not have
been terminated or released) or the Owner Lessor under Bankruptcy Code or any
other federal, state or foreign bankruptcy, insolvency or similar law now or
hereafter in effect, (ii) the appointment of a receiver, Lease Indenture
Trustee, custodian, sequestrator or similar official for the Owner Participant,
such OP Guarantor (provided the OP Guaranty shall not have been terminated or
released) or the Owner Lessor or any substantial part of the property of the
foregoing or (iii) the winding-up or liquidation of the Owner Participant, such
OP

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<Page>

Guarantor (provided the OP Guaranty shall not have been terminated or released)
or the Owner Lessor and such proceeding or petition continues undismissed for 60
days or an order or decree approving or ordering any of the foregoing continues
unstayed and in effect for 60 days; or

         (g) If Owner Lessor shall give any notice pursuant to 42 Pa.C.S.
ss.8143(c) or otherwise to terminate the operation of the Mortgage as security
for future advances or future obligations made or incurred after the date the
Lease Indenture Secured Parties receive such notice, or Owner Lessor shall take
any other similar action for the purpose of limiting or attempting to limit the
operation of the Mortgage as such security.

SECTION 7.2       CERTAIN RIGHTS TO CURE

         In the event of any Lease Indenture Event of Default triggered by a
Lease Event of Default that arises in connection with the payment of any
installment of Basic Lease Rent or Supplemental Lease Rent (other than with
respect to Excepted Payments) due under the Facility Lease, the Owner Lessor or
the Owner Participant may, but shall not be obligated to, within ten Business
Days (but with respect to a default in the payment of Basic Lease Rent in no
event more than 15 days after the related Rent Payment Date), after receipt by
the Owner Lessor and Owner Participant of written notice of the occurrence of
such Lease Default or Lease Event of Default, without the consent or concurrence
of the Security Agent, the Lease Indenture Trustee or any Noteholder, pay, as
provided in Section 2.11 hereof, for application in accordance with Section 3.1
hereof, the principal of, interest on and other amounts payable under or in
respect of, the Lessor Notes as shall then be due and payable on the Lessor
Notes (without giving effect to any acceleration pursuant to Section 7.3
hereof). If any other Lease Default or other Lease Event of Default that gives
rise to a Lease Indenture Event of Default occurs and the Owner Lessor shall
have been furnished (by or for the account of the Owner Participant) with all
funds necessary for remedying such Lease Default or Lease Event of Default, the
Owner Participant may, within ten Business Days after the earlier of (a) receipt
by the Owner Participant of written notice of or (b) the Owner Participant
acquiring actual knowledge of the occurrence of such Lease Event of Default,
without the consent or concurrence of the Security Agent, the Lease Indenture
Trustee or any Noteholder, instruct the Owner Lessor to exercise the Owner
Lessor's rights under Section 20 of the Facility Lease to perform such
obligation on behalf of the Facility Lessee. Solely for the purpose of
determining whether there exists a Lease Indenture Event of Default, (a) any
payment by the Owner Participant or the Owner Lessor pursuant to, and in
compliance with, the first sentence of this Section 7.2 shall be deemed to
remedy (for purposes of this Lease Indenture only) any Lease Default or Lease
Event of Default in the payment of installments of Basic Lease Rent theretofore
due and payable and to remedy any default by the Owner Lessor in the payment of
any amount due and payable under the Lessor Notes or hereunder, and (b) any
performance by the Owner Lessor of any obligation of the Facility Lessee under
the Facility Lease pursuant to, and in compliance with, the second sentence of
this Section 7.2 shall be deemed to remedy (for purposes of this Lease

                                       42
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Indenture) any Lease Default or Lease Event of Default to the same extent that
like performance by the Facility Lessee itself would have remedied such Lease
Event of Default (but any such payment or performance shall not relieve the
Facility Lessee of its duty to pay all Rent and perform all of its obligations
pursuant to the Facility Lease). If, on the basis specified in the preceding
sentence, such Lease Default or Lease Event of Default shall have been remedied,
then any determination that the Facility Lease, and any declaration pursuant to
this Lease Indenture that the Lessor Notes are due and payable or that a Lease
Indenture Default or Lease Indenture Event of Default exists hereunder, based
upon such Lease Default or Lease Event of Default, shall be deemed to be
rescinded, and the Owner Participant shall (to the extent of any such payments
made by or for the account of the Owner Lessor) be subrogated to the rights of
the Noteholders hereunder to receive such payment of Rent from the Facility
Lessee (and the payment of interest on account of such Rent from the Facility
Lessee being overdue), and shall be entitled, so long as no other Lease
Indenture Event of Default shall have occurred or would result therefrom, to
receive and retain such payment from the Facility Lessee; provided, however,
that the Owner Participant shall not, so long as this Lease Indenture shall not
have terminated, otherwise attempt to recover any such amount paid by it or for
its account on behalf of the Facility Lessee pursuant to this Section 7.2 except
by demanding of the Facility Lessee payment of such amount or by commencing an
action at law and obtaining and enforcing a judgment against the Facility Lessee
for the payment of such amount or taking appropriate action in a pending action
at law against the Facility Lessee and the Owner Participant will not obtain any
lien on any part of the Indenture Estate on account of such payment nor will any
claim of the Owner Participant against the Facility Lessee or any other party
for the repayment thereof impair the prior right and security interest of the
Lease Indenture Secured Parties in and to the Indenture Estate, as the case may
be; provided, further, however, that

                  (i) this Section 7.2 shall not apply with respect to any cure
         of any default in the payment of Basic Lease Rent if such cure shall
         have previously been effected with respect to (A) four (4) consecutive
         payments of Basic Lease Rent immediately preceding the date of such
         default, or (B) more than eight (8) payments of Basic Lease Rent;

                  (ii) neither the Owner Lessor nor the Owner Participant shall
         (without a Notice of Action) have the right to cure any Lease Event of
         Default except as specified in this Section 7.2; and

                  (iii) until the expiration of the period during which the
         Owner Lessor shall be entitled to exercise rights under the first and
         second sentence of this Section 7.2 with respect to any failure by the
         Facility Lessee referred to therein, neither the Lease Indenture
         Trustee and the Security Agent nor any Lease Indenture Secured Party
         shall take or commence any action it would otherwise be entitled to
         take or commence as a result of such failure by the Facility Lessee,
         whether under this Section 7 or Section 17 of the Facility Lease or
         otherwise.

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<Page>

SECTION 7.3       ACCELERATION

                  If any Lease Indenture Event of Default (other than a Lease
Indenture Event of Default specified in clause (e) or (f) of Section 7.1 hereof
with respect to the Owner Lessor) occurs and is continuing, the Security Agent
may, and upon written direction of the Noteholders of at least 33-1/3% (in the
case of any Lease Indenture Event of Default specified in clause (b) of Section
7.1 hereof) or 50% (in the case of any other Lease Indenture Event of Default)
in principal amount of the then outstanding Lessor Notes shall, declare, by
written notice to the Owner Lessor, all the Lessor Notes to be due and payable
immediately. Notwithstanding the foregoing, if a Lease Indenture Event of
Default specified in clause, (e) or (f) of Section 7.1 hereof occurs with
respect to the Owner Lessor, all outstanding Lessor Notes shall be due and
payable without further action or notice. Noteholders may not enforce this Lease
Indenture or the Lessor Notes except as provided in this Lease Indenture. The
Lease Indenture Trustee may withhold from Noteholders a notice of any continuing
Lease Indenture Default or Lease Indenture Event of Default (except a Lease
Indenture Default or Lease Indenture Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their best
interest. The Noteholders of 66 2/3% in aggregate principal amount of the then
outstanding Lessor Notes by notice to the Security Agent may on behalf of all
Noteholders rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Lease Indenture
Events of Default (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) have been cured or waived.

                  The Noteholders of a majority (or 66 2/3% in case of a Lease
Indenture Event of Default triggered by a Lease Event of Default specified in
clause (d)(i) of Section 16 of the Facility Lease, for non-compliance with
SECTION 6.1 of the Participation Agreement) in aggregate principal amount of the
Lessor Notes then outstanding by notice to the Lease Indenture Trustee may on
behalf of the Noteholders of all of the Lessor Notes waive any existing Lease
Indenture Lease Indenture Default or Lease Indenture Event of Default and its
consequences under this Lease Indenture except (i) a continuing Lease Indenture
Default or Lease Indenture Event of Default in the payment of principal of,
premium, if any, or interest on, the Lessor Notes (including in connection with
an offer to purchase) and (ii) a Lease Indenture Event of Default specified in
clause (e) or (f) of Section 7.1 hereof.

SECTION 7.4       OTHER REMEDIES

         (a) If a Lease Indenture Event of Default shall have occurred and so
long as the same shall be continuing unremedied the Security Agent may, if not
precluded by law or otherwise, exercise any or all of the rights and powers and
pursue any and all remedies available to collect the payment of principal,
premium, if any, or interest on the Lessor Notes including the remedies pursuant
to this Section 7.4 and shall have and may exercise all of the rights and
remedies of a secured party under any and all applicable

                                       44
<Page>

laws, rules or regulations. It is understood and agreed that if a Lease
Indenture Event of Default has occurred and is continuing by virtue of one or
more Lease Events of Default the Security Agent shall not exercise foreclosure
remedies under this Lease Indenture without exercising material remedies seeking
to dispossess the Lessee under the Lease, unless exercising such remedies under
the Facility Lease shall be prohibited at the time by law, governmental
authority or court order, in which case the Security Agent shall not exercise
foreclosure remedies under the Lease Indenture until the expiration of a period
of one year from the commencement of such prohibition. For the avoidance of
doubt, it is expressly understood and agreed that the above-described inability
of the Security Agent to exercise any right or remedy under the Facility Lease
shall not prevent the Security Agent from exercising any of its other rights,
powers and remedies under this Lease Indenture.

         (b) Both the Owner Lessor, the Lease Indenture Trustee and the Security
Agent irrevocably agree for the benefit of the Facility Lessee that neither of
them will exercise any remedies on account of a Lease Event of Default resulting
from a Rent Default Event other than (x) the Owner Lessor may at any time a Rent
Default Event has occurred and is continuing, exercise the remedy set forth in
Section 17.1(g) of the Facility Lease and (y) upon the Rent Default Remedy Date,
the Owner Lessor may declare the Facility Lease in default and the Owner Lessor,
or if the lien of this Lease Indenture has not terminated, the Security Agent
may exercise all remedies. The Owner Lessor and the Security Agent irrevocably
agree that the Facility Lessee is a third party beneficiary of this section
7.4(b).

SECTION 7.5       TAKING POSSESSION OF INDENTURE ESTATE

         (a) Subject to the rights of the Owner Lessor and the Owner Participant
under Sections 7.2 and 2.21 hereof, and unless a Lease Indenture Event of
Default shall have occurred and be continuing and the Lessor Notes shall have
been accelerated (and any such acceleration has not been rescinded) pursuant to
Section 7.3 hereof, upon a Notice of Action , the Owner Lessor shall promptly
execute and deliver or cause to be delivered to the Security Agent such
instruments and other documents as the Required Lease Indenture Secured Parties
may deem necessary or advisable to enable the Security Agent at such time or
times and place or places as the Security Agent (acting upon a Notice of Action)
may specify, to obtain possession of all or any part of the Indenture Estate to
which the Lease Indenture Secured Parties shall at the time be entitled
hereunder. If the Owner Lessor shall for any reason fail to execute and deliver
or cause to be delivered such instruments and documents after such request by
the Security Agent , the Security Agent (acting upon a Notice of Action) may (i)
obtain a judgment conferring on the Security Agent the right to immediate
possession and requiring the Owner Lessor to execute and deliver or cause to be
delivered such instruments and documents to the Security Agent and the Owner
Lessor hereby specifically consents to the entry of such judgment to the fullest
extent it may lawfully do so, and (ii) to the extent permitted by law, pursue
all or part of such Indenture Estate, as applicable, wherever it may be found,

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<Page>

subject to Article XI of the Participation Agreement and Section 4.2 of the
Facility Lease, if applicable. All expenses (including those of the Security
Agent) of obtaining such judgment or of pursuing, searching for and taking such
property shall, until paid, be secured by the lien of this Lease Indenture.

         (b) Upon every such taking of possession in connection with a Lease
Event of Default, the Security Agent (acting upon a Notice of Action) may, from
time to time at the expense of the Indenture Estate, make all such expenditures
for maintenance, insurance, repairs, replacements, alterations, additions and
improvements to and of the Indenture Estate as the Required Lease Indenture
Secured Parties may deem proper. In each such case, the Security Agent (acting
upon a Notice of Action) or its designee shall have the right to maintain, use,
operate, store, lease, control or manage the Indenture Estate and to carry on
the business and to exercise all rights and powers of the Owner Lessor relating
to the Indenture Estate, as the Required Lease Indenture Secured Parties shall
deem best, including the right to enter into any and all such agreements with
respect to the maintenance, insurance, use, operation, storage, leasing,
control, management or disposition of the Indenture Estate or any part thereof
as the Required Lease Indenture Secured Parties may determine; and the Security
Agent shall be entitled to collect and receive directly all tolls, rents
(including Rent), revenues, issues, income, products and profits constituting
part of the Indenture Estate and every part thereof, except Excepted Payments,
without prejudice, however, to the right of the Security Agent under any
provision of this Lease Indenture to collect and receive all cash held by, or
required to be deposited with, the Security Agent hereunder. Such tolls, rents
(including Rent), revenues, issues, income, products and profits shall be
applied to pay the expenses of use, operation, storage, subleasing, control,
management or disposition of the Indenture Estate and of conducting the business
thereof, and of all maintenance, repairs, replacements, alterations, additions
and improvements, and to make all payments which the Security Agent may be
required or may elect (acting upon a Notice of Action) to make, if any, for
taxes, assessments, insurance or other proper charges upon the Indenture Estate
or any part thereof (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
the Owner Lessor), and all other payments which the Security Agent may be
required or authorized to make under any provision of this Lease Indenture, as
well as reasonable compensation for the services of the Lease Indenture Trustee
and the Security Agent, and of all Persons properly engaged and employed by the
Lease Indenture Trustee and the Security Agent.

SECTION 7.6       WAIVER OF PAST LEASE INDENTURE DEFAULTS

                  Upon any waiver of any existing Lease Indenture Default or
Lease Indenture Event of Default pursuant to the second paragraph of Section
7.3, such Lease Indenture Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Lease Indenture; but no such waiver shall extend to any subsequent or other
Lease Indenture Default or impair any right consequent thereon.

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SECTION 7.7       CONTROL BY MAJORITY

                  The Required Lease Indenture Secured Parties may direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the Security Agent or exercising any trust or power conferred on
it. However, the Security Agent may refuse to follow any direction that
conflicts with law or this Lease Indenture or that the Security Agent determines
may be unduly prejudicial to the rights of other Noteholders or the Debt Service
Reserve Letter of Credit Secured Parties or that may involve the Security Agent
in personal liability. The Security Agent may take any other action consistent
with this Lease Indenture relating to any such direction.

SECTION 7.8       [RESERVED]

SECTION 7.9       RIGHTS OF HOLDERS OF LESSOR NOTES TO RECEIVE PAYMENT

                  Notwithstanding any other provision of this Lease Indenture
but subject to Section 2.5, the right of any Noteholder, which is absolute and
unconditional, to receive payment of principal, premium, if any, and interest on
the Lessor Note, on or after the respective due dates expressed in the Lessor
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, or the
obligation of the Owner Lessor, which is also absolute and unconditional, to pay
the principal of, premium, if any, and interest on the Lessor Note to such
Noteholder at the time and place set forth in the Lessor Note, shall not be
impaired or affected without the consent of such Noteholder.

SECTION 7.10      COLLECTION SUIT BY LEASE INDENTURE TRUSTEE

                  If a Lease Indenture Event of Default specified in Section
6.1(a) occurs and is continuing, the Security Agent is authorized to recover
judgment in its own name and as Lease Indenture Trustee of an express trust
against the Owner Lessor for the whole amount of principal of, premium, if any,
and interest remaining unpaid on the Lessor Notes and interest on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, fees, expenses, disbursements and advances of the
Security Agent, its agents and counsel.

SECTION 7.11       [RESERVED]

SECTION 7.12       NO ACTION CONTRARY TO THE FACILITY LESSEE'S RIGHTS UNDER THE
                   FACILITY LEASE

                  Notwithstanding any other provision of any Operative Document,
so long as the Facility Lease shall not have been declared (or deemed to have
been declared) in

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default, the Security Agent shall not take or cause to be taken any action
contrary to the right of the Facility Lessee under the Facility Lease, including
its rights, as between the Facility Lessee and the Owner Lessor, to quiet use
and possession of the Undivided Interest under the Facility Lease.

                                  ARTICLE VIII
                   LEASE INDENTURE TRUSTEE AND SECURITY AGENT

SECTION 8.1       DUTIES OF LEASE INDENTURE TRUSTEE AND SECURITY AGENT

         (a) If a Lease Indenture Event of Default has occurred and is
continuing, the Security Agent and the Lease Indenture Trustee shall exercise
such of the rights and powers vested in it by this Lease Indenture, and use the
same degree of care and skill in its exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.

         (b) Except during the continuance of a Lease Indenture Event of
Default:

                  (i) the duties of each of the Lease Indenture Trustee and the
         Security Agent shall be determined solely by the express provisions of
         this Lease Indenture and the Lease Indenture Trustee and the Security
         Agent need perform only those duties that are specifically set forth in
         this Lease Indenture and no others, and no implied covenants or
         obligations shall be read into this Lease Indenture against the Lease
         Indenture Trustee or the Security Agent; and

                  (ii) in the absence of bad faith on its part, the Lease
         Indenture Trustee or the Security Agent may conclusively rely, as to
         the truth of the statements and the correctness of the opinions
         expressed therein, upon certificates or opinions furnished to the Lease
         Indenture Trustee or the Security Agent and conforming to the
         requirements of this Lease Indenture. However, the Lease Indenture
         Trustee and the Security Agent shall examine the certificates and
         opinions to determine whether or not they conform to the requirements
         of this Lease Indenture.

         (c) The Lease Indenture Trustee nor the Security Agent may not be
relieved from liabilities for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

                  (i) this paragraph does not limit the effect of paragraph (b)
         of this Section;

                  (ii) the Lease Indenture Trustee nor the Security Agent shall
         not be liable for any error of judgment made in good faith by a
         Responsible Officer,

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<Page>

         unless it is proved that the Lease Indenture Trustee or the Security
         Agent was negligent in ascertaining the pertinent facts; and

                  (iii) the Lease Indenture Trustee and the Security Agent shall
         not be liable with respect to any action it takes or omits to take in
         good faith in accordance with a direction received by it pursuant to
         Section 7.7 hereof.

         (d) Whether or not therein expressly so provided, every provision of
this Lease Indenture that in any way relates to the Lease Indenture Trustee or
the Security Agent is subject to paragraphs (a), (b), (c), (e) and (f) of this
Section.

         (e) No provision of this Lease Indenture shall require the Lease
Indenture Trustee nor the Security Agent to expend or risk its own funds or
incur any liability. The Lease Indenture Trustee and the Security Agent shall be
under no obligation to exercise any of its rights and powers under this Lease
Indenture at the request or direction of any Noteholders, unless such Noteholder
shall have offered and, if requested, provided to the Lease Indenture Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

         (f) The Lease Indenture Trustee shall not be liable for interest on any
money received by it except as the Lease Indenture Trustee or the Security Agent
may agree in writing with the Owner Lessor. Money held in trust by the Lease
Indenture Trustee or the Security Agent need not be segregated from other funds
except to the extent required by law.

SECTION 8.2       RIGHTS OF LEASE INDENTURE TRUSTEE

         (a) The Lease Indenture Trustee or the Security Agent may conclusively
rely upon any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Lease Indenture Trustee and the Security
Agent need not investigate any fact or matter stated in the document, but the
Lease Indenture Trustee nor the Security Agent, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and if the Lease Indenture Trustee or the Security Agent shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Owner Lessor personally or by agent or
attorney.

         (b) Before the Lease Indenture Trustee or the Security Agent acts or
refrains from acting, it may require a Manager's Certificate or an Opinion of
Counsel or both. The Lease Indenture Trustee or the Security Agent shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officer's Certificate or Opinion of Counsel. The Lease Indenture Trustee or
the Security Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and

                                       49
<Page>

complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

         (c) The Lease Indenture Trustee or the Security Agent may act through
its attorneys and agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.

         (d) The Lease Indenture Trustee or the Security Agent shall not be
liable for any action it takes or omits to take in good faith that it believes
to be authorized or within the rights or powers conferred upon it by this Lease
Indenture.

         (e) Unless otherwise specifically provided in this Lease Indenture, any
demand, request, direction or notice from the Owner Lessor shall be sufficient
if signed by the Independent Manager of the Owner Lessor.

         (f) The Lease Indenture Trustee or the Security Agent shall be under no
obligation to exercise any of the rights or powers vested in it by this Lease
Indenture at the request or direction of any of the Lease Indenture Secured
Parties unless such Lease Indenture Secured Parties shall have offered and, if
requested, provided to the Lease Indenture Trustee or the Security Agent
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.

         (g) No permissive right of the Lease Indenture Trustee or the Security
Agent to act hereunder shall be construed as a duty.

         (h) Whenever in the administration of this Lease Indenture the Lease
Indenture Trustee or the Security Agent shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder, the Lease Indenture Trustee or the Security Agent (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers Certificate, an Opinion of Counsel, or both.

SECTION 8.3       INDIVIDUAL RIGHTS OF SECURITY AGENT

                  The Security Agent in its individual or any other capacity may
become the owner or pledgee of Lessor Notes and may otherwise deal with the
Owner Lessor or any Affiliate of the Owner Lessor with the same rights it would
have if it were not the Security Agent. However, in the event that the Security
Agent acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the Commission for permission to continue as Lease Indenture
Trustee or resign. Any Agent may do the same with like rights and duties. The
Security Agent is also subject to Sections 8.10 and 8.11 hereof.

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<Page>

SECTION 8.4       LEASE INDENTURE TRUSTEE'S DISCLAIMER

                  The Lease Indenture Trustee or the Security Agent shall not be
responsible for and makes no representation as to the validity or adequacy of
this Lease Indenture or the Lessor Notes; they shall not be accountable for the
Owner Lessor's use of the proceeds from the Lessor Notes or any money paid to
the Owner Lessor or upon the Owner Lessor's direction under any provision of
this Lease Indenture; they shall not be responsible for the use or application
of any money received by any Paying Agent other than the Lease Indenture
Trustee, and they shall not be responsible for any statement or recital herein
or any statement in the Lessor Notes or any other document in connection with
the sale of the Lessor Notes or pursuant to this Lease Indenture other than its
certificate of authentication.

SECTION 8.5       NOTICE OF LEASE INDENTURE DEFAULTS

                  If a Lease Indenture Default or a Lease Indenture Event of
Default occurs and is continuing and if the Lease Indenture Trustee receives
written notice thereof, the Lease Indenture Trustee shall (at the expense of the
Owner Lessor) mail to Noteholders a notice of the Lease Indenture Default or
Lease Indenture Event of Default within 90 days after it occurs. Except in the
case of a Lease Indenture Default or Lease Indenture Event of Default in payment
of principal of, premium, if any, or interest on any Lessor Note, the Lease
Indenture Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Noteholders of the Lessor Notes.

SECTION 8.6       GENERAL AUTHORITY OF THE SECURITY AGENT OVER THE INDENTURE
                  ESTATE

                  Each Lease Indenture Secured Party hereby irrevocably
constitutes and appoints, effective after the occurrence and during the
continuance of a Lease Indenture Event of Default, the Security Agent and any
officer or agent thereof, with full power of substitution as among such officers
and agents, as its true and lawful attorney-in-fact with full power and
authority in the name of such Lease Indenture Secured Party or in its own name,
from time to time in the Security Agent's reasonable discretion to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of the Lease
Indenture (but subject to the terms hereof and thereof) and to accomplish the
purposes hereof and thereof; and, without limiting the generality of the
foregoing, each Lease Indenture Secured Party hereby gives the Security Agent,
during any Lease Indenture Event of Default or Lease Indenture Default, the
power and right on behalf of such Lease Indenture Secured Party, without notice
to or further assent by such Lease Indenture Secured Party, to: (i) ask for,
demand, sue for, collect, receive and give acquittance for any and all moneys
due or to become due upon, or in connection with, the Indenture Estate; (ii)
receive, take, endorse, assign and deliver any and all checks, notes, drafts,
acceptances, documents and other

                                       51
<Page>

negotiable and non-negotiable instruments taken or received by the Security
Agent as, or in connection with, the Indenture Estate, (iii) commence,
prosecute, defend, settle, compromise or adjust any claim, suit, action or
proceeding with respect to, or in connection with, the Indenture Estate; (iv)
sell, transfer, assign or otherwise deal in or with the Indenture Estate or any
part thereof as fully and effectively as if the Security Agent were the absolute
owner thereof; (v) exercise all remedies provided for by the Lease Indenture;
and (vi) do, at its option and at the expense and for the account of such Lease
Indenture Secured Party, at any time or from time to time, all acts and things
which the Security Agent reasonably deems necessary to perfect the liens and
security interests of the Security Agent in the Indenture Estate, to protect or
preserve the Indenture Estate and to realize upon the Indenture Estate in each
case is accordance with the terms hereof. Each Lease Indenture Secured Party
hereby ratifies all that said attorneys-in-fact shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.

SECTION 8.7       COMPENSATION

                  The Owner Lessor agrees to pay to the Lease Indenture Trustee
and the Security Agent from time to time compensation as agreed upon by the
Lease Indenture Trustee and the Security Agent and the Owner Lessor, and, in the
absence of any such agreement, reasonable compensation for its acceptance of
this Lease Indenture and services hereunder. The Lease Indenture Trustee's and
the Security Agent's compensation shall not be limited by any law on
compensation of a Lease Indenture Trustee of an express trust.

                  To secure the Owner Lessor's payment obligations in this
Section, the Lease Indenture Trustee and the Security Agent shall have a lien
prior to the Lessor Notes on all money or property held or collected by the
Lease Indenture Trustee or the Security Agent, except that held in trust to pay
principal and interest on particular Lessor Notes.

                  When the Lease Indenture Trustee or the Security Agent incurs
expenses or renders services after a Lease Indenture Event of Default specified
in Section 7.1(e) or (b) hereof occurs, the expenses and the compensation for
the services (including the fees and expenses of its agents and counsel) are
intended to constitute expenses of administration under any Bankruptcy Code.

SECTION 8.8       REPLACEMENT OF LEASE INDENTURE TRUSTEE

                  A resignation or removal of the Lease Indenture Trustee or the
Security Agent and appointment of a successor Lease Indenture Trustee or
Security Agent shall become effective only upon the successor Lease Indenture
Trustee's acceptance of appointment as provided in this Section.

                                       52
<Page>

                  The Lease Indenture Trustee or the Security Agent may resign
in writing at any time and be discharged from the trust hereby created by so
notifying the Owner Lessor. The Noteholders of a majority in principal amount of
the then outstanding Lessor Notes may remove the Lease Indenture Trustee or the
Security Agent by so notifying the Lease Indenture Trustee or the Security Agent
and the Owner Lessor in writing. The Owner Lessor may by a Board Resolution
remove the Lease Indenture Trustee or the Security Agent if:

         (a) the Lease Indenture Trustee or the Security Agent fails to comply
with Section 8.10 hereof;

         (b) the Lease Indenture Trustee or the Security Agent is adjudged a
bankrupt or an insolvent or an order for relief is entered with respect to the
Lease Indenture Trustee or the Security Agent under any Bankruptcy Code;

         (c) a custodian or public officer takes charge of the Lease Indenture
Trustee or Security Agent or either of its property; or

         (d) the Lease Indenture Trustee or the Security Agent becomes incapable
of acting as Lease Indenture Trustee hereunder.

                  If the Lease Indenture Trustee or the Security Agent resigns
or is removed or if a vacancy exists in the office of Lease Indenture Trustee or
the Security Agent for any reason, the Owner Lessor shall promptly appoint a
successor Lease Indenture Trustee or Security Agent. Within one year after the
successor Lease Indenture Trustee or Security Agent takes office, the Required
Lease Indenture Secured Parties may appoint a successor Lease Indenture Trustee
or Security Agent to replace the successor Lease Indenture Trustee or Security
Agent appointed by the Owner Lessor.

                  If a successor Lease Indenture Trustee or Security Agent does
not take office within 60 days after a vacancy exists in the office of the Lease
Indenture Trustee or the Security, as applicable, the non-retiring Lease
Indenture Trustee or Security Agent, as applicable, the Owner Lessor, the
Noteholders of at least 10% in principal amount of the then outstanding Lessor
Notes or any of the Debt Service Reserve Letter of Credit Secured Parties may
petition any court of competent jurisdiction for the appointment of a successor
Lease Indenture Trustee or Security Agent, as applicable.

                  If the Lease Indenture Trustee or Security Agent, as
applicable, after receiving a written request by any Noteholder who has been a
BONA FIDE Noteholder for at least six months, fails to comply with Section 8.10,
such Noteholder or any of the Debt Service Reserve Letter of Credit Secured
Parties may petition any court of competent jurisdiction for the removal of the
Lease Indenture Trustee or Security Agent, as applicable and the appointment of
a successor Lease Indenture Trustee or Security Agent, as applicable.

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                  A successor Lease Indenture Trustee or Security Agent, as
applicable shall deliver a written acceptance of its appointment to the retiring
Lease Indenture Trustee or Security Agent, as applicable and to the Owner
Lessor. Thereupon, the resignation or removal of the retiring Lease Indenture
Trustee shall become effective, and the successor Lease Indenture Trustee or
Security Agent, as applicable shall have all the rights, powers and duties of
the Lease Indenture Trustee or Security Agent, as applicable under this Lease
Indenture. The successor Lease Indenture Trustee or Security Agent, as
applicable shall mail a notice of its succession to the Noteholders. The
retiring Lease Indenture Trustee or Security Agent, as applicable shall promptly
transfer all property held by it as Lease Indenture Trustee or Security Agent,
as applicable to the successor Lease Indenture Trustee or Security Agent, as
applicable, PROVIDED all sums owing to the Lease Indenture Trustee or Security
Agent, as applicable hereunder have been paid and subject to the lien provided
for in Section 8.7 hereof. Notwithstanding replacement of the Lease Indenture
Trustee or Security Agent pursuant to this Section 8.8, the Owner Lessor's
obligations under Section 8.7 hereof shall continue for the benefit of the
retiring Lease Indenture Trustee.

SECTION 8.9       SUCCESSOR LEASE INDENTURE TRUSTEE BY MERGER, ETC

                  If the Lease Indenture Trustee or Security Agent or any Agent
of theirs consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Lease
Indenture Trustee, Security Agent or Agent, as the case may be.

SECTION 8.10       ELIGIBILITY; DISQUALIFICATION

         (a) There shall at all times be a Lease Indenture Trustee and a
Security Agent hereunder that is a corporation organized and doing business
under the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that together
with its direct parent, if any, or in the case of a corporation included in a
bank holding company system, its related bank holding company, has a combined
capital and surplus of at least $100 million as set forth in its most recent
published annual report of condition.

SECTION 8.11      OTHER CAPACITIES

                  All references in this Lease Indenture to the Lease Indenture
Trustee shall be deemed to refer to the Lease Indenture Trustee in its capacity
as Lease Indenture Trustee and in its capacities as any Agent, to the extent
acting in such capacities, and every provision of this Lease Indenture relating
to the conduct or affecting the liability or offering protection, immunity or
indemnity to the Lease Indenture Trustee shall be

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deemed to apply with the same force and effect to the Lease Indenture Trustee
acting in its capacities as any Agent.

                                   ARTICLE IX
                                  SHARED RIGHTS

SECTION 9.1       CERTAIN RIGHTS OF OWNER LESSOR AND OWNER PARTICIPANT

         (a) Notwithstanding any other provisions of this Lease Indenture other
than Section 9.1 hereof, including the Granting Clause, the following rights
(the "SECTION 9.1 RIGHTS") shall be exercisable by the Owner Lessor or the
Security Agent (acting upon a Notice of Action):

                  (i) at all times the Owner Lessor shall have the right,
         together with or independently of the Security Agent, (A) to receive
         from the Facility Lessee all notices, certificates, reports, filings,
         opinions of counsel and other documents and all information which the
         Facility Lessee is permitted or required to give or furnish to the
         Owner Lessor pursuant to any Operative Document, (B) to exercise
         inspection rights granted to the Owner Lessor pursuant to Section 12 of
         the Facility Lease, (C) to exercise, to the extent necessary to enable
         it to exercise its rights under Section 7.2 hereof, the rights of the
         Owner Lessor under Section 20 of the Facility Lease, (D) to request
         from the Facility Lessee such further documents or assurances, or
         request that the Facility Lessee take such further actions in respect
         of such party's interests, as shall be required to be delivered or
         taken by the Facility Lessee pursuant to Section 5.6 or 17.14 of the
         Participation Agreement and (E) to declare and give notice of a Lease
         Default or a Lease Event of Default pursuant to Section 17 of the
         Facility Lease; PROVIDED, HOWEVER, that the rights -------- -------
         excepted and reserved by this Section 9.1(a)(i) shall not be deemed to
         include the exercise of any remedies provided for in Section 17.1 of
         the Facility Lease (other than Section 17.1(g)), except that the Owner
         Lessor and the Owner Participant may proceed by appropriate court
         action or actions, either at law or in equity, to enforce performance
         by the Facility Lessee of the applicable covenants and terms of
         Excepted Payments but not proceed to terminate the Facility Lease;

                  (ii) so long as the Lessor Notes have not been accelerated
         pursuant to Section 7.3 hereof and the Security Agent shall not have
         commenced the exercise of remedies to dispossess the Facility Lessee of
         the Undivided Interest under this Lease Indenture, the Owner Lessor
         shall have the right, but not to the exclusion of the Security Agent
         and to the extent permitted by the Operative Documents and Requirements
         of Law, to (A) seek specific performance of the, covenants of the
         Facility Lessee under the Operative Documents relating to the
         protection, insurance, maintenance, possession, use and return of the
         Property Interest, (B) to provide such insurance as may be permitted by
         Section 11 of the Facility Lease

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         and (C) to perform for the Facility Lessee as provided in Section 20 of
         the Facility Lease; and

                  (iii) so long as the Lessor Notes have not been accelerated
         pursuant to Section 7.3 hereof (or, if accelerated, such acceleration
         has theretofore been rescinded) and the Security Agent shall not have
         commenced the exercise of remedies to dispossess the Facility Lessee of
         the Undivided Interest under this Lease Indenture, neither the Owner
         Lessor nor the Security Agent shall have any right, without the prior
         consent of the other (A) to amend, supplement, modify or waive any
         return condition in Section 5 of the Facility Lease or to amend,
         supplement, modify, waive or replace the Reimbursement Agreement or
         the Ownership and Operation Agreement, or (B) to exercise any rights
         with respect to the Facility Lessee's use and operation, modification
         or maintenance of the Property Interest which the Facility Lease
         specifically confers on the Owner Lessor or to exercise any rights
         with respect to the use and operation, modification or maintenance
         of Owner Lessor under the Ownership and Operation Agreement, or (C) to
         exercise the Owner Lessor*s right under Section 22.4(b) of the
         Facility Lease to withhold or grant its consent to an assignment by
         the Facility Lessee of its rights under the Facility Lease; and

         (b) Notwithstanding the foregoing provisions of this Section 9.1 but
subject to Section 7.4(b) hereof, the Security Agent (acting upon a Notice of
Action) shall at all times have the right to declare the Facility Lease in
default and to exercise the remedies set forth in Section 17.1 of the Facility
Lease and in Section 7.4 and 7.5 hereof. Notwithstanding anything herein or in
any other Operative Document to the contrary, so long as the Facility Lessee or
any Affiliate of the Facility Lessee is a Noteholder or Owner Lessor, neither
the Facility Lessee nor any such Affiliate, in its capacity as Noteholder or
Owner Lessor, shall have any rights to approve, consent to, vote on or ratify
any action, inaction or determination taken or made or to be taken or made
hereunder; provided, however, that this sentence shall not apply to the Facility
Lessee or any such Affiliate with respect to those matters set forth in Section
10.2 hereof requiring the consent of all Noteholders.

         (c) Notwithstanding any other provision of this Lease Indenture:

                  (i) The Owner Lessor shall at all times, to the exclusion of
         the Lease Indenture Trustee and the Security Agent, retain all rights
         (A) subject to the Lease Subordination Agreement (so long as it has not
         been terminated) in accordance with its terms, to demand and receive
         payment of, and to commence an action for payment of, Excepted
         Payments, but the Owner Lessor shall have no remedy or right with
         respect to any such payment against the Indenture Estate nor any right
         to collect any such payment by the exercise of any of the remedies
         under Section 17 of the Facility Lease; (B) except in connection with
         the exercise of remedies pursuant to the Facility Lease, to exercise
         the Owner Lessor*s rights relating to the Appraisal Procedure and to
         confer and agree with the Facility Lessee on Fair

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<Page>

         Market Rental Value, or any Renewal Lease Term; (C) retain all rights
         with respect to insurance that Section 11 of the Facility Lease
         specifically confers upon the Owner Lessor and to waive any failure by
         the Facility Lessee to maintain the insurance required by Section 11 of
         the Facility Lease before or after the fact so long as the insurance
         maintained by the Facility Lessee still constitutes Prudent Industry
         Practice; (D) to consent or withhold consent to (1) any change of
         control as provided in Section 6.1 of the Participation Agreement or
         Section 16.1(m) of the Facility Lease or (2) to sell, lease, convey or
         otherwise transfer its interest provided in Article 14 of the
         Participation Agreement, PROVIDED THAT such consent shall not be given
         if: (i) the Bonds are not rated at least BBB- by S&P, Baa3 by Moody's,
         and BBB by Duff & Phelps, and a reaffirmation of such ratings if
         obtained and (ii) the reduction of EME's interest in the facility
         Lessee has not been approved by more than 66 2/3 of the Noteholders;
         (E) to exercise remedies from time to time set forth in Section 17.1(g)
         of the Facility Lease; (F) to adjust Basic Lease Rent (or any component
         thereof), Allocated Rent, Lessor Section 467 Loan Balance, Lessee
         Section 467 Loan Balance, Lessor Section 467 Interest, Proportional
         Rent, Lessee Section 467 Interest and Termination Value as provided in
         Section 3.4 of the Facility Lease, Section 13 of the Participation
         Agreement or the Tax Indemnity Agreement; provided, however, that after
         giving effect to any such adjustment (x) the amount of Basic Lease Rent
         (exclusive of Component A thereof) payable on each Rent Payment Date
         shall be at least equal to the aggregate amount of all principal and
         accrued interest payable on such Rent Payment Date on all Lessor Notes
         then outstanding and (y) Termination Value (exclusive of any Component
         A thereof) shall in no event be less (when added to all other amounts
         required to be paid by the Facility Lessee in respect of any early
         termination of the Facility Lease other than any portion thereof that
         is Component A of Basic Lease Rent or an Excepted Payment) than an
         amount sufficient, as of the date of payment, to pay in full the
         principal of, and interest on all Lessor Notes outstanding on and as of
         such date of payment; and (G) to modify the provisions of Section 6.10
         of the Participation Agreement, provided that such terms as modified
         are no more favorable than the provisions of Section 6.9 of the
         Participation Agreement;

                  (ii) So long as the Lessor Notes have not been accelerated
         pursuant to Section 7.3 hereof (or, if accelerated, such acceleration
         has theretofore been rescinded) or the Security Agent shall not have
         exercised any of its rights pursuant to Section 7 hereof to take
         possession of, foreclose, sell or otherwise take control of all or any
         part of the Indenture Estate, the Owner Lessor shall retain the right
         to the exclusion of the Security Agent to exercise the rights of the
         Owner Lessor under the provisions of Section 10 (other than Section
         10.3 and Section 10.5 thereof), 13, 14 and 15 of the Facility Lease;
         PROVIDED, HOWEVER, that if a Lease Indenture Event of Default shall
         have occurred and be continuing, subject to Section 7.2, the Owner
         Lessor shall cease to retain such rights upon

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         notice from the Security Agent (acting upon a Notice of Action) stating
         that such rights shall no longer be retained by the Owner Lessor.

SECTION 9.2       NO REPRESENTATIONS OR WARRANTIES AS TO THE PROPERTY INTEREST.

                  NONE OF THE OWNER LESSOR, THE OWNER MANAGER, THE TRUST COMPANY
OR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY
EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE, VALUE, WORKMANSHIP, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE PROPERTY INTEREST OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, INCLUDING ANY
ENVIRONMENTAL LIABILITY, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE PROPERTY INTEREST OR ANY PART THEREOF WHATSOEVER, except that the Owner
Lessor warrants that on the Closing Date it shall have received such rights and
interests that were conveyed to it with respect to the Property Interest
pursuant to the Facility Deed, the Bill of Sale and the Facility Site Lease
subject to the rights of the parties to this Lease Indenture and to Permitted
Liens and Permitted Encumbrances, and the Trust Company warrants that on the
Closing Date the Property Interest shall be free and clear of Owner Lessor Liens
attributable to the Trust Company. None of the Owner Manager or the Trust
Company makes or shall be deemed to have made any representation or warranty as
to the validity, legality or enforceability of this Indenture, the Lessor LLC
Agreement or the Lessor Notes or as to the correctness of any statement
contained in any such document, except for the representations and warranties of
the Owner Lessor, the Owner Manager or the Trust Company in its individual
capacity made under this Lease Indenture or in the Participation Agreement.

                                    ARTICLE X
             SUPPLEMENTS AND AMENDMENTS TO THIS LEASE INDENTURE AND
                                OTHER DOCUMENTS

SECTION 10.1      WITHOUT CONSENT OF NOTEHOLDERS OR REQUIRED NOTEHOLDERS.

                  Subject to the provisions of the Participation Agreement, at
any time and from time to time, the Owner Lessor (but only on the written
request of the Owner Participant) and the Lease Indenture Trustee may enter into
any indenture or indentures supplemental hereto or execute any amendment,
modification, supplement, waiver or

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consent with respect to any other Operative Document, without the consent of the
Noteholders or the Required Lease Indenture Secured Parties for one or more of
the following purposes:

                  (i) to correct, confirm or amplify the description of any
         property at any time subject to the lien on the Indenture Estate or to
         convey, transfer, assign, mortgage or pledge any property or assets to
         the Security Agent as security for the Lessor Notes;

                  (ii) to evidence the succession of another corporation as
         Owner Manager or the appointment of a co-manager in accordance with the
         terms of the Lessor LLC Agreement;

                  (iii) to add to the covenants of the Owner Lessor for the
         benefit of the Lease Indenture Secured Parties such further covenants,
         restrictions, conditions or provisions as the Owner Lessor and the
         Security Agent shall consider to be for the protection of the
         Noteholders of any series, and to make the occurrence, or the
         occurrence and continuance, of a default in complying with any such
         additional covenant, restriction, condition or provision a Lease
         Indenture Event of Default permitting the enforcement of all or any of
         the several remedies provided in this Lease Indenture as herein set
         forth; in respect of any such additional covenant, restriction,
         condition or provision, such supplement may provide for a particular
         period of grace after default (which period may be shorter or longer
         than that allowed in the case of other defaults) or may provide for an
         immediate enforcement upon such a Lease Indenture Event of Default or
         may limit the remedies available to the Security Agent upon such a
         Lease Indenture Event of Default or may limit the right of the Required
         Lease Indenture Secured Parties to waive such a Lease Indenture Event
         of Default;

                  (iv) to cure any ambiguity or to correct or supplement any
         provision contained herein or in any supplement which may be defective
         or inconsistent with any other provision contained herein or in any
         supplement, or to add or modify such other provisions or agreements
         herein or in any other Operative Documents, in each case as the Owner
         Lessor may deem necessary or desirable, with respect to matters or
         questions arising under this Lease Indenture; provided that no such
         action shall, in the reasonable judgment of the Security Agent,
         materially adversely affect the interests of the Lease Indenture
         Secured Parties of any series;

                  (v) to provide for any evidence of the creation and issuance
         of any Subsequent Lessor Notes of any series pursuant to, and subject
         to the conditions of, Section 2.6 and to establish the form and terms
         of such Subsequent Lessor Notes;

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                  (vi) to effect an assumption of the Lessor Notes, as permitted
         by Section 2.21; PROVIDED that the supplemental indenture entered into
         to effect such assumption shall contain all of the covenants applicable
         to the Facility Lessee contained in the Facility Lease and the
         Participation Agreement for the benefit of the Lease Indenture Trustee,
         the Security Agent or the Lease Indenture Secured Parties, such that
         the Facility Lessee's obligations contained therein, to the extent they
         are applicable, will continue to be in full force and effect in the
         event the Facility Lease is terminated;

                  (vii) to evidence and provide for the removal of the Lease
         Indenture Trustee or Security Agent or the acceptance of appointment
         hereunder by a successor Lease Indenture Trustee or Security Agent with
         respect to the Lessor Notes as provided in Section 8.8;

                  (viii) to grant or confer upon the Lease Indenture Trustee or
         the Security Agent for the benefit of the Lease Indenture Secured
         Parties any additional rights, remedies, powers, authority or security
         which may be lawfully granted or conferred upon the Lease Indenture
         Trustee or the Security Agent and which are not contrary to or
         inconsistent with this Lease Indenture;

                  (ix) subject to Section 10.2 with respect to the provisions of
         the Indenture Estate Documents referred to therein, to effect any other
         amendment, modification, supplement, waiver or consent with respect to
         any Indenture Estate Document; provided that no such action shall, in
         the judgment of the Security Agent, materially and adversely affect the
         interests of the Lease Indenture Secured Parties; PROVIDED, HOWEVER,
         that no such amendment, -------- ------- modification, supplement,
         waiver or consent contemplated by this Section 10.1 shall, without the
         consent of the Required Lease Indenture Secured Parties, modify the
         provisions of Sections 5.4, 5.10, 6.1, 6.2, 6.3, 6.7 or 6.10 of the
         Participation Agreement or Sections 19.1, 22.4(b), 22.4(c) or 22.4(d)
         of the Facility Lease (other than any amendment, modification,
         supplement, waiver or consent having no adverse effect on the interests
         of the Lease Indenture Secured Parties).

                  (x) The Security Agent and the Lease Indenture Trustee is
         hereby authorized to join with the Owner Lessor in the execution of any
         such supplement, to make any further appropriate agreements and
         stipulations which may be therein contained and to accept the
         conveyance, transfer, assignment, mortgage or pledge of any property or
         assets thereunder, but the Security Agent and the Lease Indenture
         Trustee shall not be obligated to enter into any such supplement which
         affects the Lease Indenture Trustee's or the Security Agent's own
         rights, duties or immunities under this Lease Indenture or otherwise.

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SECTION 10.2      WITH CONSENT OF REQUIRED NOTEHOLDERS; LIMITATIONS.

                  Subject to the provisions of the Participation Agreement, at
any time and from time to time, (i) the Owner Lessor (but only on the written
request of the Owner Participant) and the Security Agent and the Lease Indenture
Trustee (but only if so directed upon a Notice of Action to the extent that the
same is not expressly permitted by Section 10.1), may execute a supplement or
amendment hereto for the purpose of adding provisions to, or changing or
eliminating provisions of, this Lease Indenture as specified in such request,
(ii) the Owner Lessor (but only on the written request of the Owner Participant)
and, except with respect to Excepted Payments, the Security Agent and the Lease
Indenture Trustee (but only if so directed upon a Notice of Action to the extent
that the same is not expressly permitted by Section 10.1), may enter into such
written amendment of or supplement to any Indenture Estate Document as may be
specified in such request and (iii) the Owner Lessor shall not revoke or
otherwise terminate the Lessor LLC Agreement or, if such amendment or supplement
would impair the rights of the Security Agent and the Lease Indenture Trustee or
any Lease Indenture Secured Parties, amend or supplement the Lessor LLC
Agreement; provided, however, that, without the consent of each Lease Indenture
Secured Party affected, except with respect to Excepted Payments, no such
amendment of or supplement to any Indenture Estate Document, and no waiver or
modification of the terms of any thereof, shall, except to the extent pertaining
to the Excepted Payments,

                  (i) modify the definition of the term "Required Lease
         Indenture Secured Party" or reduce the percentage of Lease Indenture
         Secured Parties required to take or approve any action hereunder,

                  (ii) change the amount or the time of payment of any amount
         owing or payable under any Lessor Note or change the rate or manner of
         calculation of interest payable with respect to any Lessor Note, or
         make any Lessor Note payable in money other than that stated on the
         Lessor Notes,

                  (iii) alter or modify the provisions of Section 3 hereof with
         respect to the manner of payment or the order of priorities in which
         distribution thereunder shall be made as between the Noteholders, the
         Debt Service Reserve Letter of Credit Secured Parties and the Owner
         Lessor or the Owner Participant, or waive a Lease Indenture Event of
         Default in the payment of principal of, premium, if any, or interest on
         the Lessor Notes (except a rescission of acceleration of the Lessor
         Notes by the Noteholders of at least 66 2/3% in aggregate principal
         amount of then outstanding Lessor Notes and a waiver of the payment
         default that resulted from such acceleration),

                  (iv) reduce the amount (except as to any amount as shall be
         sufficient to pay the aggregate principal of, make-whole premium, if
         any, and interest on, all

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         outstanding Lessor Notes) or extend the time of payment of Basic Lease
         Rent or Termination Value except as expressly provided in the Facility
         Lease, or, except in connection with Section 10.1(vi), change any of
         the circumstances under which Basic Lease Rent or Termination Value is
         payable,

                  (v) except in connection with Section 10.1(vi) or as expressly
         provided in Section 22.4 of the Facility Lease, allow for the
         assignment of the Facility Lease if, in connection therewith, the
         Facility Lessee will be released from its obligation to pay Basic Lease
         Rent and Termination Value,

                  (vi) except in connection with Section 10.1(vi), release the
         Facility Lessee from its obligation to pay Basic Lease Rent or
         Termination Value or change the absolute and unconditional character of
         such obligations as set forth in Section 9 of the Facility Lease,

                  (vii) deprive the Security Agent of the lien on a material
         portion of the Indenture Estate or permit the creation of any lien on a
         material portion of the Indenture Estate ranking equally or prior to
         the lien of the Security Agent, except for permitted liens.

                  (viii) make any change in the provisions of this Lease
         Indenture relating to waivers of past Lease Indenture Defaults or the
         rights of Noteholders to receive payments of principal of, premium, if
         any, or interest on the Lessor Notes;

                  (ix) waive a redemption payment with respect to any Lessor
         Note; or

                  (x) make any change in the foregoing amendment and waiver
         provisions.

SECTION 10.3      DOCUMENTS FURNISHED TO NOTEHOLDERS.

                  Promptly after the execution by the Owner Lessor, the Security
Agent or the Lease Indenture Trustee of any document entered into pursuant to
Sections 10.1 and 10.2, the Lease Indenture Trustee shall furnish a copy thereof
to the Noteholders but the failure of the Lease Indenture Trustee to deliver
such conformed copy, or the failure of the Noteholders to receive such conformed
copies, shall not impair or affect the validity of such document.

SECTION 10.4      LEASE INDENTURE TRUSTEE AND SECURITY AGENT PROTECTED.

                  Notwithstanding anything to the contrary contained herein, if,
in the opinion of the Lease Indenture Trustee or the Security Agent, any
document required to be executed by it pursuant to Sections 10.1 and 10.2
adversely affects any right, duty, immunity or indemnity of or in favor of the
Lease Indenture Trustee or the Security

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<Page>

Agent under any Indenture Estate Document or under any other Operative Document,
the Lease Indenture Trustee or the Security Agent may in its discretion decline
to execute such document unless the Person or Persons requesting any related
action shall provide an indemnity that is reasonably satisfactory to the Lease
Indenture Trustee or the Security Agent.

SECTION 10.5      REVOCATION AND EFFECT OF CONSENTS

                  Until an amendment, supplement or waiver becomes effective, a
consent to it by a Lease Indenture Secured Party is a continuing consent by the
Lease Indenture Secured Party, even if notation of the consent is not made on
any Lessor Note. However, any such Lease Indenture Secured Party may revoke the
consent if the Security Agent receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Lease Indenture Secured Party.

SECTION 10.6      NOTATION ON OR EXCHANGE OF LESSOR NOTES

                  The Lease Indenture Trustee may place an appropriate notation
about an amendment, supplement or waiver on any Lessor Note thereafter
authenticated. The Owner Lessor in exchange for all Lessor Notes may issue and
the Lease Indenture Trustee shall, upon receipt of an Authentication Order,
authenticate new Lessor Notes that reflect the amendment, supplement or waiver.

                  Failure to make the appropriate notation or issue a new Lessor
Note shall not affect the validity and effect of such amendment, supplement or
waiver.

SECTION 10.7      LEASE INDENTURE TRUSTEE TO SIGN AMENDMENTS, ETC

                  The Lease Indenture Trustee and the Security Agent shall sign
any amended or supplemental Lease Indenture authorized pursuant to this Article
Ten if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Lease Indenture Trustee or the Security Agent.
The Owner Lessor may not sign an amendment or supplemental Lease Indenture
unless signed pursuant to Section 6.1 of the Lessor LLC Agreement. In executing
any amended or supplemental indenture, the Lease Indenture Trustee and the
Security Agent shall be entitled to receive and (subject to Section 8.1 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.4 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Lease Indenture.

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                                   ARTICLE XI
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 11.1      OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE

                  The Owner Lessor may, at its option and at any time, elect to
have either Section 11.2 or 11.3 hereof be applied to all outstanding Lessor
Notes upon compliance with the conditions set forth below in this Article 11.

SECTION 11.2      LEGAL DEFEASANCE AND DISCHARGE

                  Upon the Owner Lessor's exercise under Section 11.1 hereof of
the option applicable to this Section 11.2, the Owner Lessor shall, subject to
the satisfaction of the conditions set forth in Section 11.4 hereof, be deemed
to have been discharged from its obligations with respect to all outstanding
Lessor Notes on the date the conditions set forth below are satisfied
(hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that
the Owner Lessor shall be deemed to have paid and discharged the entire
Indebtedness represented by the Debt Service Reserve Letter of Credit and by the
outstanding Lessor Notes, which shall thereafter be deemed to be "OUTSTANDING"
only for the purposes of Section 11.5 hereof and the other Sections of this
Lease Indenture referred to in (a) and (b) below, and to have satisfied all its
other obligations under such Lessor Notes and this Lease Indenture (and the
Lease Indenture Trustee or the Security Agent, as applicable, on demand of and
at the expense of the Owner Lessor, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of
Noteholders of outstanding Lessor Notes to receive solely from the trust fund
described in Section 11.4 hereof, and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Lessor Notes when such payments are due, (b) the Owner Lessor's obligations with
respect to such Lessor Notes under Article 2 hereof, (c) the rights, powers,
trusts, duties and immunities of the Security Agent, the Lease Indenture Trustee
and any Agent hereunder and the Owner Lessor's obligations in connection
therewith, including, without limitation, Article 8 and Section 11.5 and 11.7
hereunder, and (d) this Article 11. Subject to compliance with this Article 11,
the Owner Lessor may exercise its option under this Section 11.2 notwithstanding
the prior exercise of its option under Section 11.3 hereof.

SECTION 11.3      COVENANT DEFEASANCE

                  Upon the Owner Lessor's exercise under Section 11.1 hereof of
the option applicable to this Section 11.3, the Owner Lessor shall, subject to
the satisfaction of the conditions set forth in Section 11.4 hereof, be released
from its obligations under the material covenants contained herein with respect
to the outstanding Lessor Notes on and after the date the conditions set forth
in Section 11.4 are satisfied (hereinafter, "COVENANT

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DEFEASANCE"), and the Lessor Notes shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Noteholders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "OUTSTANDING" for all other purposes
hereunder (it being understood that such Lessor Notes shall not be deemed
outstanding for accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the outstanding Lessor Notes or any outstanding
amounts due under the Debt Service Reserve Letter of Credit, the Owner Lessor
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Lease
Indenture Default or a Lease Indenture Event of Default under Section 7.1
hereof, but, except as specified above, the remainder of this Lease Indenture
and such Lessor Notes shall be unaffected thereby. In addition, upon the Owner
Lessor's exercise under Section 11.1 hereof of the option applicable to this
Section 11.3 hereof, subject to the satisfaction of the conditions set forth in
Section 11.4 hereof, Section 7.1(a) hereof shall not constitute a Lease
Indenture Event of Default.

SECTION 11.4      CONDITIONS TO LEGAL OR COVENANT DEFEASANCE

                  The following shall be the conditions to the application of
either Section 11.2 or 11.3 hereof to the outstanding Lessor Notes or any
outstanding amounts due under the Debt Service Reserve Letter of Credit, as
applicable:

In order to exercise either Legal Defeasance or Covenant Defeasance:

         (a) the Owner Lessor must irrevocably deposit with the Security Agent
in the Security Agent's Account, in trust, for the benefit of the Noteholders
(or the Debt Service Reserve Letter of Credit Secured Parties as applicable),
cash in United States dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the outstanding Lessor Notes on
the stated maturity or on the applicable redemption date, as the case may be,
and the Owner Lessor must specify whether the Lessor Notes are being defeased to
maturity or to a particular redemption date and any amount outstanding under the
Debt Service Reserve Letter of Credit;

         (b) in the case of an election under Section 11.2 hereof, the Owner
Lessor shall have delivered to the Lease Indenture Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Lease Indenture Trustee
confirming that (A) the Owner Lessor has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date of
this Lease Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon

                                       65
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such Opinion of Counsel shall confirm that, the Noteholders of the outstanding
Lessor Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;

         (c) in the case of an election under Section 11.3 hereof, the Owner
Lessor shall have delivered to the Lease Indenture Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Lease Indenture Trustee
confirming that, subject to customary assumptions and exclusions, the
Noteholders of the outstanding Lessor Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant Defeasance
had not occurred;

         (d) no Lease Indenture Default or Lease Indenture Event of Default
shall have occurred and be continuing on the date of such deposit (other than a
Lease Indenture Default or a Lease Indenture Event Default resulting from the
borrowing of funds to be applied to such deposit) or insofar as Sections 7.1(e)
or 7.1(f) hereof are concerned, at any time in the period ending on the 91st day
after the date of deposit;

         (e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a Lease Indenture Default under, any
material agreement or instrument (other than this Lease Indenture or any other
Financing Document) to which the Owner Lessor is a party or by which the Owner
Lessor is bound;

         (f) the Owner Lessor shall have delivered to the Security Agent an
Opinion of Counsel to the effect that (subject to customary qualifications and
assumptions) after the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;

         (g) the Owner Lessor shall have delivered to the Security Agent an
Officer's Certificate stating that the deposit was not made by the Owner Lessor
with the intent of preferring the Noteholders or the Debt Service Reserve Letter
of Credit Secured Parties over any other creditors of the Owner Lessor or with
the intent of defeating, hindering, delaying or defrauding creditors of the
Owner Lessor or others; and

         (h) the Owner Lessor shall have delivered to the Lease Indenture
Trustee and the Security Agent an Officer's Certificate and an Opinion of
Counsel, each stating that, subject to customary assumptions and exclusions, all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.

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SECTION 11.5      DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
                  OTHER MISCELLANEOUS PROVISIONS

                  Subject to Section 11.6 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Security Agent (or other qualifying trustee or agent) pursuant to Section 11.4
hereof in respect of the outstanding Lessor Notes or outstanding amounts due
under the Debt Service Reserve Letter of Credit shall be held in trust and
applied by the Security Agent, in accordance with the provisions of such Lessor
Notes and this Lease Indenture, to the payment, either directly or through any
Paying Agent, to the Noteholders of such Lessor Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law or any of the Debt Service Reserve Letter of Credit Secured Parties.

                  The Owner Lessor agrees to pay and indemnify the Lease
Indenture Trustee and the Security Agent against any tax, fee or other charge
imposed on or assessed against the cash or non-callable Government Securities
deposited pursuant to Section 11.4 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Noteholders of the outstanding Lessor Notes.

                  Anything in this Article 11 to the contrary notwithstanding,
the Lease Indenture Trustee or the Security Agent shall deliver or pay to the
Owner Lessor from time to time upon the request of the Owner Lessor any money or
non-callable Government Securities held by it as provided in Section 11.4 hereof
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the Lease
Indenture Trustee (which may be the opinion delivered under Section 11.4(a)
hereof), are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

SECTION 11.6      REPAYMENT TO OWNER LESSOR

                  Any money deposited with the Security Agent or any Paying
Agent, or then held by the Owner Lessor in trust for the payment of the
principal of, premium, if any, or interest on any Lessor Note and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Owner Lessor on its request or
(if then held by the Owner Lessor) shall be discharged from such trust; and the
Noteholder of such Lessor Note shall thereafter, as a secured creditor, look
only to the Owner Lessor for payment thereof, and all liability of the Security
Agent or such Paying Agent with respect to such trust money, and all liability
of the Owner Lessor as trustee thereof, shall thereupon cease; PROVIDED,
HOWEVER, that the Security Agent or such Paying Agent, before being required to
make any such repayment, may at the expense of the Owner Lessor cause to be
published once, in The New York

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Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Owner
Lessor.

SECTION 11.7      REINSTATEMENT

                  If the Security Agent or Paying Agent is unable to apply any
United States dollars or non-callable Government Securities in accordance with
Section 11.2 or 11.3 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Owner Lessor's obligations
under this Lease Indenture and the Lessor Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 11.2 or 11.3 hereof until
such time as the Security Agent or Paying Agent is permitted by such court or
governmental authority to apply all such money in accordance with Section 11.2
or 11.3 hereof, as the case may be; PROVIDED, HOWEVER, that, if the Owner Lessor
makes any payment of principal of, premium, if any, or interest on any Lessor
Note following the reinstatement of its obligations, the Owner Lessor shall be
subrogated to the rights of the Noteholders of such Lessor Notes to receive such
payment from the money held by the Security Agent or Paying Agent.

                                   ARTICLE XII
                                  MISCELLANEOUS

SECTION 12.1      TERMINATION OF INDENTURE

                  Upon payment in full of the principal of and interest on, and
all other amounts payable to the Noteholders hereunder, under all Lessor Notes
and under the Operative Documents and to each of the Debt Service Letter of
Credit Secured Parties, the Security Agent shall execute and deliver to the
Owner Lessor an appropriate instrument releasing the Indenture Estate from the
lien of this Lease Indenture and releasing the Indenture Estate Documents from
the assignment and pledge thereof hereunder, and the Security Agent shall
execute and deliver such instrument as aforesaid and, at the Owner Lessor's
expense, will execute and deliver such other instruments or documents as may be
reasonably requested by the Owner Lessor to give effect to such release;
PROVIDED, HOWEVER, that this Lease Indenture shall earlier terminate and shall
be of no further force or effect upon any sale or other final disposition by the
Security Agent of all property constituting part of the Indenture Estate and the
final distribution by the Security Agent of all moneys or other property or
proceeds constituting part of the Indenture Estate in accordance with the terms
hereof. Further, upon the purchase or redemption of the Lessor Notes pursuant to
Section 4.7 or 4.8 hereof, and receipt by the Lease Indenture Trustee and then
the Security Agent of a certificate from each Noteholder to the effect that all
sums payable to the Noteholders hereunder and under the

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Operative Documents, the Security Agent shall execute and deliver to the Owner
Lessor an appropriate instrument releasing the Indenture Estate from the lien of
this Lease Indenture and releasing the Indenture Estate Documents from the
assignment and pledge hereunder, and the Security Agent shall execute and
deliver such instruments as aforesaid. Except as otherwise provided in this
Section 12.1, this Lease Indenture and the lien created by this Lease Indenture
shall continue in full force and effect in accordance with the terms hereof.
Promptly upon receipt by a Noteholder of payment in full of the principal of and
interest on the Lessor Notes held by it, and all other amounts payable to it
hereunder, under the Lessor Notes and under the Operative Documents and under
the Debt Service Reserve Letter of Credit such Noteholder shall deliver the
appropriate certificate contemplated by the foregoing sentences of this Section
12.1 to be delivered by it.

SECTION 12.2      NOTICES

                  Any notice or communication by the Owner Lessor, the Lease
Indenture Trustee and the Security Agent to the others is duly given if in
writing and delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the others' address.

                  If to the Owner Lessor:

                  Homer City OL1 LLC

                  c/o Wells Fargo Bank Minnesota, N.A.
                  Corporate Trustee Services
                  MAC; N2691-090
                  213 Court Street
                  Middletown, CT 06457

                  With a copy to:

                  Wells Fargo Bank Northwest, N.A.
                  Corporate Trust Services
                  MAC; U1254-031
                  Salt Lake City, UT 84111

                  If to the Lease Indenture Trustee or the Security Agent:

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                  The Bank of New York
                  114 West 47th Street
                  25th Floor
                  New York, New York  10036
                  Attention:  Corporate Trust Division
                  Facsimile:  212-852-1625

                  The Owner Lessor, the Lease Indenture Trustee or the Security
Agent, by notice to the others may designate additional or different addresses
for subsequent notices or communications.

                  All notices and communications (other than those sent to
Noteholders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

                  Any notice or communication to a Lease Indenture Secured Party
shall be mailed by first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day delivery to its
address shown on the register kept by the Paying Agent.

                  If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it, except for notices or communications to the Security Agent or the
Lease Indenture Trustee, which shall be effective only upon actual receipt
thereof.

                  If the Owner Lessor mails a notice or communication to
Noteholders, it shall mail a copy to the Lease Indenture Trustee, the Security
Agent and each Agent at the same time.

SECTION 12.3      RULES BY LEASE INDENTURE TRUSTEE AND AGENTS

                  The Lease Indenture Trustee may make reasonable rules for
action by or at a meeting of Noteholders. The Paying Agent may make reasonable
rules and set reasonable requirements for its functions.

SECTION 12.4      NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
                  SHAREHOLDERS

                  No director, officer, employee, incorporator, shareholder or
Affiliate of the Owner Lessor, as such, shall have any liability for any
obligations of the Owner Lessor under the Lessor Notes, this Lease Indenture or
for any claim based on, in respect

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of, or by reason of, such obligations or their creation. Each Noteholder of
Lessor Notes by accepting a Lessor Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Lessor
Notes. Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.

SECTION 12.5      GOVERNING LAW

                  THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS LEASE INDENTURE AND THE LESSOR NOTES EXCEPT TO THE EXTENT
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA ARE MANDATORILY APPLICABLE UNDER
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.

SECTION 12.6      NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS

                  This Lease Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Owner Lessor or its Subsidiaries or of
any other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Lease Indenture.

SECTION 12.7      SUCCESSORS

                  All agreements of the Owner Lessor in this Lease Indenture and
the Lessor Notes shall bind its successors. All agreements of the Lease
Indenture Trustee and the Security Agent in this Lease Indenture shall bind its
successors.

SECTION 12.8      SEVERABILITY

                  In case any provision in this Lease Indenture or in the Lessor
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

SECTION 12.9      COUNTERPART ORIGINALS

                  The parties may sign any number of copies of this Lease
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.

SECTION 12.10      TABLE OF CONTENTS, HEADINGS, ETC

                  The Table of Contents and Headings of the Articles and
Sections of this Lease Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Lease Indenture and shall in no
way modify or restrict any of the terms or provisions hereof.

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SECTION 12.11     CONCERNING THE OWNER MANAGER.

                  The Owner Manager is executing this Lease Indenture on behalf
of the Owner Lessor solely in its capacity as Owner Manager under the Lessor LLC
Agreement and not in its individual capacity (except as expressly stated herein)
and in no case shall the Trust Company (or any successor entity acting as Owner
Manager under the Lessor LLC Agreement) be personally liable for or on account
of any of the statements, representations, warranties, covenants or obligations
stated to be those of the Owner Lessor or the Owner Manager hereunder, all such
liability, if any, being expressly waived by the parties hereto and any Person
claiming by, through, or under such party; PROVIDED, HOWEVER, that the Trust
Company (or any such successor Owner Manager) shall be personally liable
hereunder for its own gross negligence or willful misconduct or for its breach
of its covenants, representations and warranties contained herein, to the extent
covenanted or made in its individual capacity.

SECTION 12.12     ACKNOWLEDGEMENT.

                  In order to secure the Fundco Bonds of the Lender, the Lender
will assign and grant a first priority security interest in favor of the
Bondholder Trustee in and to all of the Lender's right, title and interest to
and under the Lessor Notes. The Owner Lessor hereby consents to such assignment
and to the creation of such lien and security interest and acknowledges receipt
of copies of the Fundco Indenture. In addition, the Lender has granted to the
Bondholder Trustee a power of attorney to, among other things, take any action
with respect to and exercise any rights or remedies of the Lender under the
Lessor Notes and this Lease Indenture and has assigned to the Bondholder Trustee
its rights to receive any and all payments on and in respect of the Lessor Notes
and this Lease Indenture for as long as the estate created by the Fundco
Indenture remains in existence. The Owner Lessor hereby acknowledges and
consents to such power of attorney and assignment and further agrees that all
amounts due to the Lender under the Lessor Notes and this Lease Indenture will
be paid directly to the Bondholder Trustee. Unless and until the lien of the
Fundco Indenture shall have been discharged, the Bondholder Trustee shall have
the right to exercise the rights of the Lender under this Lease Indenture and to
directly receive for application in accordance with the Fundco Indenture all
amounts payable or otherwise distributable with respect to the Lessor Notes or
this Lease Indenture.

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                                   SIGNATURES

Dated as of December __, 2001

                                       THE BANK OF NEW YORK, as Lease Indenture
                                       Trustee

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

                                       THE BANK OF NEW YORK, as Security Agent

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

                                       HOMER CITY OLI LLC, as Owner Lessor

                                       By:
                                           -------------------------------------
                                           Wells Fargo Bank Northwest, National
                                           Association, not in its individual
                                           capacity, but solely as Owner Manager
                                           under the Lessor LLC Agreement

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

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                          EXHIBIT A to Lease Indenture

                          FORM OF INITIAL LESSOR NOTES

                   THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
                 SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
                  BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
                EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT OR
                   PURSUANT TO AN EXEMPTION FROM REGISTRATION
                                 UNDER SAID ACT

                               Homer City OL1 LLC
                                 as Owner Lessor

                       SERIES [A] [B] LESSOR NOTE DUE [ ]

$[___________] December, 20_

                  Homer City OL1 LLC (herein called the "OWNER LESSOR", which
term includes any successor person under the Indenture hereinafter referred to),
a Delaware limited liability company and wholly-owned subsidiary of [General
Electric Capital Corporation], a Delaware corporation (the "OWNER PARTICIPANT")
acting pursuant to that certain LLC Agreement (LA1) effective as of September
__, 2001 (as the same may from time to time be amended, amended and restated,
supplemented or otherwise modified in accordance with the terms thereof and,
where applicable, the terms of the other Operative Documents, the "LESSOR LLC
AGREEMENT") between the Owner Participant and Wells Fargo Bank Northwest,
National Association (the "TRUST COMPANY"), hereby promises to pay to
[________________________][, as Lease Indenture Trustee/Paying Agent,] or its
registered assigns, the principal sum of [_____________] Dollars, which is due
and payable in a series of installments of principal on the Rent Payment Dates
and in the amounts set forth in Annex A hereto; PROVIDED, HOWEVER, that the
final principal payment hereon shall in any and all events equal the then
outstanding principal balance hereof. Interest shall be due and payable in
arrears on each Rent Payment Date and on the date the Lessor Note is paid in
full at the rate of [ ]% per annum on the unpaid principal amount hereof from
time to time outstanding from and including the date hereof until such principal
amount is paid in full. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months. This Lessor Note shall bear interest, to the
extent permitted by Requirements of Law, at a rate that is 1% per annum in
excess of the rate then in effect on any part of the principal amount hereof and
on any interest, Make-Whole Premium or other amounts due hereunder, not paid
when due (whether at stated maturity, by acceleration or otherwise), for the
period the same is past due, payable on demand of the holder hereof.

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                  Capitalized terms used in this Lessor Note which are not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture of Trust and Security Agreement, dated as of December __, 2001 (as the
same may from time to time be amended, amended and restated, supplemented or
otherwise modified in accordance with the terms thereof and, where applicable,
the terms of the other Operative Documents, the " LEASE INDENTURE"), between the
Owner Lessor and The Bank of New York, not in its individual capacity but solely
as trustee (the "LEASE INDENTURE Trustee").

                  All payments of principal and interest and all other amounts
to be made by the Owner Lessor hereunder or under the Lease Indenture shall be
made only from the income and proceeds from the Indenture Estate and the Owner
Lessor and Lease Indenture Trustee shall have no obligation for the payment
thereof except to the extent that the Lease Indenture Trustee shall have
sufficient income or proceeds from the Indenture Estate to enable such payments
to be made in accordance with the terms of the Lease Indenture. Each holder
hereof, by its acceptance of this Lessor Note, agrees that (a) it will look
solely to the income and proceeds from the Indenture Estate to the extent
available for distribution to the holder hereof as above provided, (b) none of
the Lease Indenture Trustee, Owner Participant, any OP Guarantor, the Owner
Manager or the Trust Company, or any Affiliate of any thereof, is, or shall be,
personally liable to the holder hereof for any amounts payable under this Lessor
Note or under the Lease Indenture or for any liability under the Lease
Indenture, except as expressly provided in the Lease Indenture and (c) any such
amounts shall be non-recourse to the assets of each of the Lease Indenture
Trustee, the Owner Participant, any OP Guarantor, the Owner Manager or the Trust
Company, or any Affiliate of any thereof.

                  Principal, Make-Whole Premium (if any) and interest and other
amounts due hereunder or under the Lease Indenture shall be payable in Dollars
by wire transfer of immediately available funds on the due date thereof to the
Security Agent's Account (by wire transfer of immediately available funds if not
otherwise specified) or to such other account as the holder hereof shall have
designated to the Owner Lessor in writing. Payment to the Lease Indenture
Trustee must be received by 10:00 a.m., New York City time. If any sum payable
hereunder or under the Lease Indenture falls due on a day which is not a
Business Day, then such sum shall be payable on the next succeeding Business Day
and, if paid on such Business Day, the payment thereof shall be without penalty
or interest (unless calculation of such amount is based on actual days elapsed)
or other adjustment.

                  The holder hereof, by its acceptance of this Lessor Note,
agrees that each payment of principal and interest or other amounts received by
it hereunder shall be applied, first, to the payment of interest on this Lessor
Note (as well as any interest on overdue principal, and, to the extent permitted
by law, interest and other amounts hereunder) due and payable to the date of
such payment as hereinabove provided, second, to the payment of the principal
of, and Make-Whole Premium, if any, then due hereunder, and third, to the extent
permitted under the Lease Indenture, the balance, if any,

                                       75
<Page>

remaining thereafter, to the payment of the principal amount of, and Make-Whole
Premium, if any, hereunder.

                  This Lessor Note is one of the Lessor Notes, and one of the
Initial Lessor Notes, referred to in the Lease Indenture which have been or are
to be issued by the Owner Lessor pursuant to the terms of the Lease Indenture.
The Indenture Estate is held by the Lease Indenture Trustee as security for the
Lessor Notes. Reference is hereby made to the Lease Indenture for a statement of
the rights and obligations of the holder of, and the nature and extent of the
security for, this Lessor Note and of the rights and obligations of the
Noteholders of, and the nature and extent of the security for, the other Lessor
Notes, as well as for a statement of the terms and conditions of the trusts
created thereby. By its acceptance of this Lessor Note, each holder hereof
agrees to all of the terms and conditions in the Lease Indenture and in the
Participation Agreement referred to therein expressed to be binding on the Lease
Indenture Trustee or a holder of a Lessor Note.

                  There shall be maintained a register for the purpose of
registering this Lessor Note and registering transfers and exchanges of Lessor
Notes in the manner provided in Section 2.11 of the Lease Indenture. As provided
in the Lease Indenture and subject to certain limitations therein set forth, the
Lessor Notes are exchangeable for Lessor Notes of the same series, of any
authorized denominations and of like aggregate original principal amount, as
requested by the holder hereof surrendering the same.

                  Except as otherwise provided in Section 2.11 of the Lease
Indenture, prior to the due presentment for registration of transfer of this
Lessor Note, the Owner Lessor and the Lease Indenture Trustee shall deem and
treat the Person in whose name this Lessor Note is registered on the register as
the absolute owner and holder hereof for the purpose of receiving payment of all
amounts payable with respect to this Lessor Note and for all other purposes
whether or not this Lessor Note is overdue, and neither the Owner Lessor nor any
holder hereof shall be affected by any notice to the contrary. All payments made
on this Lessor Note in accordance with the provisions of this paragraph shall be
valid and effective to satisfy and discharge the liability on this Lessor Note
to the extent of the sums so paid and neither the Lease Indenture Trustee nor
the Owner Lessor shall have any liability in respect of such payment.

                  This Lessor Note is subject to redemption solely as required
or permitted by Sections 4.7 and 4.8 of the Lease Indenture, to purchase by the
Facility Lessee or the Owner Participant as provided in Sections 10.2(a),
13.3(a) and 14.3 of the Facility Lease and to assumption by the Facility Lessee
in accordance with Section 2.21 of the Lease Indenture. If at any time a Lease
Indenture Event of Default shall have occurred and be continuing, this Lessor
Note may, subject to certain rights of the Owner Lessor and Owner Participant
contained or referred to in the Lease Indenture, be declared, and under certain
circumstances shall automatically be deemed to be declared, due and payable, all
upon the conditions, in the manner and with the effect provided in the Lease
Indenture.

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                  By its acceptance hereof, the holder of this Lessor Note
agrees that the Owner Manager is executing this Lessor Note on behalf of the
Owner Lessor solely in its capacity as Owner Manager under the Lessor LLC
Agreement and not in its individual capacity and in no case shall the Trust
Company (or any entity acting as Owner Manager under the Lessor LLC Agreement)
be personally liable in respect of the obligations stated to be those of the
Owner Lessor or the Owner Participant hereunder.

                  In circumstances set forth in Section 2.21 of the Lease
Indenture, the obligations of the Owner Lessor under this Lessor Note may,
subject to the conditions set forth in Section 2.21 of the Lease Indenture, be
assumed in whole by the Facility Lessee in accordance with Section 2.21 of the
Lease Indenture, in which case the Owner Lessor shall be released and discharged
from all such obligations. In connection with such an assumption, the holder of
this Lessor Note may be required to exchange this Lessor Note for a new Lessor
Note evidencing such assumption.

                  THIS LESSOR NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE, WITH THE LAWS OF THE STATE OF NEW YORK.

                                       77
<Page>

                  IN WITNESS WHEREOF, the Owner Lessor has caused this Lessor
Note to be executed in its name by the Owner Manager by an officer of the Owner
Manager thereunto duly authorized, as of the date hereof.

                                   Homer City OL1 LLC, as Owner Lessor

                                   By:  Wells Fargo Bank Northwest, National
                                   Association, not in its individual capacity,
                                   but solely as Owner Manager under the
                                   LLC                  Agreement

                                   By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                       78
<Page>

                  SCHEDULE OF SCHEDULED PAYMENTS OF PRINCIPAL

             [Attach the following table for Series A Lessor Notes]

<Table>
<Caption>

--------------------------------------------------------------------------------------------------------------------------
                                                                       PERCENTAGE OF PRINCIPAL AMOUNT
             PRINCIPAL PAYMENT DATES                               PAYABLE ON EACH PRINCIPAL PAYMENT DATE
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>
           April 1 and October 1, 2004                                             1.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2005                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2006                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2007                                             2.500%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2008                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2009                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2010                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2011                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2012                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2013                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2014                                             3.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2015                                             4.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2016                                             4.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2017                                             5.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2018                                             5.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2019                                             3.500%
--------------------------------------------------------------------------------------------------------------------------
<Caption>
                                  [Attach the following table for Series B Lessor Notes]
--------------------------------------------------------------------------------------------------------------------------
                                                                       PERCENTAGE OF PRINCIPAL AMOUNT
             PRINCIPAL PAYMENT DATES                               PAYABLE ON EACH PRINCIPAL PAYMENT DATE
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>
           April 1 and October 1, 2004                                             0.055%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2005                                             0.480%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2006                                             0.590%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2007                                             0.375%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2008                                             0.375%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2009                                             0.415%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2010                                             1.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2011                                             1.750%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2012                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2013                                             1.250%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2014                                             1.500%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2015                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2016                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2017                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2018                                             2.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2019                                             2.500%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2020                                             3.500%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2021                                             3.500%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2022                                             3.500%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2023                                             4.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2024                                             4.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2025                                             5.000%
--------------------------------------------------------------------------------------------------------------------------
           April 1 and October 1, 2026                                             6.210%
--------------------------------------------------------------------------------------------------------------------------
</Table>

                                      A-2-1
<Page>

                                 ASSIGNMENT FORM

To assign this Lessor Note, fill in the form below: (I) or (we) assign and
transfer this Lessor Note to

--------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)

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

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

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

--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to transfer this Lessor Note on the books of the Owner Lessor. The agent may
substitute another to act for him.

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

Date:
      ---------

                                            Your signature:
                                                           ---------------------
                                            (Sign exactly as your name appears
                                            on the face of this Lessor Note)

                                            Tax Identification No.:
                                                                   -------------

                                            SIGNATURE GUARANTEE:

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

                                            Signatures must be guaranteed by an
                                            "eligible guarantor institution"
                                            meeting the requirements of the
                                            Paying Agent, which requirements
                                            include membership or participation
                                            in the Security Transfer Agent
                                            Medallion Program ("STAMP") or such
                                            other "signature guarantee program"
                                            as may be determined by the Paying
                                            Agent in addition to, or in
                                            substitution for, STAMP, all in
                                            accordance with the Securities
                                            Exchange Act of 1934, as amended.

                                      A-2-2
<Page>
                                  EXHIBIT B

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

                   THIS MORTGAGE CONSTITUTES A FIXTURE FILING
                 UNDER THE PENNSYLVANIA UNIFORM COMMERCIAL CODE

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

              THIS IS AN OPEN-END MORTGAGE SECURING FUTURE ADVANCES
                UP TO A MAXIMUM PRINCIPAL AMOUNT OF $330,000,000
                  PLUS ACCRUED INTEREST AND OTHER INDEBTEDNESS
                       AS DESCRIBED IN 42 PA.C.S. SS.8143

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

                      OPEN-END MORTGAGE, SECURITY AGREEMENT

                             AND ASSIGNMENT OF RENTS

                         dated as of December ___, 2001

                                      from

                               HOMER CITY OL1 LLC,
                               as the Owner Lessor

                                       to

                              THE BANK OF NEW YORK,
                         as Security Agent and Mortgagee

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

                            When recorded return to:
                              The Bank of New York
                 c/o The United States Trust Company of New York
                        114 West 47th Street, 25th Floor
                            New York, New York 10036
                    Attention: Corporate Trust Administration

<Page>

              THIS IS AN OPEN-END MORTGAGE SECURING FUTURE ADVANCES
                UP TO A MAXIMUM PRINCIPAL AMOUNT OF $330,000,000
                  PLUS ACCRUED INTEREST AND OTHER INDEBTEDNESS
                        AS DESCRIBED IN 42 Pa.C.S.ss.8143

                      OPEN-END MORTGAGE, SECURITY AGREEMENT

                             AND ASSIGNMENT OF RENTS

         THIS OPEN-END MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
(this "Mortgage"), dated as of December ___, 2001, is made by and between HOMER
CITY OL1 LLC, a Delaware limited liability company ("OWNER Lessor"), as
mortgagor, and THE BANK OF NEW YORK as Security Agent for the Lease Indenture
Secured Parties as defined below (the "SECURITY AGENT").

         WHEREAS, the Owner Lessor is the ground tenant of an undivided
percentage interest (the "GROUND Interest") in the land more particularly
described on Schedule I hereto (the "SITE") pursuant to the Facility Site Lease
described on Schedule II hereto (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "FACILITY SITE
LEASE"), a memorandum of which Facility Site Lease is recorded in __________
Book _____, page _____ in the Office of the Recorder of Deeds for Indiana
County, Pennsylvania;

         WHEREAS, the Owner Lessor has subleased the Ground Interest to EME
Homer City Generation L.P. ("HOMER CITY") pursuant to the Facility Site Sublease
described on Schedule III hereto (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "FACILITY SITE
SUBLEASE"), a memorandum of which Facility Site Sublease is recorded in
__________ Book _____, page _____ in the Office of the Recorder of Deeds for
Indiana County, Pennsylvania;

         WHEREAS, the Owner Lessor is the fee owner of an undivided 30% interest
in the generating facilities located on the Site (the "FACILITY") more
particularly described in Schedule IV hereto (the "UNDIVIDED Interest").

         WHEREAS, the Owner Lessor has leased the Undivided Interest in the
Facility to Homer City pursuant to a Facility Lease described on Schedule V
hereto (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "FACILITY LEASE"), a memorandum of which Facility Lease
is recorded in ____ Book_____, page _____ in the Office of the Recorder of Deeds
for Indiana County, Pennsylvania;

         WHEREAS, Owner Lessor, the Security Agent and The Bank of New York (the
"LEASE INDENTURE TRUSTEE") have entered into an Indenture of Trust and Security
Agreement, dated as of December ___, 2001 (as amended, restated, supplemented or
otherwise modified from time to

<Page>

time, the "LEASE INDENTURE"), to provide among other things for the issuance by
the Owner Lessor of certain Lessor Notes as defined therein, and for the grant
of this Mortgage;

         WHEREAS, pursuant to the Lease Indenture, the Security Agent serves as
a common representative and to hold the Indenture Estate for the benefit of the
Lease Indenture Secured Parties;

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, in order to secure (i)
the prompt payment of the principal of and interest on, and all other amounts
due with respect to, the Lessor Notes from time to time outstanding, and all
other amounts owing by Owner Lessor hereunder or under the Lease Indenture, and
the performance and observance by Owner Lessor of all the agreements, covenants
and provisions contained in the Operative Documents, and the prompt payment of
all amounts from time to time due or to become due to any Lease Indenture
Secured Party under the Operative Documents (collectively the "LESSOR SECURED
OBLIGATIONS"), Owner Lessor hereby grants, bargains, sells, conveys, aliens,
enfeoffs, confirms, releases, assigns, transfers, pledges and mortgages unto the
Security Agent acting for and on behalf of the Lease Indenture Secured Parties,
a first priority security interest in and mortgage lien on all estate, right,
title and interest now held or hereafter acquired by the Owner Lessor in, to and
under the following described property, rights, interests and privileges,
whether now or hereafter acquired, other than Excepted Payments (such property,
rights, interests and privileges as are conveyed pursuant to this granting
clause, but excluding Excepted Payments and the rights to enforce and collect
the sums as set forth herein, being hereinafter referred to as the "INDENTURE
ESTATE"):

                           (1) the Undivided Interest; the Owner Lessor's
                  interest in all goods (as defined in the Uniform Commercial
                  Code as in effect in the State of New York from time to time)
                  constituting the Facility; all appliances, parts, instruments,
                  appurtenances, accessories, furnishings, equipment or other
                  property of whatever nature that may from time to time be
                  incorporated in the Facility ("Components"), except to the
                  extent constituting a modification, alteration, addition or
                  improvement to the Facility ("Improvements"); the Owner
                  Lessor's interest in any Improvements; the Facility Site Lease
                  and the Ground Interest thereunder; the Facility Lease and all
                  payments of any kind by the Facility Lessee thereunder
                  (including Rent); the Facility Site Sublease and the Sublease
                  Ground Interest thereunder and all payments of any kind by the
                  Facility Lessee thereunder; Owner Lessor's interest in all
                  tangible property located on or at or attached to the Facility
                  Land that an interest in such tangible property arises under
                  applicable real estate law ("FIXTURES"); the Facility Deed,
                  the Bill of Sale, the Ownership and Operation Agreement, the
                  Lessor LLC Agreement, and all and any interest in any property
                  now or hereafter granted to the Owner Lessor pursuant to any
                  provision of the Facility Site Lease, Facility Lease or the
                  Facility Site Sublease; the Security Depositary Agreement, the
                  Debt Service Reserve Letter of Credit, the Pledge and
                  Collateral Agreement and each other Operative Document to
                  which the Owner

<Page>

                  Lessor is a party (the Undivided Interest, the Owner Lessor's
                  interest in any Components, the Owner Lessor's interest in any
                  fixtures, Improvements and the Ground Interest are
                  collectively referred to as the "PROPERTY INTEREST" and the
                  documents, specifically referred to above in this paragraph
                  (1) are collectively referred to as the "INDENTURE ESTATE
                  DOCUMENTS"), including, without limitation, (x) all rights of
                  the Owner Lessor or the Facility Lessee (to the extent
                  assigned by the Facility Lessee to the Owner Lessor) to
                  receive any payments or other amounts or to exercise any
                  election or option or to make any decision or determination or
                  to give or receive any notice, consent, waiver or approval or
                  to make any demand or to take any other action under or in
                  respect of any such document, to accept surrender or
                  redelivery of the Property Interest or any part thereof, as
                  well as all the rights, powers and remedies on the part of the
                  Owner Lessor or the Facility Lessee (to the extent assigned by
                  the Facility Lessee to the Owner Lessor), whether acting under
                  any such document or by statute or at law or in equity or
                  otherwise, arising out of any Lease Default or Lease Event of
                  Default and (y) any right to restitution from the Facility
                  Lessee, any sublessee or any other Person in respect of any
                  determination of invalidity of any such document;

                           (2) all rents, royalties, issues, profits, revenues,
                  proceeds, damages, claims and other income from the property
                  described in this Granting Clause, including, without
                  limitation, all payments or proceeds payable to the Owner
                  Lessor as the result of the sale of the Property Interest or
                  the lease or other disposition of the Property Interest, and
                  all estate, right, title and interest of every nature
                  whatsoever of the Owner Lessor in and to such rents, issues,
                  profits, revenues and other income and every part thereof (the
                  "LEASE REVENUES");

                           (3) all condemnation proceeds with respect to the
                  Property Interest or any part thereof (to the extent of the
                  Owner Lessor's interest therein), and all proceeds (to the
                  extent of the Owner Lessor's interest therein) of all
                  insurance maintained pursuant to Section 11 of the Facility
                  Lease or otherwise;

                           (4) all other property of every kind and description
                  and interests therein now held or hereafter acquired by the
                  Owner Lessor pursuant to the terms of any Operative Document,
                  wherever located;

                           (5) all damages resulting from breach (including,
                  without limitation, breach of warranty or misrepresentation)
                  or termination of any of the Indenture Estate Documents or
                  arising from bankruptcy, insolvency or other similar
                  proceedings involving any party to the Indenture Estate
                  Documents;

                           (6) the Debt Service Reserve Account and all amounts
                  on deposit therein; and

                           (7) all proceeds of the foregoing;

<Page>

                  BUT EXCLUDING from the Indenture Estate all Excepted Payments,
any and all rights to enforce and collect the same, and SUBJECT TO the rights of
the Owner Lessor and the Owner Participant under the Lease Indenture.

                  TO HAVE AND TO HOLD the Indenture Estate unto the Security
Agent, forever, provided that if Owner Lessor shall pay and otherwise observe
and perform all of the Lessor Secured Obligations, then this Mortgage and the
estate and interests hereby granted, shall cease and be void.

                  AND Owner Lessor covenants and agrees with Security Agent as
follows:

                  1. PAYMENT AND PERFORMANCE. THIS IS AN OPEN-END MORTGAGE
SECURING FUTURE ADVANCES UP TO A MAXIMUM PRINCIPAL AMOUNT OF $330,000,000 PLUS
ACCRUED INTEREST AND OTHER INDEBTEDNESS AS DESCRIBED IN 42 Pa.C.S. ss.8143.
Subject to the terms and conditions of the Lease Indenture, Owner Lessor shall
pay when due and shall observe and perform all of the Lessor Secured
Obligations.

                  2. DEFAULT. Owner Lessor shall not be deemed in default
hereunder unless and until a Lease Indenture Event of Default shall have
occurred.

                  3. REMEDIES. Upon the occurrence and continuance of a Lease
Indenture Event of Default, Mortgagee may forthwith exercise, separately,
concurrently, successively or otherwise, but only in compliance with the Lease
Indenture, any and all rights and remedies available to Mortgagee pursuant to
this Mortgage or the Lease Indenture or available by law, equity or otherwise.

                  4. MORTGAGEE'S RIGHT TO PERFORM OBLIGATIONS. Upon the
occurrence and continuance of any Lease Indenture Event of Default, and in
addition to all other rights and remedies available to it, to the extent
provided in the Lease Indenture the Security Agent shall have the right, but not
the obligation, to perform the Obligation of Owner Lessor then in default, and
to make all advances of funds in connection therewith as the Security Agent
deems appropriate, including, without limitation, for the payment of taxes,
assessments, and other charges and costs for the protection of the Indenture
Estate or the lien of this Mortgage and expenses incurred by reason of the
default of this Mortgage, all of which expenditures shall be secured by the lien
of this Mortgage and payable on demand of Security Agent.

                  5. INVALIDITY. If any term, provision, or condition of the
Lease Indenture, Facility Lease, the Facility Sublease, the Facility Site Lease
and/or this Mortgage or the application thereof to any person or circumstance
shall be invalid, illegal or unenforceable in any respect, the remainder thereof
shall be construed without such provision and the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable, as the case may be, shall not be affected
thereby, and each term and provision thereof shall be valid and enforced to the
fullest extent permitted by law.

<Page>

                  9. GOVERNING LAW. This Mortgage shall be governed by the laws
of the Commonwealth of Pennsylvania.

                  10. LEASE INDENTURE. This Mortgage is executed pursuant to the
Lease Indenture, and is subject to the rights and obligations of the Owner
Lessor, the Owner Participant and the Security Agent as set forth therein
(except to the extent inapplicable by their nature to a mortgage). Capitalized
terms used and not defined herein shall have the meaning given such terms in the
Lease Indenture.

                  11. FUTURE ADVANCES, 42 PA. C.S. SECTION 8143. This Mortgage
shall secure any additional loans as well as any and all present or future
advances and readvances under or in connection with the Lessor Secured
Obligations, made pursuant to or in connection with the Lease Indenture to or
for the benefit of Owner Lessor or the Indenture Estate, all of which shall be
entitled to the benefits of an Open-End Mortgage under 42 Pa.C.S.A. ss.8143 and
shall have the same lien priority as if the future loans, advances or readvances
were made as of the date hereof including, without limitation: (i) principal,
interest, late charges, fees and other amounts due under the Lease Indenture,
the Lessor Notes, or this Mortgage; (ii) all advances made or costs incurred by
Mortgagee for the payment of real estate taxes, and other charges and costs
incurred by Security Agent for the enforcement and protection of the Indenture
Estate or the lien of this Mortgage; and (ii) all legal fees, costs and other
expenses incurred by the Security Agent by reason of any Lease Indenture Event
of Default.

                  12. 42 PA. C.S. SECTION 8144. In addition to any other
indebtedness secured hereby, this Mortgage secures unpaid balances of advances
made with respect to the Indenture Estate, for the payment of taxes,
assessments, and other charges or costs incurred for the protection of the
Indenture Estate or the lien of this Mortgage, and expenses incurred by the
Security Agent by reason of default by Owner Lessor under this Mortgage. This
Mortgage shall be a lien on the Indenture Estate from the time the Mortgage is
left for record, or the time of delivery to the Security Agent of a Purchase
Money Mortgage which is recorded within ten days after its date, for the full
amount of the unpaid balances of such advances that are made under this
Mortgage, plus interest thereon, regardless of the time when such advances are
or may be made.

<Page>

                  IN WITNESS WHEREOF, Owner Lessor has executed this Mortgage as
of the date first above written.

                                       HOMER CITY OL1 LLC

                                       By: WELLS FARGO BANK
                                           NORTHWEST, NATIONAL
                                           ASSOCIATION, not in its individual
                                           capacity, but solely as Owner Manager
                                           under the Lessor LLC Agreement

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

I certify that the precise address
of the within named mortgagee is:

         The Bank of New York
         c/o The United Sates Trust Company of New York
         114 West 47th Street, 25th Floor
         New York, New York 10036
         Attention: Corporate Trust Administration

------------------------------
For the mortgagee

<Page>

STATE OF NEW YORK          )
                           )
COUNTY OF NEW YORK         )

                  To wit, I, hereby certify, that on this ___ day of December,
in the year 2001, before the subscriber, a Notary Public, personally appeared
_____________, the ___________________ of Wells Fargo Bank Northwest, National
Association and that he/she, as _______________ of such corporation,
acknowledged the foregoing deed to be the act of said corporation as Owner
Manager under the LIMITED LIABILITY COMPANY AGREEMENT dated as of December __,
2001.

                  In testimony whereof, I have affixed my official seal, this
____ day of December, A.D. 2001.

                                                         --------------------
                                                         Notary Public

My commission expires: ________________

<Page>

                       [ADD OWNER LESSOR ACKNOWLEDGEMENT]

                  [ADD SCHEDULE I - LEGAL DESCRIPTION OF SITE]

              [ADD SCHEDULE II - DESCRIPTION OF FACILITY SITE LEASE

           [ADD SCHEDULE III - DESCRIPTION OF FACILITY SITE SUBLEASE]

                 [ADD SCHEDULE IV - DESCRIPTION OF THE FACILITY]

                [ADD SCHEDULE V - DESCRIPTION OF FACILITY LEASE]

<Page>

          SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL BOND

                  The following exchanges of a part of this Regulation S
Temporary Global Bond for an interest in another Global Bond for an interest in
this Regulation S Temporary Global Bond, have been made:

<Table>
<Caption>

                                                                    Principal Amount
                         Amount of          Amount of increase     of this Global Bond
                        decrease in            in Principal          following such
                     Principal Amount         Amount of this          decrease (or
Date of Exchange    of this Global Bond        Global Bond              increase
----------------    -------------------        -----------              --------
<S>                 <C>                        <C>                      <C>

</Table>

                                      C-1<Page>

                                                                     Exhibit 4.3

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

                            FACILITY LEASE AGREEMENT

                                      OL1

                         Dated as of December ___, 2001

                                     between

                               HOMER CITY OL1 LLC,
                                 as Owner Lessor

                                       and

                         EME HOMER CITY GENERATION L.P.
                               as Facility Lessee

                          HOMER CITY GENERATING STATION
       1,884 Megawatt (net), Coal-Fired Electric Generation Power Facility
                              Located northeast of
                            Pittsburgh, Pennsylvania

--------------------------------------------------------------------------------
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE OWNER LESSOR IN AND TO THIS
LEASE AND THE RENT DUE AND TO BECOME DUE HEREUNDER HAVE BEEN ASSIGNED AS
COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
LENDER, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS LEASE INDENTURE TRUSTEE
UNDER AN INDENTURE OF TRUST AND SECURITY AGREEMENT, DATED AS OF
DECEMBER __, 2001 AMONG SAID LEASE INDENTURE TRUSTEE AND SECURITY AGENT, AS
SECURED PARTIES, FOR THE BENEFIT OF THE HOLDERS THEREUNDER, AND THE OWNER
LESSOR, AS DEBTOR. SEE SECTION 21 HEREOF FOR INFORMATION CONCERNING THE RIGHTS
OF THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
<Page>

<Table>
<Caption>
                                TABLE OF CONTENTS
                                                                                                               Page
<S>           <C>                                                                                              <C>
SECTION 1     DEFINITIONS.........................................................................................2
---------     -----------

SECTION 2     LEASE OF THE UNDIVIDED INTEREST.....................................................................2
---------     -------------------------------

SECTION 3     FACILITY LEASE TERM AND RENT........................................................................2
---------     ----------------------------

              SECTION 3.1        BASIC LEASE TERM.................................................................2
              -----------        ----------------

              SECTION 3.2        RENT.............................................................................2
              -----------        ----

              SECTION 3.3        SUPPLEMENTAL LEASE RENT..........................................................4
              -----------        -----------------------

              SECTION 3.4        ADJUSTMENT OF BASIC LEASE RENT AND TERMINATION VALUE.............................4
              -----------        ----------------------------------------------------

              SECTION 3.5        MANNER OF PAYMENTS...............................................................6
              -----------        ------------------

SECTION 4     DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT..................................................7
---------     --------------------------------------------------

              SECTION 4.1        DISCLAIMER OF WARRANTIES.........................................................7
              -----------        -------------------------

              SECTION 4.2        QUIET ENJOYMENT..................................................................9
              -----------        ---------------

SECTION 5     RETURN OF UNDIVIDED INTEREST........................................................................9
---------     ----------------------------

              SECTION 5.1        RETURN...........................................................................9
              -----------        ------

              SECTION 5.2        CONDITION UPON RETURN............................................................9
              -----------        ---------------------

              SECTION 5.3        EXPENSES........................................................................13
              -----------        --------

SECTION 6     LIENS..............................................................................................13
---------     -----

SECTION 7     MAINTENANCE; REPLACEMENTS OF COMPONENTS............................................................13
---------     ---------------------------------------

              SECTION 7.1        MAINTENANCE.....................................................................13
              -----------        -----------

              SECTION 7.2        REPLACEMENT OF COMPONENTS.......................................................14
              -----------        -------------------------

              SECTION 7.3        ENVIRONMENTAL MATTERS...........................................................15
              -----------        ---------------------

SECTION 8     IMPROVEMENTS.......................................................................................17
---------     ------------

              SECTION 8.1        REQUIRED IMPROVEMENTS...........................................................17
              -----------        ---------------------

              SECTION 8.2        OPTIONAL IMPROVEMENTS...........................................................17
              -----------        ---------------------

              SECTION 8.3        TITLE TO IMPROVEMENTS...........................................................18
              -----------        ---------------------

              SECTION 8.4        FINANCING OF IMPROVEMENTS.......................................................18
              -----------        -------------------------

SECTION 9     NET LEASE..........................................................................................19
---------     ---------
<Page>

SECTION 10    EVENTS OF LOSS.....................................................................................20
----------    --------------

              SECTION 10.1       OCCURRENCE OF EVENTS OF LOSS....................................................20
              ------------       -----------------------------

              SECTION 10.2       PAYMENT UPON TERMINATION; SPECIAL LESSEE
                                   TRANSFER PAYMENT UPON TERMINATION; SPECIAL LESSEE TRANSFER....................21
              ------------       ---------------------------------------------------------------------------------------------------

              SECTION 10.3       APPLICATION OF PROCEEDS.........................................................24
              ------------       -----------------------

              SECTION 10.4       REBUILDING OR REPLACEMENT.......................................................25
              ------------       -------------------------

              SECTION 10.5       APPLICATION OF PAYMENTS NOT RELATING TO AN EVENT OF LOSS........................26
              ------------       --------------------------------------------------------

              SECTION 10.6       PARTIAL CASUALTIES..............................................................26
              ------------       ------------------

SECTION 11    INSURANCE..........................................................................................27
----------    ---------------------------------------------------------------------------------------------------

              SECTION 11.1       GENERAL.........................................................................27
              ------------       -------

              SECTION 11.2       APPLICATION OF INSURANCE PROCEEDS...............................................27
              ------------       ---------------------------------

SECTION 12    INSPECTION.........................................................................................28
----------    ----------

SECTION 13    TERMINATION OPTION FOR BURDENSOME EVENTS...........................................................28
----------    ----------------------------------------

              SECTION 13.1       ELECTION TO TERMINATE...........................................................28
              ------------       ---------------------

              SECTION 13.2       SOLICITATION OF QUALIFYING BIDS; PAYMENTS UPON TERMINATION......................30
              ------------       ----------------------------------------------------------

              SECTION 13.3       PROCEDURE FOR EXERCISE OF TERMINATION OPTION....................................31
              ------------       --------------------------------------------

              SECTION 13.4       ASSUMPTION OF THE LESSOR NOTES; SPECIAL LESSEE TRANSFERS........................32
              ------------       ---------------------------------------------------------

              SECTION 13.5       CERTAIN CONDITIONS TO TERMINATION...............................................32
              ------------       ---------------------------------

SECTION 14    TERMINATION FOR OBSOLESCENCE; PARTIAL RELEASE OF INTEREST..........................................33
----------    ---------------------------------------------------------

              SECTION 14.1       TERMINATION.....................................................................33
              ------------       -----------

              SECTION 14.2       SOLICITATION OF OFFERS..........................................................33
              ------------       ----------------------

              SECTION 14.3       RIGHT OF OWNER LESSOR TO RETAIN THE UNDIVIDED INTEREST..........................34
              ------------       ------------------------------------------------------

              SECTION 14.4       PROCEDURE FOR EXERCISE OF TERMINATION OPTION....................................35
              ------------       --------------------------------------------

              SECTION 14.5       CERTAIN CONDITIONS TO TERMINATION...............................................36
              ------------       ---------------------------------

SECTION 15    LEASE RENEWAL......................................................................................36
----------    -------------

              SECTION 15.1       RENEWAL LEASE TERMS.............................................................36
              ------------       -------------------

              SECTION 15.2       FAIR MARKET VALUE RENEWAL LEASE TERMS...........................................37
              ------------       -------------------------------------

              SECTION 15.3       RENEWAL RENT AND TERMINATION VALUE FOR RENEWAL LEASE TERM.......................38
              ------------       ---------------------------------------------------------

                                       ii
<Page>

              SECTION 15.4       DETERMINATION OF FAIR MARKET RENTAL VALUE.......................................38
              ------------       -----------------------------------------

              SECTION 15.5       TERMINATION VALUE DURING RENEWAL LEASE TERMS....................................39
              ------------       --------------------------------------------

SECTION 16    EVENTS OF DEFAULT..................................................................................39
----------    -----------------

SECTION 17    REMEDIES...........................................................................................43
----------    --------

              SECTION 17.1       REMEDIES FOR LEASE EVENT OF DEFAULT.............................................43
              ------------       -----------------------------------

              SECTION 17.2       CUMULATIVE REMEDIES.............................................................46
              ------------       -------------------

              SECTION 17.3       NO DELAY OR OMISSION TO BE CONSTRUED AS WAIVER..................................46
              ------------       ----------------------------------------------

SECTION 18    SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS.................................................47
----------    --------------------------------------------------

SECTION 19    RIGHT TO SUBLEASE..................................................................................47
----------    -----------------

              SECTION 19.1       SUBLEASE........................................................................47
              ------------       --------

SECTION 20    OWNER LESSOR'S RIGHT TO PERFORM....................................................................48
----------    -------------------------------

SECTION 21    SECURITY FOR OWNER LESSOR'S OBLIGATION TO THE LEASE INDENTURE TRUSTEE..............................49
----------    ---------------------------------------------------------------------

SECTION 22    MISCELLANEOUS......................................................................................49
----------    -------------

              SECTION 22.1       AMENDMENTS AND WAIVERS..........................................................49
              ------------       ----------------------

              SECTION 22.2       NOTICES.........................................................................49
              ------------       -------

              SECTION 22.3       SURVIVAL........................................................................50
              ------------       --------

              SECTION 22.4       SUCCESSORS AND ASSIGNS..........................................................50
              ------------       ----------------------

              SECTION 22.5       TRUE LEASE; SEPARATE LEGAL OBLIGATIONS..........................................53
              ------------       --------------------------------------

              SECTION 22.6       GOVERNING LAW...................................................................53
              ------------       -------------

              SECTION 22.7       SEVERABILITY....................................................................53
              ------------       ------------

              SECTION 22.8       COUNTERPARTS....................................................................53
              ------------       ------------

              SECTION 22.9       HEADINGS AND TABLE OF CONTENTS..................................................53
              ------------       ------------------------------

              SECTION 22.10      FURTHER ASSURANCES..............................................................53
              -------------      ------------------

              SECTION 22.11      EFFECTIVENESS...................................................................54
              -------------      -------------

              SECTION 22.12      LIMITATION OF LIABILITY.........................................................54
              -------------      -----------------------

              SECTION 22.13      MEASURING LIFE..................................................................54
              -------------      --------------
</Table>

                                      iii
<Page>

                            FACILITY LEASE AGREEMENT

                  This FACILITY LEASE AGREEMENT, dated as of December __,
2001 (as amended, supplemented or otherwise modified from time to time and in
accordance with the provisions hereof, this "FACILITY LEASE"), between HOMER
CITY OL1 LLC, a Delaware limited liability company (together with its
successors and permitted assigns, the "OWNER LESSOR") created for the benefit
of General Electric Capital Corporation, a Delaware corporation (together
with its successors and permitted assigns, the "OWNER PARTICIPANT"), and EME
HOMER CITY GENERATION L.P., a Pennsylvania limited partnership (together with
its successors assigns, the "FACILITY LESSEE" or "HOMER CITY").

                                   WITNESSETH:

                  WHEREAS, the Facility Lessee owns the Facility Site which is
more particularly described in Exhibit A hereto, such Exhibit A being attached
to this Facility Lease as a part hereof;

                  WHEREAS, pursuant to the Facility Site Lease, Homer City has
leased the Ground Interest and granted certain non-exclusive easements to the
Owner Lessor for the Facility Lease Term;

                  WHEREAS, pursuant to the Facility Site Sublease, the Owner
Lessor has leased the Ground Interest to Homer City for the term equal to the
term of this Facility Lease, including any renewals hereof;

                  WHEREAS, the Facility is located on the Facility Site and is
more particularly described in Exhibit B hereto, such Exhibit B being attached
to this Facility Lease as a part hereof;

                  WHEREAS, pursuant to the Facility Deed and the Bill of Sale,
the Owner Lessor has acquired from the Facility Lessee an undivided ownership
interest in the Facility, with the right to nonexclusive possession of the
Facility including an entitlement share in the electrical capacity and output of
the Facility equal to the Owner Lessor's Percentage (such undivided ownership
interest and entitlement share together, the "UNDIVIDED INTEREST");

                  WHEREAS, the Facility does not include the Facility Site or
any part thereof, and the Facility Site is being leased to the Owner Lessor
pursuant to the Facility Site Lease and is being subleased to the Facility
Lessee pursuant to the Facility Site Sublease; and

                  WHEREAS, pursuant to this Facility Lease, the Owner Lessor
will lease the Undivided Interest to the Facility Lessee for the Basic Lease
Term and the Renewal Lease Terms, if any, provided herein.
<Page>

                  NOW, THEREFORE, in consideration of the foregoing premises,
the mutual agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1         DEFINITIONS

                  Capitalized terms used in this Facility Lease, including those
in the recitals, and not otherwise defined herein shall have the respective
meanings set forth in Appendix A to that certain Participation Agreement (P1),
dated as of December ___, 2001, among the Facility Lessee, the Owner Lessor, the
Owner Manager, the Owner Participant, The Bank of New York (as successor to
United States Trust Company of New York) as Bondholder Trustee, the Lender, the
Security Agent and the Lease Indenture Trustee (the "PARTICIPATION AGREEMENT"),
unless the context hereof shall otherwise require. The general provisions of
Appendix A to the Participation Agreement shall apply to the this Facility
Lease.

SECTION 2         LEASE OF THE UNDIVIDED INTEREST

                  Upon the terms and conditions set forth herein, the Owner
Lessor hereby leases the Undivided Interest to the Facility Lessee, and the
Facility Lessee hereby leases the Undivided Interest from the Owner Lessor, for
the Basic Lease Term and, subject to the Facility Lessee's exercise of any of
its options to renew this Facility Lease as provided in SECTION 15, one or more
Renewal Lease Terms. The Facility Lessee and the Owner Lessor understand and
agree that this Facility Lease is subject to those encumbrances set forth in the
Title Policies. The Undivided Interest shall be subject to the terms of this
Facility Lease from the date on which this Facility Lease is executed and
delivered.

SECTION 3         FACILITY LEASE TERM AND RENT

         SECTION 3.1 BASIC LEASE TERM. The basic lease term of this Facility
Lease (the "BASIC LEASE TERM") shall commence on the Closing Date (the "BASIC
LEASE COMMENCEMENT DATE") and shall continue for a period of 33 years and eight
months, to and including _______ ___, 2035, subject to earlier termination
pursuant to SECTIONS 10, 13, 14 or 17 hereof. The Facility Lessee shall have the
right to renew this Facility Lease in accordance with SECTION 15 hereof. The
Basic Lease Term and the Renewal Lease Terms are referred to as the "FACILITY
LEASE TERM".

         SECTION 3.2 RENT

         (a) The Facility Lessee hereby agrees to pay to the Owner Lessor
lease rent payable with respect to the Basic Lease Term ("BASIC LEASE RENT").
The Basic Lease Rent shall be paid by the Facility Lessee to the Owner Lessor in
installments in the amounts and on the dates (each a "RENT PAYMENT DATE") shown
on SCHEDULE 1-1 hereto. All Basic Lease Rent to be paid pursuant to this SECTION
3.2 shall be payable in the manner set forth in SECTION 3.5 and shall be
adjusted from time to time in accordance with SECTION 3.4 hereof. Renewal Rent,
with respect to any exercised Renewal Lease

                                       2
<Page>

Term, shall be paid in accordance with the provisions of SECTION 15.3 hereof.
The term "BASIC LEASE RENT" is intended to constitute "fixed rent" (as such term
is defined in Treasury Regulation ss.1.467-1(h)(3)).

                  (b) Unless and until such time as adjustments are made
pursuant to SECTION 3.4, the Basic Lease Rent allocated to each period for the
use by the Facility Lessee of the Undivided Interest shall be the amount set
forth on SCHEDULE 1-2 hereto (the "ALLOCATED RENT"). Notwithstanding that Basic
Lease Rent is payable in accordance with SECTION 3.2(A), the Allocated Rent
allocated pursuant to this SECTION 3.2(B) shall represent and be the amount of
Basic Lease Rent for which the Facility Lessee becomes liable on account of the
use of the Undivided Interest for each calendar year in whole or in part of the
Basic Lease Term.

                  (c) It is the intention of the parties hereto that the
allocation of Basic Lease Rent to each Rent Payment Period as provided in
SECTION 3.2(B) constitutes a specific allocation of fixed rent within the
meaning of Treasury Regulation ss.1.467-1(c)(2)(ii)(A) with the effect that
pursuant to Treasury Regulation ss.ss.1.467-1(d) and 1.467-2 the Owner Lessor
and the Facility Lessee, on any federal income tax returns filed by them (or
on any return on which their income is included), shall accrue the amounts of
rental income and rental expense, respectively, set forth for each Rent
Payment Period on SCHEDULE 1-3 hereto under the caption "Proportional Rent"
(the "PROPORTIONAL RENT") and shall include such amounts in income for each
taxable year in accordance with Treasury Regulation ss. 1.467-1(d)(1).
Because there shall be from time to time a difference between (i) the
cumulative amount of Basic Lease Rent paid by the Facility Lessee (as set
forth in SECTION 3.2(a)) and (ii) the cumulative amount of Basic Lease Rent
allocated pursuant to SECTION 3.2(B), for the purpose of determining the
Owner Lessor's and the Facility Lessee's tax consequences under Section 467
of the Code, there shall be considered to exist a loan for purposes of Section
467 of the Code, the amount of which is based on the difference between the
cumulative amount of Basic Lease Rent paid by the Facility Lessee and the
cumulative amount of the Proportional Rent accrued by the Facility Lessee
adjusted to account for an interest component, as provided in Treasury
Regulation ss.1.467-4(b)(1) and the amount of which is set forth on SCHEDULE
    hereto under the caption "Section 467 Loan" (the "SECTION 467 LOAN"). If
the applicable amount of the Section 467 Loan set forth on SCHEDULE
hereto is positive, such amount (the "LESSOR SECTION 467 LOAN BALANCE")
represents a loan in favor of the Owner Lessor; if the applicable amount of
the Section 467 Loan set forth on SCHEDULE     hereto is negative, such
amount (the "LESSEE SECTION 467 LOAN BALANCE") represents a loan in favor of
the Facility Lessee. If there shall be a Lessor Section 467 Loan Balance, the
Owner Lessor shall deduct interest expense and the Facility Lessee shall
accrue interest income, in each case, in an amount equal to the amount set
forth under the caption "Lessor Section 467 Interest" for the applicable Rent
Payment Period on SCHEDULE 1-3 hereto (the "LESSOR SECTION 467 INTEREST"). If
there shall be a Lessee Section 467 Loan Balance, the Owner Lessor shall
accrue interest income and the Facility Lessee shall deduct interest expense,
in each case, in an amount equal to the amount set forth for the applicable
Rent Payment Period on SCHEDULE 1-3 hereto (the "LESSEE SECTION 467
INTEREST").

                  (d) If the Lease is terminated prior to the end of the Basic
Lease Term or the Facility Lessee is otherwise required to pay Termination Value
(or amounts computed

                                       3
<Page>

by reference thereto) (A) the Owner Lessor shall make a payment to the
Facility Lessee on the applicable Termination Date equal to the Lessor
Section 467 Loan Balance on such date, if any, and (B) the Facility Lessee
shall make a payment to the Owner Lessor on the applicable Termination Date
equal to the Lessee Section 467 Loan Balance on such date, if any.
Notwithstanding the foregoing, either party may offset any Lessor Section 467
Loan Balance owed by the Owner Lessor to the Facility Lessee against the
amount of Termination Value (or amounts computed by reference thereto) due
and payable by the Facility Lessee to the Owner Lessor on such date, and the
Facility Lessee shall pay an amount equal to the excess of such Termination
Value (or amounts computed by reference thereto) over such Lessor Section 467
Loan Balance or the Owner Lessor shall pay an amount equal to the excess of
such Lessor Section 467 Loan Balance over such Termination Value (or amounts
computed by reference thereto). Notwithstanding anything in this Facility
Lease to the contrary, if by operation of law, the full amount of Termination
Value is not payable by the Facility Lessee in accordance with the provisions
hereof, the amount of the Section 467 Loan from the Facility Lessee to the
Owner Lessor will be reduced by an amount equal to any such reduction of the
amount of Termination Value payable by the Facility Lessee. For the avoidance
of doubt, it is the explicit intent, understanding and agreement of the
parties hereto that, under such circumstances, the Facility Lessee is not to
receive any amounts in respect of any Section 467 Loan then outstanding from
the Facility Lessee to the Owner Lessor to the extent such amounts are in
excess of the Termination Value then payable by the Facility Lessee.

         SECTION 3.3 SUPPLEMENTAL LEASE RENT. The Facility Lessee also agrees to
pay, on an After-Tax Basis, to the Owner Lessor, or to any other Person entitled
thereto as expressly provided herein or in any other Operative Document, as
appropriate, any and all Supplemental Lease Rent, promptly as the same shall
become due and owing, or where no due date is specified, promptly after demand
by the Person entitled thereto, and in the event of any failure on the part of
the Facility Lessee to pay any Supplemental Lease Rent, the Owner Lessor shall
have all rights, powers and remedies provided for herein or by law or equity or
otherwise for the failure to pay Basic Lease Rent. The Facility Lessee will also
pay as Supplemental Lease Rent, unless prohibited by any Requirement of Law, an
amount equal to interest at the applicable Overdue Rate (computed on the basis
of a 360-day year of twelve 30-day months) on any part of any payment of Basic
Lease Rent not paid when due for any period for which the same shall be overdue
and on any Supplemental Lease Rent not paid when due (whether on demand or
otherwise) for the period from such due date until the same shall be paid. All
Supplemental Lease Rent to be paid pursuant to this SECTION 3.3 shall be payable
in the manner set forth in SECTION 3.5.

         SECTION 3.4 ADJUSTMENT OF BASIC LEASE RENT AND TERMINATION VALUE . (a)
The Facility Lessee and the Owner Lessor agree that Basic Lease Rent, Allocated
Rent, Proportional Rent, Lessor Section 467 Loan Balance, Lessee Section 467
Loan Balance, Lessor Section 467 Interest, Lessee Section 467 Interest and
Termination Values may be adjusted, either upwards or downwards, at the request
of the Facility Lessee or the Owner Participant in the following situations: (i)
after the Closing Date to reflect the change in interest rate on any New Lessor
Notes issued in connection with a refinancing pursuant to Section 12.2 of the
Participation Agreement and pursuant to SECTION 2.6 of the Lease Indenture, (ii)
in connection with the financing of improvements through Additional Lessor Notes
pursuant to Section 12.1(a)(iii) of the Participation Agreement and (iii) to
reflect the payments made pursuant to Section 10.3(d) hereof.

                  (b) Any adjustments pursuant to this SECTION 3.4 shall be
calculated, (A) first, so as to maintain the Owner Participant's Net Economic
Return, the minimum and

                                       4
<Page>

average Rent Service Coverage Ratios set forth in the Closing Projections
through the end of the Basic Lease Term, and the "operating lease" treatment for
the Facility Lessee and, (B) second, at the option of the Facility Lessee (x) to
minimize the average annual Basic Lease Rent over the Basic Lease Term for GAAP
accounting purposes of the Facility Lessee and/or (y) to minimize, to the extent
possible, the net present value of the Basic Lease Rent (PROVIDED THAT, with
respect to GAAP earnings, the Owner Participant shall not be obligated by any
such adjustment to record a book loss or reduce book earnings in the year of
adjustment). Adjustments shall be computed by the Owner Participant, using the
same method of computation, Tax Assumptions and Pricing Assumptions originally
used (other than those that have changed as a result of the event giving rise to
the adjustment) in the calculation of Basic Lease Rent, Allocated Rent,
Proportional Rent, Lessor 467 Interest, Lessee 467 Interest, Lessor Section 467
Loan Balance, Lessee Section 467 Loan Balance, and Termination Values set
forth in SCHEDULES 1-1, 1-2, 1-3 and SCHEDULE 2 hereto, respectively, but
shall be subject to the verification procedure described in SECTION 3.4(D)
and shall be in compliance with Section 467 of the Code and Rev. Proc.
2001-28, 2001-19 IRB 1156 and Rev. Proc. 2001-29, 2001-19 IRB 1160 except to
the extent the original transaction did not comply therewith.

                  (c) Anything herein or in any other Operative Document to the
contrary notwithstanding, Basic Lease Rent (excluding Component A of Basic Lease
Rent) payable on any Rent Payment Date, whether or not adjusted in accordance
with this SECTION 3.4, shall, in the aggregate, be in an amount at least
sufficient to pay in full principal and interest payable on the Lessor Notes on
such Rent Payment Date. Anything herein or in any other Operative Document to
the contrary notwithstanding, Termination Values (excluding Component A of
Termination Value) payable on any date under this Facility Lease, whether or not
adjusted in accordance with this SECTION 3.4, shall in the aggregate, together
with all other Rent due and owing on such date, exclusive of any portion thereof
that is Component A of Basic Lease Rent or an Excepted Payment, be in an amount
at least sufficient to pay in full the principal of, premium, if any, and
accrued interest on the Lessor Notes payable on such date.

                  (d) Any adjustment pursuant to this SECTION 3.4 computed by
the Owner Participant pursuant to SECTION 3.4(B) shall be subject to the
verification procedure described in this SECTION 3.4(D). Once computed, the
results of such computation shall promptly be delivered by the Owner Participant
to the Facility Lessee. Within 30 days after the receipt of the results of any
such adjustment, the Facility Lessee may request that a nationally recognized
firm of accountants or lease advisors selected by the Owner Participant and
reasonably acceptable to the Facility Lessee (the "VERIFIER") verify, on a
confidential basis, after consultation with the Owner Participant and the
Facility Lessee, the accuracy of such adjustment in accordance with this SECTION
3.4. The Owner Participant and the Facility Lessee hereby agree, subject to the
execution by the Verifier of an appropriate confidentiality agreement, to
provide the Verifier with all necessary information and materials (other than
the Owner Participant's, the OP Guarantor's or any of their respective
Affiliates' income tax returns or accounting records) as shall be necessary in
connection with such verification. Both the Owner Participant and the Facility
Lessee shall have the right to communicate with the Verifier and to submit
supporting information and data to the Verifier. If the Verifier confirms that
such

                                       5
<Page>

adjustment is in accordance with this SECTION 3.4, and the adjustment to Basic
Lease Rent, Allocated Rent, Proportional Rent, Lessor Section 467 Loan Balance,
Lessee Section 467 Loan Balance, Lessor 467 Interest, Lessee 467 Interest and
Termination Value calculated by the Verifier are the same as those calculated by
the Owner Participant, it shall so certify to the Facility Lessee, the Owner
Lessor and the Owner Participant and such certification shall be final, binding
and conclusive on the Facility Lessee, the Owner Lessor and the Owner
Participant. If the Verifier concludes that such adjustment is not in accordance
with this SECTION 3.4, and the adjustments to Basic Lease Rent, Allocated Rent,
Proportional Rent, Lessor Section 467 Loan Balance, Lessee Section 467 Loan
Balance, Lessor 467 Interest, Lessee 467 Interest and Termination Value
calculated by the Verifier are different from those calculated by the Owner
Participant, it shall so certify to the Facility Lessee, the Owner Lessor and
the Owner Participant, and the Verifier's calculation shall be final, binding
and conclusive on the Facility Lessee, the Owner Lessor and the Owner
Participant. If the Facility Lessee does not request a verification of any
adjustment within the 30 day period specified above in this SECTION 3.4(D), the
computation provided by the Owner Participant shall be final, binding and
conclusive on the Facility Lessee, the Owner Lessor and the Owner Participant.
The final determination of any adjustment hereunder shall be set forth in an
amendment to this Facility Lease, executed and delivered by the Owner Lessor and
the Facility Lessee and consented to by the Owner Participant; PROVIDED,
however, that any omission to execute and deliver such amendment shall not
affect the validity and effectiveness of any such adjustment. The reasonable
costs of the Verifier in verifying an adjustment pursuant to this SECTION 3.4
shall be paid by the Facility Lessee; PROVIDED, HOWEVER, that in the event that
such Verifier determines that the present value of the remaining Basic Lease
Rent to be made under this Facility Lease as calculated by the Owner Participant
is greater than the present value of the remaining Basic Lease Rent as certified
by the Verifier, in each case, discounted annually at the Discount Rate, by more
than ten basis points, then such reasonable costs of the Verifier shall be paid
by the Owner Participant. Notwithstanding anything herein to the contrary, the
sole responsibility of the Verifier shall be to verify the calculations
hereunder and the scope of the Verifier's responsibilities shall not include
matters of interpretation of this Facility Lease or any other Operative
Document.

         SECTION 3.5 MANNER OF PAYMENTS. All Rent (whether Basic Lease Rent,
Renewal Rent or Supplemental Lease Rent) and all Termination Value payments
shall be paid by the Facility Lessee in Dollars in immediately available funds
to the recipient not later than 11:00 a.m. (New York City time) on the date due.
If any Rent is due on a day which is not a Business Day, payment thereof shall
be made on the next succeeding Business Day with the same effect as if made on
the date on which such payment was due. All Rent payments payable to the Owner
Lessor (other than Excepted Payments) shall be paid by the Facility Lessee to
the Owner Lessor at its account at [________] (Account No. [________]) (the
"OWNER LESSOR'S RENT ACCOUNT"), or to such other place as the Owner Lessor shall
notify the Facility Lessee in writing; PROVIDED, HOWEVER, that so long as the
Lessor Notes are outstanding and the Lien created under the Lease Indenture has
not been discharged, the Owner Lessor hereby irrevocably directs (it being
agreed and understood that such direction shall be deemed to have been revoked
after the Lien created under the Lease Indenture shall have been fully
discharged in accordance with its

                                       6
<Page>

terms), and the Facility Lessee agrees, that all payments of Rent (other than
Excepted Payments) payable to the Owner Lessor shall be paid by "wire" transfer
directly to the Security Agent's Account or to such other place as the Security
Agent shall notify the Facility Lessee in writing pursuant to the Participation
Agreement. On each Rent Payment Date, Basic Lease Rent shall be paid by
transferring funds in the amount equal to the Basic Lease Rent payment (in the
amount notified by the Facility Lessee to the Owner Lessor and, so long as the
Lessor Notes are outstanding and the Lien created under the Lease Indenture has
not been discharged, the Security Agent) into the Owner Lessor's Rent Account
or, so long as the Lessor Notes are outstanding and the Lien created under the
Lease Indenture has not been discharged, the Security Agent's Account. Payments
constituting Excepted Payments shall be made to the Person entitled thereto at
the address for such Person set forth in the Participation Agreement, or to such
other place as such Person shall notify the Facility Lessee in writing.

SECTION 4 DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT

         SECTION 4.1 DISCLAIMER OF WARRANTIES.

                  (a) Without waiving any claim the Facility Lessee may have
against any manufacturer, vendor or contractor, THE FACILITY LESSEE ACKNOWLEDGES
AND AGREES SOLELY FOR THE BENEFIT OF THE OWNER LESSOR AND THE OWNER PARTICIPANT
THAT (i) THE FACILITY AND EACH COMPONENT ARE OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE ACCEPTABLE TO THE FACILITY LESSEE, (ii) THE FACILITY LESSEE IS
SATISFIED THAT THE FACILITY AND EACH COMPONENT ARE SUITABLE FOR THEIR RESPECTIVE
PURPOSES, (iii) NEITHER THE OWNER LESSOR NOR THE OWNER PARTICIPANT IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) THE UNDIVIDED INTEREST
IS LEASED HEREUNDER TO THE EXTENT PROVIDED HEREBY FOR THE BASIC LEASE TERM AND
THE RENEWAL LEASE TERMS, IF ANY, SPECIFIED HEREIN SUBJECT TO ALL REQUIREMENTS OF
LAW NOW IN EFFECT OR HEREAFTER ADOPTED, INCLUDING (1) ZONING REGULATIONS, (2)
ENVIRONMENTAL LAWS OR (3) BUILDING RESTRICTIONS, AND IN THE STATE AND CONDITION
OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME SUBJECT TO THIS FACILITY LEASE
WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE OWNER LESSOR OR THE OWNER
PARTICIPANT AND (v) THE OWNER LESSOR LEASES FOR THE BASIC LEASE TERM AND THE
RENEWAL LEASE TERMS, IF ANY, SPECIFIED HEREIN AND THE FACILITY LESSEE TAKES THE
UNDIVIDED INTEREST UNDER THIS FACILITY LEASE "AS-IS," "WHERE-IS" AND "WITH ALL
FAULTS," AND THE FACILITY LESSEE ACKNOWLEDGES THAT NEITHER THE OWNER LESSOR, NOR
THE OWNER PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EACH EXPRESSLY
DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS, EITHER
EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR
PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE OF THE
FACILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF

                                       7
<Page>

OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR
TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR
NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY
WHATSOEVER WITH RESPECT THERETO, except that the Owner Lessor represents and
warrants that on the Closing Date, the Undivided Interest will be free of
Owner Lessor Liens. It is agreed that all such risks, as between the Owner
Lessor and the Owner Participant on the one hand and the Facility Lessee on
the other hand are to be borne by the Facility Lessee with respect to acts,
occurrences or omissions during the Facility Lease Term. Neither the Owner
Lessor nor the Owner Participant shall have any responsibility or liability
to the Facility Lessee or any other Person with respect to any of the
following: (w) any liability, loss or damage caused or alleged to be caused
directly or indirectly by the Facility or any Component or by any inadequacy
thereof or deficiency or defect therein or by any other circumstances in
connection therewith; (x) the use, operation or performance of the Facility,
any Component or any risks relating thereto; (y) the delivery, operation,
servicing, maintenance, repair, improvement, replacement or decommissioning
of the Facility or any Component; or (z) a Lessor Section 467 Loan Balance to
the extent of the reduction in the Facility Lessee's obligation to pay
Termination Value pursuant to operation of law. The provisions of this
paragraph (a) of this SECTION 4.1 have been negotiated, and, except to the
extent otherwise expressly stated, the foregoing provisions are intended to
be a complete exclusion and negation of any representations or warranties of
the Owner Lessor, express or implied, with respect to the Facility, any
Component or the Undivided Interest that may arise pursuant to any
Requirement of Law now or hereafter in effect, or otherwise.

                  (b) During the Facility Lease Term, so long as no Lease Event
of Default shall have occurred and be continuing, the Owner Lessor hereby
appoints irrevocably and constitutes the Facility Lessee its agent and
attorney-in-fact, coupled with an interest, to assert and enforce, from time to
time, in the name and for the account of the Owner Lessor and the Facility
Lessee, as their interests may appear, but in all cases at the sole cost and
expense of the Facility Lessee, whatever claims and rights the Owner Lessor may
have in respect of the Facility, any Component or the Undivided Interest against
any manufacturer, vendor or contractor, or under any express or implied
warranties relating to the Facility, any Component or the Undivided Interest.
Notwithstanding the foregoing, any amount in excess of $5,000,000 that is
payable under any warranty shall not be payable to or retained by the Facility
Lessee (for application in repair or replacement of the affected property if
necessary) if at the time of such payment a Material Lease Default or Lease
Event of Default shall have occurred and be continuing, but shall be paid to and
held by the Owner Lessor as security for the obligations of the Facility Lessee
under this Facility Lease (or, if the Lien created under the Lease Indenture
shall not have been discharged pursuant to the terms thereof, such amounts shall
be paid to and held by the Security Agent in accordance with the terms of the
Lease Indenture) in accordance with SECTION 21 or shall be applied towards
payment of the Facility Lessee's obligations under the Operative Documents at
the Owner Lessor's option during such time as any Material Lease Default or
Lease Event of Default shall have occurred and be continuing. At such time
thereafter as no Material Lease Default or Lease Event of Default shall be
continuing, such amount at the time held by the Owner Lessor, or, if applicable,
the

                                       8
<Page>

Security Agent, in excess of the amount applied in accordance with the preceding
sentence shall be paid to the Facility Lessee net of and after deduction for any
applicable withholding Taxes, upon the Facility Lessee's written request
therefor, specifying the amount to be paid and certifying that no Material Lease
Default or Lease Event of Default has occurred and is continuing. The Owner
Lessor agrees to execute and deliver such further documents and take such
further action (including the assignment of warranty claims), at the Facility
Lessee's expense and at no after-tax cost to the Owner Participant, as may be
reasonably requested by the Facility Lessee in order to obtain such warranty
service as may be furnished for the Facility or any Component by any of the
warrantors.

         SECTION 4.2 QUIET ENJOYMENT. So long as no Lease Event of Default has
occurred and is continuing, the Facility Lessee's quiet enjoyment of the use,
operation, or possession by the Facility Lessee of the Facility or the Undivided
Interest will not be disturbed by the Owner Lessor or the Owner Participant, any
of their respective Affiliates thereof or any other Person having a rightful,
valid and legal claim by, through or under the Owner Lessor or any of its
Affiliates.

SECTION 5 RETURN OF UNDIVIDED INTEREST

         SECTION 5.1 RETURN. Upon expiration of the Facility Lease Term (or
earlier than such date if required pursuant to the provisions of this Facility
Lease) (the "DATE OF RETURN"), unless the Undivided Interest is being
transferred to the Facility Lessee (or its designee) pursuant to SECTION 10 or
SECTION 13, the Facility Lessee shall return the Undivided Interest (together
with all Required Improvements, all Non-Severable Improvements, all other
Improvements financed through this Facility Lease, if any, all logs and records
relating to the Undivided Interest, title to each of which shall vest in the
Owner Lessor) to the Owner Lessor or any designee or transferee of the Owner
Lessor by surrendering the Undivided Interest into the possession of the Owner
Lessor, or such designee or transferee at the location of the Facility on the
Facility Site.

         SECTION 5.2 CONDITION UPON RETURN. On the Date of Return, (other than
in connection with a return of the Undivided Interest by the Facility Lessee
pursuant to SECTION 13 or SECTION 14), the Facility Lessee agrees that the
following conditions (the "RETURN CONDITIONS") shall be satisfied or waived,
whereupon this Facility Lease shall terminate:

                  (a) the Facility will be in at least as good condition as it
would have been in if it had been maintained during the Facility Lease Term in
compliance with the provisions of this Facility Lease (including, without
limitation, SECTION 7), ordinary wear and tear excepted; and the Owner Lessor
shall be entitled to exercise its right pursuant to the Designated
Representative Agreement to appoint itself or a party of its choosing, in its
sole discretion, as the designated account representative on file with the EPA
or DEP (as the case may be) to be allocated any emission allowances granted by
such agencies with respect to the Facility on or after the Termination Date, and
all such emission allowances shall be for the exclusive account of the Owner
Lessor (and the Facility Lessee shall take such action as the Owner Lessor may
reasonably request which the

                                       9
<Page>

Owner Lessor deems necessary to obtain such allowances);

                  (b) the Facility Lessee shall, to the extent permitted by
Requirements of Law and the provisions of such licenses or permits, assign an
undivided interest equal to the Owner Lessor's Percentage to the Owner Lessor or
its transferee or designee in, and shall cooperate with all reasonable requests
of the Owner Participant, the Owner Lessor or any transferee or designee of
either such Person for purposes of obtaining, or enabling the Owner Participant,
the Owner Lessor or such transferee or designee to obtain, any and all licenses
and permits of any Governmental Authorities or other Persons that are or will be
required to be obtained by the Owner Participant, the Owner Lessor or such
transferee or designee in connection with the use, operation or maintenance of
the Undivided Interest that are not already in the name of the Owner Lessor or a
transferee or designee, as the case may be on or after such return as required
by Requirements of Law;

                  (c) the Facility Lessee shall provide the Owner Lessor or its
transferee or designee with originals or copies of all documents, instruments,
plans, maps, specifications, manuals, drawings and other documentary materials
relating to the installation, maintenance, operation, construction, design,
modification and repair of the Facility, in each case as shall be in the
Facility Lessee's possession and reasonably appropriate or necessary for the
continued operation of the Facility;

                  (d) the Facility Lessee, at the request of the Owner Lessor,
shall sell to the Owner Lessor or its designee or transferee at the then fair
market value thereof, determined by agreement between the Facility Lessee and
the Owner Lessor or, absent such agreement, by an appraisal (the fees and
expenses to be for the account of the Owner Lessor) conducted according to the
Appraisal Procedure, an undivided interest equal to the Owner Lessor's
Percentage in (i) the Facility Lessee's right, title and interest in and to any
or all Severable Improvements made to the Facility that are owned by the
Facility Lessee, and (ii) any and all supplies, spare parts, consumables, safety
equipment, and other parts or materials as shall be in the Facility Lessee's
possession and shall be reasonably appropriate or necessary for the continued
operation of the Facility;

                  (e) the Undivided Interest (and the Severable Improvements,
supplies, spare parts, consumables, safety equipment, and other parts and
materials referred to in SECTION 5.2(D)) shall be free and clear of all Liens
other than Permitted Encumbrances set forth in clauses (ii), (iii), (vii),
(viii), (ix), (xi) and (xiii) of the definition thereof; PROVIDED, HOWEVER, in
the case of Permitted Encumbrances set forth in clauses (iii), (vii), (viii) and
(ix) of the definition thereof, adequate cash reserves shall have been escrowed
in a manner reasonably satisfactory to the Owner Lessor; PROVIDED, FURTHER, that
nothing in this SECTION 5.2(E) shall limit the obligations of the Facility
Lessee under SECTION 10.1 of the Participation Agreement;

                  (f) any Component in existence on the Date of Return shall
be in the same condition as required under SECTION 7.2;

                  (g) the Facility Lessee, or an Affiliate thereof, shall enter
into an agreement or other arrangements reasonably acceptable to the Owner
Lessor, which arrangements, however, shall not be a condition precedent to the
return of the Undivided

                                       10
<Page>

Interest (the "SUPPORT ARRANGEMENTS") to provide the Owner Lessor with the
Support Services; PROVIDED, that the Facility Lessee, or its Affiliate, as the
case may be, shall be bound to provide Support Services only to the extent the
Facility Lessee or any domestic, unregulated Affiliate thereof is capable of
providing such services and is either in the business of providing such Support
Services to others or performs such Support Services on its own behalf, and only
to the extent that such services are necessary for the operation of the Facility
and cannot commercially reasonably and timely be obtained by the Owner Lessor or
its Affiliates from third parties. It is the intent of the parties hereto that
the Support Arrangements, together with the Facility Site Lease, and mutually
agreed easements and rights of way, if required, will provide all rights,
including reasonable access to the Facility and the Facility Site, that are
necessary and appropriate for the Owner Lessor (or any transferee or designee
thereof) to own and operate the Facility, and transmit power generated thereby,
during and after the expiration of this Facility Lease in the same manner as
operated and transmitted by the Facility Lessee during the Facility Lease Term
(assuming such operation and transmission was in accordance with the Facility
Site Lease and the other Operative Documents). Support Arrangements shall
provide for the provision of Support Services from and after the expiration of
this Facility Lease, and will provide for fair market value compensation from
time to time to be paid to the Facility Lessee, or an Affiliate thereof, for the
performance of such Support Services, periodically in advance on no more than a
monthly basis and no less than an annual basis, for such rights and the
performance of other services, and all such arrangements shall terminate upon
expiration or early termination of the Facility Site Lease or at the Owner
Lessor's option. Within 180 days after the expiration or termination of this
Facility Lease, the Owner Lessor shall notify the Facility Lessee of the
material elements of the Support Services that the Owner Lessor desires the
Facility Lessee, or its Affiliate, to perform. Following such notice, the
Facility Lessee and the Owner Lessor shall negotiate in good faith the terms of
the fair market value, performance standards, compensation and other terms of
such specified Support Services, including the circumstances under which the
Facility Lessee and its Affiliates shall be released from any further obligation
to provide such Support Services, and enter into contracts for the performance
of the Support Services upon any such negotiated terms, PROVIDED, HOWEVER, that
if the notice referenced in the preceding sentence is given by the Owner Lessor
at any time up to 60 days prior to the Date of Return, the Owner Lessor and the
Facility Lessee shall use reasonable efforts to cause such contracts to be
executed no later than the Date of Return; PROVIDED, FURTHER, that in the event
such contracts shall not have been executed prior to the Date of Return, from
the period beginning on such Date of Return and ending on the date on which such
contracts are executed, the Facility Lessee shall provide to the Owner Lessor,
at the then prevailing rate being charged for the same or similar services in
the power generation industry, such specified Support Services as are necessary
to enable the Owner Lessor to operate, maintain and repair the Facility in
accordance with Prudent Industry Practice and the Facility Lease and in
compliance with applicable Requirements of Law. The Facility Lessee shall also,
subject to obtaining any required third party consents, assign to the Owner
Lessor upon termination of this Facility Lease any support or similar agreements
to the extent relating to the Facility it has with third parties.

                                       11
<Page>

                  (h) the Facility Lessee shall provide to the Owner Lessor and
the Owner Participant a Phase I Environmental Survey of the Facility and the
Facility Site and, if as a result of such survey, facts are revealed that would
reasonably necessitate a Phase II Environmental Survey, a Phase II Environmental
Survey, as to the presence or absence of Environmental Conditions (and
compliance or non-compliance with applicable Environmental Laws), not later than
12 months prior to the Date of Return or, in connection with a return other than
pursuant to SECTION 5.1, not later than the date such Undivided Interest is
returned, such surveys to be prepared by a reputable and nationally recognized
environmental consulting firm (selected by the Facility Lessee and reasonably
acceptable to the Owner Participant) and to be in form and scope reasonably
satisfactory to the Owner Participant. The cost and expense of preparing and
providing such surveys shall be for the account of the Facility Lessee. If, as a
result of either such environmental survey, any action (including, any cleaning,
investigation, abatement, correction, removal or remediation) is required in
order that the Facility and the Facility Site are in compliance with applicable
Environmental Laws and the Return Conditions, the Facility Lessee shall, at its
own expense, within 90 days of the Owner Lessor having received such
environmental survey, (a) provide the Owner Participant and, so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture shall not have
been discharged, the Security Agent with a plan, reasonably satisfactory to the
Owner Participant and/or the Security Agent, designed to ensure that the
Facility and the Facility Site will be brought into compliance with applicable
Environmental Laws, and all material Environmental Conditions recommended for
correction in such survey will be corrected as promptly as is reasonably
practicable and without materially adversely affecting the continued operation
of the Facility. The actions referred to in this SECTION 5.2(H) shall be
completed prior to the expiration of the Basic Lease Term or any then existing
Renewal Lease Term or early termination thereof, as applicable, in compliance
with Environmental Laws other than immaterial violations that do not involve any
(1) material risk of foreclosure, sale, forfeiture or loss of, or imposition of
a Lien (other than Liens permitted pursuant to SECTION 5.2(E)) on the Facility,
the Undivided Interest or the Facility Site or the impairment of the use,
operation or maintenance of the Facility or the Facility Site in any material
respect, (2) the risk of criminal liability being incurred by the Owner Lessor,
the Owner Participant or the OP Guarantor or (3) a material risk of any material
adverse effect on the interest of the Owner Lessor, the Owner Participant or the
OP Guarantor; PROVIDED, HOWEVER, if any such action cannot reasonably be
completed prior to the expiration or early termination of such Lease Term, and
if continued operation of the Facility could not reasonably be expected to
result in strict liability being imposed upon the Owner Lessor, the Owner
Participant, the OP Guarantor or the Facility Lessee, then the Facility Lessee
shall complete such action as promptly thereafter as is reasonably practicable
and shall provide financial assurance in the form of a letter of credit or
equivalent collateral to the Owner Lessor and the Owner Participant, reasonably
satisfactory to each such Person, during the period of such action following the
end of such Lease Term and provided, further, that any such action shall be
completed no later than twelve (12) months after the Date of Return. Neither the
provision of the surveys contemplated by this SECTION 5.2(H), nor any other
provision of this SECTION 5.2(H), shall alter the obligations of any party to
the Operative Documents, including those set forth in SECTIONS 5.4(III) and 10.1
of the Participation Agreement. The obligations of the Facility

                                       12
<Page>

Lessee set forth in this SECTION 5.2(H) shall survive the termination of this
Facility Lease and the expiration of the applicable Facility Lease Term;

                  (i) the Facility shall have at least the capability and the
functional ability to generate electricity, on a continuous basis in normal
commercial operating conditions, substantially at the ratings for which it was
designed after taking into account normal performance degradation as a function
of (a) time and (b) all Required Improvements to the Facility made in accordance
with this Facility Lease; and

                  (j) at the Owner Lessor's request, a nationally recognized
independent engineer (selected by the Facility Lessee and reasonably acceptable
to the Owner Participant) shall provide a certificate certifying that the
Facility is in compliance with the Return Conditions.

                  There shall be no other return conditions or requirements
other than the Return Conditions set forth in this SECTION 5.2.

         SECTION 5.3 EXPENSES. Except as provided in SECTION 5.2(D) and 5.2(G),
the Facility Lessee agrees to pay or reimburse or to cause to be paid or
reimbursed, on an After-Tax Basis, on demand, all costs and expenses incurred in
connection with any return contemplated by this SECTION 5.

SECTION 6 LIENS

                  The Facility Lessee hereby covenants that it will not directly
or indirectly create, incur, assume or suffer to exist any Lien or other
encumbrance on or with respect to the Undivided Interest, the Facility, the
Facility Site, any Component, any Project Document, or on any Operative Document
or on the Owner Lessor's or the Owner Participant's interest in or under any
Operative Document, except Permitted Encumbrances. The Facility Lessee shall
promptly notify the Owner Lessor of the imposition of any such Lien of which the
Facility Lessee has Actual Knowledge and shall promptly, at its own expense,
take such action as may be necessary to fully discharge or release any such Lien
(except for Permitted Encumbrances). The Facility Lessee shall defend the Owner
Lessor from and against all claims to the Owner Lessor's title to the Undivided
Interest or any portion thereof.

SECTION 7 MAINTENANCE; REPLACEMENTS OF COMPONENTS

         SECTION 7.1 MAINTENANCE. The Facility Lessee, at its own cost and
expense, will (i) cause the Facility to be maintained in as good condition,
repair and working order as when delivered, ordinary wear and tear excepted, and
in any event, in all material respects (a) no less favorably as compared to
other facilities of a similar type owned or operated by the Facility Lessee (or
any of its domestic unregulated Affiliates), solely as a result of the status of
the Facility as a leased facility as opposed to an owned facility, (b) in
accordance with Prudent Industry Practice, (c) in compliance with all
Requirements of Law, including without limitation all applicable Environmental
Laws and safety laws and FERC, unless such noncompliance could not reasonably be
expected to result in a Material Adverse Effect or involve any (1) material risk
of foreclosure, sale, forfeiture or

                                       13
<Page>

loss of, or imposition of a Lien (other than a Permitted Encumbrance) on, the
Facility, the Undivided Interest or the Facility Site or the impairment of the
use, operation or maintenance of the Facility or the Facility Site in any
material respect, (2) risk of criminal or material civil liability being
incurred by the Owner Lessor, the Owner Participant or the OP Guarantor, or (so
long as the Lessor Notes are outstanding and the Lien of the Lease Indenture has
not been discharged) the Security Agent, any Lender or the Bondholder Trustee or
any of their respective Affiliates, or (3) material risk of any material adverse
effect on the interests of the Owner Lessor, the Owner Participant or the OP
Guarantor, or (so long as the Lessor Notes are outstanding and the Lien of the
Lease Indenture has not been discharged) the Security Agent, any Lender or the
Bondholder Trustee or any of their respective Affiliates (including, without
limitation, subjecting any such Person to regulation as a public utility under
any Requirement of Law), and (d) in accordance with the terms of all insurance
policies required to be maintained pursuant to SECTION 11 and (ii) cause to be
made all repairs, renewals, replacements, betterments and improvements to the
Facility, all as in the reasonable judgment of the Facility Lessee may be
necessary so that the Facility may be operated (x) in compliance with all
Requirements of Law, unless such noncompliance could not reasonably be expected
to result in a Material Adverse Effect, (y) in accordance with the Operative
Documents and (z) to the extent commercially reasonable, consistent with the
estimated remaining economic useful life of the Facility as set forth in the
Closing Appraisal (it being understood and agreed that the timing of such
repairs, renewals, replacements, betterments and improvements required under
clause (z) of this SECTION 7.1 shall be in the sole discretion of the Facility
Lessee).

         SECTION 7.2 REPLACEMENT OF COMPONENTS. In the ordinary course of
maintenance, service, repair or testing of the Facility or any Component, the
Facility Lessee, at its own cost and expense, may remove or cause or permit to
be removed from the Facility any Component; PROVIDED, HOWEVER, that the Facility
Lessee shall (a) cause any such Component to be replaced as soon as commercially
practicable by a replacement Component which shall be free and clear of all
Liens (other than Permitted Encumbrances) and which shall be in as good an
operating condition as and shall have a current and residual value, remaining
economic useful life and utility at least equal to that of the Component
replaced, assuming such replaced Component was maintained in accordance with the
terms of this Facility Lease, and (b) cause such replacement to be performed in
a manner that does not diminish the current value, residual value, utility or
remaining economic useful life of the Facility by more than a de minimis amount
(as measured immediately prior to such replacement, assuming the Facility is, at
such time, in the condition required by the terms of this Facility Lease) or
cause the Facility to become "limited use property" within the meaning of Rev.
Proc. 2001-28, 2001-19 IRB 1156 or Rev. Proc. 2001-29, 2001-19 IRB 1160 (each
such replacement Component being herein referred to as a "REPLACEMENT
COMPONENT"). An undivided interest equal to the Owner Lessor's Percentage in
each Component at any time removed from the Facility shall remain subject to
this Facility Lease, wherever located, until such time as such Component shall
be replaced by a Replacement Component which has been incorporated in the
Facility and which meets the requirements for Replacement Components specified
above. Immediately upon any Replacement Component becoming incorporated in the
Facility, without further act (and at no cost to the Owner Lessor and with no
adjustment

                                       14
<Page>

to the Purchase Price, Basic Lease Rent, Renewal Rent, Proportional Rent,
Allocated Rent, Lessor Section 467 Loan Balance, Lessee Section 467 Loan
Balance, Lessor Section 467 Interest, Lessee Section 467 Interest or Termination
Values), (i) the replaced Component shall no longer be subject to this Facility
Lease, (ii) title to the Owner Lessor's undivided interest equal to the Owner
Lessor's Percentage in the removed Component shall thereupon vest in the
Facility Lessee or such other Person as shall be designated by the Facility
Lessee, free and clear of all rights of the Owner Lessor and the Lease Indenture
Trustee, and (iii) title to an undivided interest equal to the Owner Lessor's
Percentage in the Replacement Component shall thereupon vest with the Owner
Lessor and such undivided interest shall (a) become subject to this Facility
Lease and, so long as the Lessor Notes are outstanding, the Lien of the Lease
Indenture, and (b) be deemed a part of the Facility and the Undivided Interest
for all purposes of this Facility Lease. Notwithstanding anything in this
SECTION 7.2 to the contrary, if the Facility Lessee has determined that any
part, Component or portion of the Facility is surplus or obsolete, the Facility
Lessee shall have the right to remove such part, Component or portion of the
Facility without replacing it as long as such removal would not diminish the
current value, residual value, utility or remaining economic useful life of the
Facility or the Undivided Interest by more than a de minimis amount below the
then current or residual value, the remaining economic useful life or the
utility thereof (as measured immediately prior to such removal, assuming the
Facility is, at such time, in the condition required by the terms of this
Facility Lease) or cause the Facility to become "limited use property" within
the meaning of Rev. Proc. 2001-28, 2001-19 IRB 1156 or Rev. Proc. 2001-29,
2001-19 IRB 1160.

         SECTION 7.3 ENVIRONMENTAL MATTERS. The Facility Lessee will, at its own
expense:

                  (a) comply with all Environmental Laws applicable to the
Facility or the Facility Site, except in the case of (i) instances of
non-compliance that could not reasonably be expected to have a Material
Adverse Effect or involve any (1) material risk of foreclosure, sale,
forfeiture or loss of, or imposition of a Lien (other than a Permitted
Encumbrance) on, the Facility, the Undivided Interest or the Facility Site or
the impairment of the use, operation or maintenance of the Facility or the
Facility Site in any material respect, (2) risk of criminal or material civil
liability being incurred by the Owner Lessor, the Owner Participant or the OP
Guarantor, or (so long as the Lessor Notes are outstanding and the Lien of
the Lease Indenture has not been discharged) the Security Agent, any Lender
or the Bondholder Trustee or any of their respective Affiliates, or (3)
material risk of any material adverse effect on the interests of the Owner
Lessor, the Owner Participant or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Security Agent, any Lender or the Bondholder Trustee or any
of their respective Affiliates (including, without limitation, subjecting any
such Person to regulation as a public utility under any Requirement of Law);

                  (b) obtain and maintain all necessary Governmental Approvals
required under any applicable Environmental Law in connection with the use,
operation and maintenance of the Facility and the Facility Site and operate the
Facility in compliance with such Governmental Approvals, except instances of
non-compliance that could not

                                       15
<Page>

reasonably be expected to have a Material Adverse Effect or involve any (1)
material risk of foreclosure, sale, forfeiture or loss of, or imposition of a
Lien (other than a Permitted Encumbrance) on, the Facility, the Undivided
Interest or the Facility Site or the impairment of the use, operation or
maintenance of the Facility or the Facility Site in any material respect, (2)
risk of criminal or material civil liability being incurred by the Owner Lessor,
the Owner Participant or the OP Guarantor, or (so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged) the
Security Agent, any Lender or the Bondholder Trustee or any of their respective
Affiliates, or (3) material risk of any material adverse effect on the interests
of the Owner Lessor, the Owner Participant or the OP Guarantor, or (so long as
the Lessor Notes are outstanding and the Lien of the Lease Indenture has not
been discharged) the Security Agent, any Lender or the Bondholder Trustee or any
of their respective Affiliates (including, without limitation, subjecting any
such Person to regulation as a public utility under any Requirement of Law);

                  (c) conduct and complete, at no cost and expense to the Owner
Participant or the Owner Lessor, any investigation, study, sampling, monitoring
and testing and undertake any cleanup, removal, remediation, correction,
mitigation, response or other action necessary or advisable to abate, correct,
remove and clean up any Environmental Condition at the Facility or the Facility
Site, to the extent required by and in material compliance with applicable
Environmental Laws except instances of non-compliance that could not reasonably
be expected to have a Material Adverse Effect or involve any (1) material risk
of foreclosure, sale, forfeiture or loss of, or imposition of a Lien (other than
a Permitted Encumbrance) on, the Facility, the Undivided Interest or the
Facility Site or the impairment of the use, operation or maintenance of the
Facility or the Facility Site in any material respect, (2) risk of criminal or
material civil liability being incurred by the Owner Lessor, the Owner
Participant or the OP Guarantor, or (so long as the Lessor Notes are outstanding
and the Lien of the Lease Indenture has not been discharged) the Security Agent,
any Lender or the Bondholder Trustee or any of their respective Affiliates, or
(3) material risk of any material adverse effect on the interests of the Owner
Lessor, the Owner Participant or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Security Agent, any Lender or the Bondholder Trustee or any of
their respective Affiliates (including, without limitation, subjecting any such
Person to regulation as a public utility under any Requirement of Law); and

                  (d) as soon as possible and in any event within thirty
Business Days of the Facility Lessee obtaining Actual Knowledge thereof, provide
the Owner Lessor with written notice of any pending or threatened material
Environmental Claim involving the Facility or the Facility Site that could be
expected to have a Material Adverse Effect on the Facility Lessee or involve any
(1) material risk of foreclosure, sale, forfeiture or loss of, or imposition of
a Lien (other than a Permitted Encumbrance) on, the Facility, the Undivided
Interest or the Facility Site or the impairment of the use, operation or
maintenance of the Facility or the Facility Site in any material respect, (2)
risk of criminal or material civil liability being incurred by the Owner Lessor,
the Owner Participant or the OP Guarantor, or (so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged) the
Security Agent, any Lender or the

                                       16
<Page>

Bondholder Trustee or any of their respective Affiliates, or (3) material risk
of any material adverse effect on the interests of the Owner Lessor, the Owner
Participant or the OP Guarantor, or (so long as the Lessor Notes are outstanding
and the Lien of the Lease Indenture has not been discharged) the Security Agent,
any Lender or the Bondholder Trustee or any of their respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any Requirement of Law).

SECTION 8 IMPROVEMENTS

         SECTION 8.1 REQUIRED IMPROVEMENTS. The Facility Lessee, at its own cost
and expense, and without the consent of the Lease Indenture Trustee, the
Security Agent, the Lender, the Bondholder Trustee, the Owner Lessor or Owner
Participant, shall make or cause to be made any Improvements as are required (x)
by Requirements of Law or by any Governmental Authority having jurisdiction
thereon, (y) by any insurance policy required to be maintained by the Facility
Lessee under any Operative Document or (z) by the terms of the Operative
Documents (each, a "REQUIRED IMPROVEMENT"); PROVIDED, HOWEVER, that the Facility
Lessee may, in good faith and by appropriate proceedings, diligently contest the
validity or application of any Requirement of Law in any reasonable manner which
does not involve any (1) material risk of foreclosure, sale, forfeiture or loss
of, or imposition of a Lien (other than a Permitted Encumbrance) on, the
Facility, the Undivided Interest or the Facility Site or the impairment of the
use, operation or maintenance of the Facility or the Facility Site in any
material respect, (2) risk of criminal liability being incurred by the Owner
Lessor, the Owner Participant or the OP Guarantor, or (so long as the Lessor
Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Security Agent, any Lender or the Bondholder Trustee or any of
their respective Affiliates, or (3) material risk of any material adverse effect
on the Owner Lessor, the Owner Participant or the OP Guarantor, or (so long as
the Lessor Notes are outstanding and the Lien of the Lease Indenture has not
been discharged) the Security Agent or any of its respective Affiliates
(including, without limitation, subjecting any such Person to regulation as a
public utility under any Requirement of Law); PROVIDED FURTHER, that no such
contest may extend beyond the date that is 180 days prior to the expiration or
earlier termination of this Facility Lease.

         SECTION 8.2 OPTIONAL IMPROVEMENTS. So long as no Material Lease Default
or Lease Event of Default shall have occurred and be continuing, the Facility
Lessee at any time may, at its own cost and expense, and without the consent of
the Lease Indenture Trustee, the Lender, the Security Agent, the Bondholder
Trustee, the Owner Lessor or Owner Participant make, cause to be made, or permit
to be made any Improvement as the Facility Lessee considers desirable in the
proper conduct of its business (any such non-Required Improvement being referred
to as an "OPTIONAL Improvement"); provided that the Facility Lessee shall
prevent any Optional Improvement from being made that would decrease the then
current value, residual value, utility or remaining economic useful life of the
Facility by more than a de minimis amount below the then current or residual
value, the remaining economic useful life or the utility thereof (as measured
immediately prior to the making of such Optional Improvement, assuming the
Facility is, at such time, in the condition required by the terms of this
Facility Lease), or cause the Facility to become "limited use property" within
the meaning of Rev. Proc. 2001-28, 2001-19 IRB

                                       17
<Page>

1156 or Rev. Proc. 2001-29, 2001-19 IRB 1160.

         SECTION 8.3 TITLE TO IMPROVEMENTS. Title to an undivided interest equal
to the Owner Lessor's Percentage in (i) all Required Improvements, (ii) all
Non-Severable Improvements and (iii) all other Improvements which are financed
by the Owner Lessor by an Additional Equity Investment or a Supplemental
Financing pursuant to SECTION 12.1 of the Participation Agreement shall (at no
cost to the Owner Lessor, the Owner Participant or the OP Guarantor and with no
adjustment to the Purchase Price, or except as expressly provided herein, Basic
Lease Rent, Renewal Rent, Proportional Rent, Allocated Rent, Lessor Section 467
Loan Balance, Lessee Section 467 Loan Balance, Lessor Section 467 Interest,
Lessee Section 467 Interest or Termination Values) automatically vest in the
Owner Lessor upon being affixed to or incorporated into the Facility, and such
undivided interest shall immediately (a) become subject to this Facility Lease
and (b) be deemed part of the Undivided Interest for all purposes of this
Facility Lease. The Facility Lessee shall, at its own cost and expense, take
such steps as the Owner Lessor may reasonably require from time to time to
confirm that title to such Improvement has vested in the Owner Lessor and is
subject to this Facility Lease. No interest in any Optional Improvement which is
a Severable Improvement (other than Severable Improvements which are financed by
the Owner Lessor by an Additional Equity Investment or a Supplemental Financing
pursuant to SECTION 12.1 of the Participation Agreement) shall vest in the Owner
Lessor or become subject to this Facility Lease; PROVIDED, HOWEVER, that if the
Facility Lessee shall, at its cost and expense, cause such Optional Improvements
which are Severable Improvements to be made to the Facility, the Owner Lessor
shall have the right, prior to the return of the Undivided Interest to the Owner
Lessor hereunder, to purchase an undivided interest equal to the Owner Lessor's
Percentage in any such Optional Improvements which are Severable Improvements.
The purchase price for such undivided interest shall be the then Fair Market
Sales Value of such undivided interest. If the Owner Lessor does not elect to
purchase such Optional Improvements which are Severable Improvements, the
Facility Lessee may, and at the request of the Owner Lessor shall, remove such
Improvements at the end of the Facility Lease Term. The Facility Lessee shall
repair any damage to the Facility and the Facility Site caused by such removal,
all at the Facility Lessee's sole cost and expense; provided that such removal
shall not (i) materially diminish the value, remaining economic useful life or
utility of the Facility as a whole (assuming the Facility is, at such time, in
the condition required by the terms of this Facility Lease) or (ii) cause the
Facility to become "limited use property" within the meaning of Rev. Proc.
2001-28, 2001-19 IRB 1156 or Rev. Proc. 2001-29, 2001-19 IRB 1160. If the
Facility Lessee shall have failed to remove any Optional Improvement which is a
Severable Improvement as above provided prior to the return of the Undivided
Interest pursuant to SECTION 5.1, title to an undivided interest equal to the
Owner Lessor's Percentage in such Optional Improvement shall (at no cost to the
Owner Lessor, the Owner Participant or the OP Guarantor) vest in the Owner
Lessor.

         SECTION 8.4 FINANCING OF IMPROVEMENTS. Subject to SECTION 6.7 of the
Participation Agreement, the Facility Lessee shall at all times have the right
to finance Improvements other than through this Facility Lease. The Facility
Lessee may elect to finance Improvements to the Facility through this Facility
Lease in accordance with

                                       18
<Page>

SECTION 12.1 of the Participation Agreement.

SECTION 9 NET LEASE

                  This Facility Lease is a "net lease." The Facility Lessee's
obligation to make all Rent payments payable hereunder (and all amounts,
including Termination Value, following termination of this Facility Lease) shall
be absolute and unconditional under any and all circumstances, and shall not be
terminated, extinguished, diminished, lost or otherwise impaired by any
circumstance of any character, including by (i) any setoff, counterclaim,
recoupment, defense or other right which the Facility Lessee may have against
the Owner Lessor, the Owner Participant, the OP Guarantor, the Lease Indenture
Trustee, the Security Agent, the Lender, the Bondholder Trustee or any other
Person, including, without limitation, any claim as a result of any breach by
any of said parties of any covenant or provision in this Facility Lease or any
other Operative Document, (ii) any lack or invalidity of title or any defect in
the title, condition, design, operation, merchantability or fitness for use of
the Facility or any Component, or any eviction by paramount title or otherwise,
or any unavailability of the Facility, the Facility Site, any Component, any
other portion of the Undivided Interest, or any part thereof, (iii) any loss or
destruction of, or damage to, the Facility or any Component or interruption or
cessation in the use or possession thereof or any part thereof by the Facility
Lessee for any reason whatsoever and of whatever duration, (iv) the
condemnation, requisitioning, expropriation, seizure or other taking of title to
or use of the Facility, the Facility Site, any Component, or any other portion
of the Undivided Interest by any Governmental Authority or otherwise, (v) the
invalidity or unenforceability or lack of due authorization or other infirmity
of this Facility Lease or any other Operative Document, (vi) the lack of right,
power or authority of the Owner Lessor to enter into this Facility Lease or any
other Operative Document, (vii) any ineligibility of the Facility or any
Component for any particular use, whether or not due to any failure of the
Facility Lessee to comply with any Requirement of Law, (viii) any Event of Force
Majeure or any frustration of purpose, (ix) any legal requirement similar or
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding, (x) any insolvency, bankruptcy, reorganization or similar
proceeding by or against the Facility Lessee or any other Person, (xi) any Lien
of any Person with respect to the Facility, the Facility Site, any Component,
any other portion of the Undivided Interest or any part thereof, (xii) any
prohibition, limitation or restriction of the Facility Lessee's use of all or
any part of the Facility or any portion thereof or any interest therein or the
interference with such use by any Person, (xiii) the termination or loss of the
Facility or any portion thereof, any other lease, sublease, right-of-way,
easement or other interest in personal or real property upon or to which any
portion of the Facility is located, attached or appurtenant or in connection
with which any portion of the Facility is used or otherwise affects or may
affect the Facility or any right thereto, (xiv) the existence of any Lien with
respect to the Facility or any act or circumstance that may constitute an
eviction or constructive eviction, failure of consideration or commercial
frustration of purpose, (xv) any breach, default or misrepresentation by the
Owner Lessor or any other Person under the Facility Lease or any of the other
Operative Documents, PROVIDED THAT the Facility Lessee reserves its rights with
respect to any breach, default or misrepresentation by the Owner Lessor or any
other Person or (xvi) any other cause, whether similar or dissimilar to the
foregoing,

                                       19
<Page>

any present or future law notwithstanding, except as expressly set forth herein
or in any other Operative Document, it being the intention of the parties hereto
that Allocated Rent shall continue to accrue and all Basic Lease Rent, Renewal
Rent and Supplemental Lease Rent (and all amounts, including Termination Value,
in lieu of Basic Lease Rent, following termination of this Facility Lease)
payable by the Facility Lessee hereunder shall continue to be payable in all
events in the manner and at times provided for herein. Such Allocated Rent,
Basic Lease Rent, Renewal Rent and Supplemental Lease Rent (and all amounts,
including Termination Value, in lieu of Basic Lease Rent, following termination
of this Facility Lease) shall not be subject to any abatement and the accrual
and payment thereof shall not be subject to any setoff or reduction for any
reason whatsoever, including any present or future claims of the Facility Lessee
or any other Person against the Owner Lessor or any other Person under this
Facility Lease or otherwise. To the extent permitted by Requirements of Law, the
Facility Lessee hereby waives any and all rights which it may now have or which
at any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender this Facility Lease with respect to the
Undivided Interest except in accordance with SECTIONS 10, 13, or 14. If for any
reason whatsoever this Facility Lease shall be terminated in whole or in part by
operation of law or otherwise, except as specifically provided herein, the
Facility Lessee nonetheless agrees, to the extent permitted by Requirements of
Law, (x) that Allocated Rent shall continue to accrue and (y) to pay to the
Owner Lessor an amount equal to each installment of Basic Lease Rent, Renewal
Rent and all Supplemental Lease Rent due and owing, at the time such payment
would have become due and payable in accordance with the terms hereof had this
Facility Lease not been so terminated. Nothing contained herein shall be
construed to waive any claim which the Facility Lessee might have under any of
the Operative Documents or otherwise or to limit the right of the Facility
Lessee to make any claim it might have against the Owner Lessor or any other
Person or to pursue such claim in such manner as the Facility Lessee shall deem
appropriate.

SECTION 10 EVENTS OF LOSS

         SECTION 10.1 OCCURRENCE OF EVENTS OF LOSS.

                  (a) Each of the Owner Participant and the Owner Lessor will
promptly notify the Facility Lessee of any event of which it is aware that would
result in a Regulatory Event of Loss; PROVIDED, HOWEVER, that the failure to
provide such notice shall not result in any liability with respect to the Owner
Participant or the Owner Lessor and shall not in any way relieve the Facility
Lessee of any of its obligations under this Facility Lease, including the
obligations under this SECTION 10. The Facility Lessee shall promptly notify
each other Lease Financing Party of any Event of Loss.

                  (b) If an Event of Loss described in clauses (i), (ii) or
(iii) of the definition of Event of Loss shall occur, then the Facility Lessee
shall rebuild or replace the Facility in accordance with this Facility Lease and
the other Operative Documents and subject to the Rebuild Conditions; PROVIDED
THAT in the event that any such Event of Loss occurs after the last day upon
which the Facility Lessee may exercise a renewal right under this Facility Lease
pursuant to SECTION 15.1, (i) the Lease Term shall be automatically

                                       20
<Page>

extended for such period of time as is reasonably necessary for the Facility
Lessee to complete any rebuilding or replacement required hereunder, (ii) the
Facility Lessee shall pay as Renewal Rent during any such extended term an
amount, payable monthly in arrears, equal to the average monthly Rent paid
during the Basic Lease Term or Renewal Term, as the case may be, then being
extended, and (iii) the Termination Value during such extended term shall be the
Termination Value as of the end of the Facility Lease Term without giving effect
to any such extension. The Facility Lessee shall have the right, in lieu of
rebuilding or replacing the Facility, to terminate this Facility Lease and
purchase the Undivided Interest from the Owner Lessor by paying to the Owner
Lessor an amount equal to the Termination Value and paying to the parties
entitled thereto all other amounts payable pursuant to SECTION 10.2; PROVIDED
THAT the Facility Lessee shall give irrevocable written notice of its election
to terminate the Facility Lease not later than six (6) months after such Event
of Loss.

         (c) In the event of a Regulatory Event of Loss or an Event of Loss
described in clause (v) of the definition of Event of Loss, the Facility Lessee
shall use commercially reasonable efforts to obtain bids from third parties
unaffiliated with the Facility Lessee and sell the Owner Lessor's interest
following such Event of Loss, subject to SECTION 10.2(B) hereof.

         SECTION 10.2 PAYMENT UPON TERMINATION; SPECIAL LESSEE TRANSFER PAYMENT
UPON TERMINATION; SPECIAL LESSEE TRANSFER

                  (a) If (A) the Facility Lessee shall elect (or be deemed to
have elected) to terminate this Facility Lease pursuant to SECTION 10.1(B)
following an Event of Loss described in clause (i), (ii) or (iii) of the
definition of Event of Loss, then on the next Termination Date following the
Facility Lessee's election not to rebuild or replace the Facility and (B) the
Owner Lessor tenders all of its right, title and interest in the Facility to the
Facility Lessee, the Facility Lessee shall pay to the Owner Lessor, or so long
as the Lessor Notes are outstanding and the Lien of the Lease Indenture has not
been discharged, the Security Agent, the sum of (a) the Termination Value
determined as of the relevant Termination Value Payment Date, plus (b) on an
After-Tax Basis, all reasonable documented out-of-pocket costs and expenses
incurred in connection with the Event of Loss by the Owner Lessor, the Owner
Participant, and so long as the Lessor Notes are outstanding and the Lien of the
Lease Indenture has not been discharged, the Security Agent, the Lease Indenture
Trustee, the Lender and the Bondholder Trustee plus (c) any other Rent (other
than Basic Lease Rent or Renewal Rent payable after the Termination Value
Payment Date) due and unpaid on the Termination Value Payment Date and any
amount due and unpaid or accrued and unpaid on the Termination Value Payment
Date under any other Operative Document plus (d) any Lessee Section 467 Loan
Balance (such sum, the "EVENT OF LOSS PAYMENT"). Upon payment of the Event of
Loss Payment (i) the Owner Lessor shall redeem the Lessor Notes together with
all other amounts due to the Security Agent including the Lessor Section 467
Loan Balance, if any, determined as of such date; (ii) the Bondholder Trustee
shall use such funds to repay the Lease Debt; (iii) this Facility Lease shall
terminate and the Facility Lessee shall cease to have any liability to the Owner
Lessor or the Owner Participant other than for obligations surviving pursuant to
the express terms of the Operative Documents and (iv)

                                       21
<Page>

all of the Owner Lessor's right, title and interest in and to the Facility shall
be transferred to the Facility Lessee, on an "as is," "where is" and "with all
faults" basis, without warranty but free of Lessor Liens and (v) Owner Lessor
shall repay to the Facility Lessee the Lessor Section 467 Loan Balance, if any,
determined as of the relevant Termination Value Payment Date (the obligations to
make such payments shall be subject to the provisions of Section 3.2(d)).

                  (b) In the case of Regulatory Event of Loss or an Event of
Loss described in clause (v) of the definition of Event of Loss, if at least one
cash bid is received on or prior to the next Termination Date occurring at least
three months after the occurrence of such Regulatory Event of Loss or an Event
of Loss described in clause (v) of the definition of Event of Loss, this
Facility Lease shall terminate on such Termination Date and the Owner Lessor
shall, subject to the Facility Lessee's right of first refusal, sell the
Undivided Interest in the Facility to the party submitting the highest cash bid
on an "as is", "where is" and "with all faults" basis, without representations
or warranties other than a warranty of the Owner Lessor as to the absence of
Owner Lessor Liens and a warranty of the Owner Participant as to the absence of
Owner Participant Liens, all of the proceeds of which will be for the account of
the Owner Lessor. The Facility Lessee shall pay to the Owner Lessor (i) the
amount, if any, by which the Termination Value determined as of the Termination
Date exceeds the sales price received by the Owner Lessor for the Facility (net
of the fees, commissions and costs of any broker engaged by the Facility Lessee
or any Affiliate thereof), plus (ii) on an After-Tax Basis all reasonable
documented out-of-pocket costs and expenses incurred in connection with the
Event of Loss by the Owner Lessor, the Owner Participant, and so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged, the Security Agent, the Lease Indenture Trustee, the Lender and the
Bondholder Trustee plus (iii) any other Rent (other than Basic Lease Rent or
Renewal Rent payable after the Termination Value Payment Date) due and unpaid on
the Termination Value Payment Date and any amount due and unpaid or accrued and
unpaid on the Termination Value Payment Date under any other Operative Document
plus (iv) Lessee Section 467 Loan Balance. If no cash bids are received by such
time or if any cash bids are received but no sale is consummated, the Facility
Lessee shall pay (x) Termination Value as of such Termination Date, plus (y) the
amounts described in clauses (ii) and (iii) above. In either case, upon payment
of such amounts, (a) Allocated Rent shall cease to accrue, this Facility Lease,
and the Facility Lessee's obligation to pay Basic Lease Rent or Renewal Lease
Rent hereunder, as the case may be, shall terminate, except for covenants that
survive pursuant to the express terms of any Operative Document and (c) the
Owner Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan
Balance, if any, determined as of the Termination Value Payment Date. The
obligation to make such payments shall be subject to the provisions of SECTION
3.2(D). In the case of a Regulatory Event of Loss, if shutting down the Facility
does not eliminate the burdensome regulation on the Owner Participant, the Owner
Lessor shall sell the Facility as scrap subject to the Facility Lessee's right
of first refusal; PROVIDED, HOWEVER, that if shutting down the Facility
eliminates such burdensome regulation, the Facility shall be shut down and the
Facility Lessee may, at its option,

                                       22
<Page>

continue marketing the Facility for up to an additional three months (the
"EXTENDED MARKETING PERIOD"). In the case of an Event of Loss defined in clause
(v) of the definition of Event of Loss, the Facility Lessee may, at its option,
continue remarketing the Facility during the Extended Marketing Period. If at
least one cash bid is received prior to the end of the Extended Marketing
Period, the Owner Lessor shall, subject to the Facility Lessee's right of first
refusal, sell the Undivided Interest in the Facility to the highest cash bidder
on an "as, is", "where is" and "with all faults" basis, without representations
or warranties other than a warranty of the Owner Lessor as to the absence of
Owner Lessor's Liens and a warranty of the Owner Participant as to the absence
of Owner Participant's Liens. The Facility Lessee shall pay on an After-Tax
Basis all reasonable, documented out-of-pocket costs and expenses of the Owner
Participant, the Owner Lessor, and so long as the Lessor Notes are outstanding
and the Lien of the Lease Indenture has not been terminated, the Security Agent,
the Lender and the Bondholder Trustee; the Owner Lessor shall pay the net cash
proceeds of the sale to the Facility Lessee to the extent of payments made by
the Facility Lessee under clauses (x) or (y) above. If there is no Extended
Marketing Period or no offers are received prior to the end of the Extended
Marketing Period, the Owner Lessor shall sell the Facility as scrap subject to
the Facility Lessee's right of first refusal.

                  (c) Any Requisition or property damage insurance proceeds
received in respect of an Event of Loss shall be used to pay, or to reimburse
the Facility Lessee for, the Event of Loss Payment. Requisition proceeds in
excess of the Event of Loss Payment shall be for the account of the Owner Lessor
and the Facility Lessee in accordance with their respective interests.

                  (d) Notwithstanding anything herein to the contrary, in the
event of a Regulatory Event of Loss or an Event of Loss described in clause (v)
of the definition of Event of Loss and in connection with the Facility Lessee's
purchase of the Undivided Interest in accordance with SECTION 10.1(B), the
Facility Lessee may, at its option, in lieu of paying Termination Value, assume
the Owner Lessor's obligations under the Lease Indenture and pay an amount equal
to the difference between the Termination Value and the outstanding principal
amount of the Lessor Notes assumed by the Facility Lessee, so long as all
payments required to be made pursuant to SECTION 10.3(D) have been made and no
Lease Event of Default or Material Lease Default shall have occurred and be
continuing after giving effect to such assumption. Alternatively, the Facility
Lessee may purchase the Owner Participant's interest in the Owner Lessor and
elect not to terminate this Facility Lease pursuant to SECTION 13.4. In
addition, on the Termination Value Payment Date, the Facility Lessee, in
addition to the Termination Value determined as of the relevant Termination
Value Payment Date, shall also pay (without duplication of any other amount paid
hereunder) on an After-Tax Basis to the Owner Lessor all reasonable documented
out-of-pocket costs and expenses incurred in connection with the Event of Loss
by the Owner Lessor, the Owner Participant, and so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged, the
Security Agent, the Lease Indenture Trustee, the Lender and the Bondholder
Trustee plus any other Rent (other than Basic Lease Rent or Renewal Rent payable
after the Termination Value Payment Date) due and unpaid on the Termination
Value Payment Date plus any Lessee Section 467 Loan Balance and any amount due
and unpaid or accrued and unpaid on the Termination Value Payment Date under any
other Operative Document, whereupon (other than in the case of a Special Lessee
Transfer) this Facility Lease shall terminate. Upon payment of such amounts due
under this paragraph

                                       23
<Page>

by the Facility Lessee, Allocated Rent shall cease to accrue and this Facility
Lease, and the Facility Lessee's obligation to pay Basic Lease Rent or Renewal
Lease Rent, as the case may be, shall terminate and the Owner Lessor shall pay
to the Facility Lessee the Lessor Section 467 Loan Balance, if any, determined
as of the Termination Value Payment Date. The obligation to make such payments
shall be subject to the provisions of SECTION 3.2(D).

         SECTION 10.3 APPLICATION OF PROCEEDS. Any payments with respect to the
Undivided Interest received at any time by the Owner Lessor or the Facility
Lessee from any Governmental Authority or from insurance proceeds as a result of
the occurrence of an Event of Loss shall be applied as follows:

                  (a) all such payments received at any time by the Facility
Lessee shall be promptly paid to the Owner Lessor or, so long as the Lessor
Notes are outstanding, to the Security Agent, for application pursuant to the
following provisions of this SECTION 10.3, except that, so long as no Material
Lease Default or Lease Event of Default shall have occurred and be continuing or
shall be created thereby (other than Material Lease Defaults and Lease Events of
Defaults arising as a result of such Event of Loss), the Facility Lessee may
retain any amounts that the Owner Lessor would at the time be obligated to pay
to the Facility Lessee as reimbursement pursuant to Section 10.3(B);

                  (b) so much of such payments as shall not exceed the Event of
Loss Payment required to be paid by the Facility Lessee pursuant to SECTION 10.2
shall be applied in reduction of the Facility Lessee's obligation to pay such
amount if not already paid by the Facility Lessee or, if already paid by the
Facility Lessee, shall, so long as no Material Lease Default or Lease Event of
Default shall have occurred and be continuing or shall be created thereby (other
than Material Lease Defaults and Lease Events of Defaults arising as a result of
such Event of Loss), be applied to reimburse the Facility Lessee for its payment
of such amount; and

                  (c) the balance, if any, of such payments remaining thereafter
shall be apportioned between the Owner Lessor and the Facility Lessee in
accordance with their respective interests.

         Notwithstanding the foregoing, if the Facility Lessee shall have
elected to rebuild or replace the Facility pursuant to SECTION 10.1(B), any
insurance proceeds received by the Owner Lessor, the Security Agent or the
Facility Lessee as a result of the occurrence of an Event of Loss described in
clause (i) or (ii) of the definition of Event of Loss shall be applied as
provided in SECTION 11.2.

                  (d) Notwithstanding anything to the contrary herein, upon the
occurrence of an Event of Loss described in clauses (i), (ii), (iii) or (v) of
the definition of Event of Loss or a Partial Event of Loss in connection with
which the Facility Lessee does not elect to rebuild or does not deliver the
Reinvestment Notice to the Owner Lessor, the Owner Participant and so long as
the Lessor Notes are outstanding and the Lien of the Lease Indenture has not
been discharged, the Security Agent, the Lender and the Bondholder Trustee,
within 45 days of the settlement of or payment of $5,000,000 or

                                       24
<Page>

more in respect of an Event of Loss described in clauses (i), (ii), (iii) or (v)
of the definition of Event of Loss or a Partial Event of Loss, then the Facility
Lessee shall pay to the Owner Lessor as Supplemental Rent an amount equal to the
Owner Lessor's Percentage of such payment to be applied pursuant to SECTION 4.8
of the Lease Indenture. Payment of any such Supplemental Rent shall not relieve
the Facility Lessee from any of its other obligations hereunder including its
obligations set forth in SECTION 10.6.

         SECTION 10.4 Rebuilding or Replacement. In connection with the Facility
Lessee's obligation to rebuild or replace the Facility pursuant to SECTION
10.1(B), the Facility Lessee shall have satisfied the conditions set forth in
clauses (a) through (g) below (collectively, the "REBUILD CONDITIONS"):

                  (a) delivery to the Owner Participant of either (i) an opinion
reasonably satisfactory to it from Owner Participant's Counsel to the effect
that such rebuilding or replacement should not result in any material
unindemnified incremental tax consequences to the Owner Participant, (ii) an
indemnity against such risk in form and substance reasonably satisfactory to the
Owner Participant from or guaranteed by an entity that meets the Minimum Credit
Rating or (iii) any other indemnity arrangement against such risks satisfactory
to the Owner Participant;

                  (b) delivery to the Owner Participant and, so long as the
Lessor Notes are outstanding, the Security Agent, the Lender and the Bondholder
Trustee (i) a report of the Engineering Consultant, or such other independent
engineer satisfactory to the Owner Participant and the Lease Indenture Trustee,
to the effect that the rebuilding or replacement of the Facility is
technologically feasible and economically viable and that it is reasonable to
expect that such rebuilding or replacement can be completed prior to the end of
the Facility Lease Term, including any Renewal Lease Term then in effect or
elected by the Facility Lessee (including any extension pursuant to SECTION
10.1(B), and (ii) a report of an appraiser selected by the Facility Lessee and
reasonably acceptable to the Owner Participant, to the effect that the Facility
will after completion of the rebuilding or replacement have at least the same
current value, residual value, utility and remaining economic useful life as the
Facility immediately prior to the Event of Loss (assuming the Facility was in
the condition required by the terms of this Facility Lease) and such rebuilding
or replacement will not result in the Facility being "limited use property"
within the meaning of Rev. Proc. 2001-28, 2001-19 I.R.B. 1156;

                  (c) delivery of a certificate from a responsible officer of
the Facility Lessee to the reasonable satisfaction of the Owner Participant and
the Lease Indenture Trustee that the Facility Lessee (i) has adequate financial
resources, from insurance proceeds or otherwise, to complete such rebuilding or
replacement and to perform its other obligations under the Operative Documents
including the payment of Basic Lease Rent or Renewal Rent, as the case may be,
that is projected to become due and payable while the Facility is being rebuilt
or replaced and (ii) reasonably expects to be capable of replacing or modifying
any project documents that must be replaced or modified in order to avoid a
Material Adverse Effect;

                                       25
<Page>

                  (d) commencement of such rebuilding or replacement as soon as
reasonably practicable and, in any event, within twelve (12) months of such
damage or destruction;

                  (e) not causing any material adverse accounting effect on the
Owner Participant;

                  (f) demonstration of the absence of any Material Lease Default
or Lease Event of Default (other than any Material Lease Default or Lease Event
of Default that would be cured by such rebuilding); and

                  (g) demonstration that all Governmental Approvals required in
connection with the work done or proposed to be done have been obtained or can
reasonably be expected to be obtained on or prior to the date required in
connection therewith

         SECTION 10.5 APPLICATION OF PAYMENTS NOT RELATING TO AN EVENT OF LOSS.
(a) In the event that during the Facility Lease Term title to, or the use of,
all or any portion of the Undivided Interest, the Facility or the Facility Site
is requisitioned or taken by or pursuant to a request of any Governmental
Authority under the power of eminent domain or otherwise for a period or in a
manner which does not constitute an Event of Loss, the Facility Lessee's
obligation to pay all installments of Basic Lease Rent or Renewal Rent, as
applicable, shall continue for the duration of such requisitioning or taking.
Subject to Section 10.3(d) hereof, the Facility Lessee shall be entitled to
receive and retain for its own account all sums payable for any such period by
such Governmental Authority as compensation for such requisition or taking of
possession; PROVIDED THAT if at the time of such payment a Material Lease
Default or a Lease Event of Default shall have occurred and be continuing, such
amounts shall be paid to and held by the Owner Lessor unless the Lessor Notes
are outstanding, in which case such amounts shall be paid to and held by the
Security Agent, as security for the obligations of the Facility Lessee under
this Facility Lease until such time as no Material Lease Default or Lease Event
of Default is continuing.

                  (b) Any insurance proceeds with respect to the Undivided
Interest received at any time by the Owner Lessor, the Security Agent or the
Facility Lessee under any of the insurance policies required to be maintained by
the Facility Lessee under SECTION 11 as a result of any damage to the Facility
or any part thereof which does not constitute an Event of Loss shall be applied
as follows: (i) in accordance with SECTION 11.7, and (ii) the balance, if any,
of such insurance proceeds remaining thereafter shall be paid to the Facility
Lessee.

         SECTION 10.6 PARTIAL CASUALTIES. If the Facility or any part thereof
shall suffer any destruction, damage, loss or theft not constituting an Event of
Loss ("PARTIAL EVENT OF LOSS"), the Facility Lessee shall rebuild or make such
repairs as are necessary (i) to restore the Facility to the current value,
residual value, utility and remaining economic useful life it had immediately
prior to such destruction, damage, loss or theft (assuming, for the purposes of
determining the current value, residual value, utility and remaining economic
useful life of the Facility, that no Severable Improvements that are not

                                       26
<Page>

Required Improvements or Improvements financed through this Facility Lease shall
have been made to the Facility during the Facility Lease Term and assuming the
Facility was in the condition and repair required to be maintained by the terms
of this Facility Lease) and (ii) to ensure that the Facility is maintained in
accordance with SECTIONS 7 and 8 hereof and that the Facility does not become
"limited use property" within the meaning of Rev. Proc. 2001-28, 2001-19 I.R.B.
1156 or Rev. Proc. 2001-29, 2001-19 I.R.B. 1160, PROVIDED HOWEVER, that in
connection with a Partial Event of Loss in respect of which the Facility Lessee
received a settlement of or payment of $5,000,000 or more, the Facility Lessee
shall deliver a Reinvestment Notice to the Owner Lessor, the Owner Participant,
the Lease Indenture Trustee, the Security Agent, the Lender and the Bondholder
Trustee within 45 days of the receipt of the proceeds in respect of such Partial
Event of Loss.

SECTION 11 INSURANCE

         SECTION 11.1 GENERAL. The Facility Lessee will comply with the
requirements set forth in Schedule 5.10 of the Participation Agreement.

         SECTION 11.2 APPLICATION OF INSURANCE PROCEEDS. (a) All insurance
proceeds exceeding $5,000,000 but less than $50,000,000 on account of any damage
to, or destruction of, the Facility or any part thereof (in each case less the
actual costs, fees and expenses incurred in the collection thereof), shall,
subject to the provisions of SECTION 11.2(D), be held in the Recovery Event
Proceeds Account for application in repair or replacement of the affected
property. If the insurance proceeds on account of such damage to, or destruction
of, the Facility exceed $50,000,000, or in the case of an Event of Loss, then
the Owner Lessor's Percentage of all insurance proceeds on account of such
damage or destruction to the Facility shall be paid to the Owner Lessor or, if
the Lessor Notes are outstanding and the Lien of the Lease Indenture shall not
have been discharged, the Security Agent and shall be applied and dealt with as
provided in SECTION 11.2(B) below.

                  (b) Other than proceeds of insurance paid to the Security
Agent or the Owner Lessor in connection with an Event of Loss, all proceeds of
insurance paid to the Security Agent or the Owner Lessor, as the case may be,
and the Facility Lessee shall be paid over to the Facility Lessee upon receipt
by the Owner Lessor and the Lease Indenture Trustee, if applicable, of evidence
satisfactory to each of them, in their reasonable judgment that such proceeds,
together with funds of the Facility Lessee available for the purpose will be
sufficient to complete such repair and restoration of the Facility or a portion
thereof. Promptly after receiving Actual Knowledge that a Material Lease Default
or Lease Event of Default shall have occurred and be continuing, the Facility
Lessee shall notify the insurer under any property insurance policy providing
coverage of the Undivided Interest of the existence of such Material Lease
Default or Lease Event of Default. After receipt of any such notification, each
such insurer shall pay the proceeds of any property insurance policies in
accordance with SECTION 11.2(D).

                  (c) Within 30 days after receiving Actual Knowledge that an
Event of Loss has occurred, the Facility Lessee shall notify the insurer under
any property insurance policy providing coverage for such Event of Loss, the
Security Agent so long

                                       27
<Page>

as the Lien of the Lease Indenture shall not have been discharged, and the Owner
Lessor of the occurrence of such Event of Loss. Each of the Facility Lessee, the
Owner Lessor and the Security Agent, as applicable, shall provide any necessary
endorsements and otherwise cooperate in the processing of any related claims or
proceeds in accordance with the terms of this SECTION 11.

                  (d) Notwithstanding the foregoing provisions of this SECTION
11 or SECTION 10, so long as a Material Lease Default or Lease Event of Default
shall have occurred and be continuing, the proceeds of any insurance required to
be maintained pursuant to this SECTION 11 that would otherwise be payable to or
for the account of, or that would otherwise be retained by, the Facility Lessee
pursuant to this SECTION 11 or SECTION 10.3 will be held as security for the
obligations of the Facility Lessee under this Facility Lease by the Owner Lessor
or, so long as the Lien of the Lease Indenture shall not have been terminated or
discharged, the Security Agent and, at such time thereafter as no Material Lease
Default or Lease Event of Default shall be continuing, such amount shall be paid
promptly to the Facility Lessee.

SECTION 12 INSPECTION

                  During the Facility Lease Term, each of the Owner Lessor, the
Owner Participant, the OP Guarantor and, so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged, the
Security Agent, the Lender and the Bondholder Trustee and their respective
representatives shall have the right, during normal business hours, upon
reasonable notice to the Facility Lessee and at their own expense (except when a
Lease Default or a Lease Event of Default has occurred and is continuing) and
risk, to inspect the Facility and the records relating to the operation and
maintenance thereof in the Facility Lessee's custody or, so long as the Facility
Lessee has the opportunity to be present, to which the Facility Lessee has
access; PROVIDED, HOWEVER, that any such inspection will not interfere with the
operation or maintenance of the Facility or the conduct by the Facility Lessee
of its business and shall be in accordance with the Facility Lessee's safety and
insurance programs; PROVIDED FURTHER, HOWEVER, that, except during the
continuance of a Material Lease Default or a Lease Event of Default, no more
than one inspection in any twelve (12) month period shall be conducted by each
of (x) the Owner Lessor and the Owner Participant and (y), if applicable, the
Lease Indenture Trustee; PROVIDED FURTHER, HOWEVER, that any such Person (or
group of Persons) may make more than one inspection during the last eighteen
(18) months of the Facility Lease Term unless the Facility Lessee has exercised
one of its options under SECTION 15 hereof to renew this Facility Lease beyond
such eighteen (18) month period. In no event shall the Owner Lessor, the Owner
Participant, the OP Guarantor, or the Lease Indenture Trustee, the Lender and
the Bondholder Trustee have any duty or obligation to make any such inspection
and such Persons shall not incur any liability or obligation by reason of not
making any such inspection.

SECTION 13 TERMINATION OPTION FOR BURDENSOME EVENTS

         SECTION 13.1 ELECTION TO TERMINATE. The Facility Lessee, by giving
written notice (the "BURDENSOME TERMINATION NOTICE") to the Owner Lessor no
later than twelve

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<Page>

(12) months after the date the Facility Lessee receives notice or first has
Actual Knowledge of either of the events specified below, shall have the right,
at its option, to terminate this Facility Lease in accordance with SECTION 13.3
on the Termination Date specified in the Burdensome Termination Notice (which
shall be a date occurring not less than 30 days nor more than 60 days after the
date of the Burdensome Termination Notice) or such later Termination Date (which
shall be a date occurring not more than 12 months after the date of the
Burdensome Termination Notice) as may be necessary for the Facility Lessee to
obtain such consents and approvals required for the Facility Lessee to comply
with its obligations under this SECTION 13 if:

                  (a) as a result of a change in Requirements of Law, it shall
have become illegal for the Facility Lessee to continue this Facility Lease or
for the Facility Lessee to make payments under this Facility Lease, and the
transactions contemplated by the Operative Documents cannot be restructured to
comply with such change in Requirements of Law in a manner reasonably acceptable
to the Facility Lessee, the Owner Participant, the Owner Lessor, and, so long as
the Lessor Notes are outstanding, the Security Agent, the Lender and the
Bondholder Trustee; or

                  (b) one or more events outside the control of the Facility
Lessee, shall have occurred which will, or can reasonably be expected to give
rise to an obligation by the Facility Lessee to make a payment or to incur an
indemnity obligation in respect of the Tax Indemnity Agreement or Section 10.1
or 10.2 of the Participation Agreement; PROVIDED, HOWEVER, that (i) such payment
or indemnity obligation (and the underlying cost or tax) can be avoided in whole
or in material part if this Facility Lease is terminated or the Owner Lessor
sells the Owner Lessor's Interest and (ii) the amount of such avoided payments
would exceed (on a present value basis, discounted at the Discount Rate,
compounded on an annual basis to the date of the termination) 2.5% of the
Purchase Price (unless the Owner Participant has waived its right to payments in
excess of 2.5% of the Purchase Price or arranged for its own account for the
payment thereof).

                  (c) Notwithstanding the foregoing, if the Owner Participant or
any Affiliate thereof owns the membership interest in any Other Owner Lessor,
the Facility Lessee may deliver to the Owner Lessor a Burdensome Termination
Notice and exercise the Burdensome Buyout Option (as defined below) only if (i)
it has also delivered such a notice to each Other Owner Lessor under Section
13.1 of the Other Facility Leases and (ii) it is concurrently exercising its
Burdensome Buyout Option under Section 13 of the Other Facility Leases;
PROVIDED, HOWEVER, that the requirements in clauses (i) and (ii) of this
paragraph shall not apply in the event the Facility Lessee does not have the
right to deliver such notice or exercise such Burdensome Buyout Option, as
applicable, under Section 13 of the Other Facility Leases.

                  (d) If the Facility Lessee does not give the Burdensome
Termination Notice within twelve (12) months of the date the Facility Lessee
receives notice or has Actual Knowledge of an event or condition described
above, the Facility Lessee shall lose its right to terminate this Facility Lease
pursuant to this SECTION 13.1 as a result of such event or condition.

                                       29
<Page>

         SECTION 13.2 SOLICITATION OF QUALIFYING BIDS; PAYMENTS UPON
TERMINATION. (a) Upon receipt of a Burdensome Termination Notice pursuant to
SECTION 13.1, the Owner Lessor shall have the right, but shall be under no
obligation to, sell the Undivided Interest and, at the request of the Owner
Lessor, the Facility Lessee will, as nonexclusive agent for the Owner Lessor,
use commercially reasonable efforts to obtain cash bids from unaffiliated third
parties for the sale of the Undivided Interest. In connection with the delivery
of a Burdensome Termination Notice, the Facility Lessee may, but shall be under
no obligation to, make an offer to purchase the Undivided Interest and shall
have a right of first refusal with respect to any offer received from an
unaffiliated third party (which may be exercised any time prior to the
Termination Date), in connection with such sale. Only bona fide bids, whether
from the Facility Lessee or a third party, to purchase the Undivided Interest
for cash on the Termination Date on an "as is, where is" and "with all faults"
basis without any representation, other than by the Owner Lessor that the Owner
Lessor's Undivided Interest is free of Owner Lessor Liens and a warranty of the
Owner Participant as to the absence of Owner Participant Liens, shall be
qualifying cash bids ("QUALIFYING CASH BIDS") and all the proceeds of any such
Qualifying Cash Bid shall be for the account of the Owner Lessor. If a
Qualifying Cash Bid is received and the Owner Lessor accepts such bid in
writing, the Facility Lessee shall pay the Owner Lessor on the Termination Date
(i) the Termination Value determined as of such Termination Date, less the cash
actually received by the Owner Lessor in connection with such Qualifying Cash
Bid (or, if the amount of such cash actually received by the Owner Lessor from
such Qualifying Cash Bid is equal to or greater than such Termination Value,
zero) plus (ii) all amounts due and payable under SECTION 13.3. If a Qualifying
Cash Bid is rejected in writing by the Owner Lessor and the Owner Lessor has not
elected to retain the Owner Lessor's Interest, the Facility Lessee shall pay the
Owner Lessor on the Termination Date (x) the Termination Value determined as of
such Termination Date, less the amount of such rejected Qualifying Cash Bid (or,
if the amount of such rejected Qualifying Cash Bid is equal to or greater than
such Termination Value, zero) plus (y) all amounts due and payable under SECTION
13.3. If no Qualifying Cash Bid is offered and the Owner Lessor has not elected
to retain the Owner Lessor's Interest, the Facility Lessee shall pay the Owner
Lessor on the Termination Date (A) the Termination Value determined as of such
Termination Date plus (B) all amounts due and payable under SECTION 13.3. If the
Owner Lessor elects in writing to retain the Owner Lessor's Interest, the
Facility Lessee shall pay the Owner Lessor on the Termination Date all amounts
due and payable under Section 13.3 (but shall have no obligation to pay
Termination Value). In any case, the Owner Lessor shall be obligated to pay all
amounts payable under SECTION 13.3.

                  (b) If, within 30 days of the Termination Date set forth in
the Burdensome Termination Notice delivered pursuant to Section 13.1 (a), (i)
the Facility Lessee shall not have purchased the Facility pursuant to Section
13.2(a) above, (ii) the Owner Lessor shall not have received a Qualifying Cash
Bid from the Facility Lessee, and (iii) the Owner Lessor shall not have elected
to retain the Owner Lessor's Interest, this Facility Lease shall continue, the
Facility Lessee shall lose its right to terminate this Facility Lease for the
Burdensome Buyout Event referred to in such Burdensome Termination Notice, and
any and all rights that the Owner Lessor had immediately prior to the receipt of
such Burdensome Termination Notice shall remain in full force and effect.

                                       30
<Page>

         SECTION 13.3 PROCEDURE FOR EXERCISE OF TERMINATION OPTION. (a) If the
Facility Lessee shall have exercised its option under SECTION 13.1 (a
"BURDENSOME BUYOUT OPTION"), the Facility Lessee shall, prior to and as a
condition to the closing of the sale, pay (in addition to the applicable amount
set forth in SECTION 13.2(A), if any, without duplication of any other amounts
paid hereunder): (i) on an After-Tax Basis, all reasonable documented
out-of-pocket costs and expenses of the Owner Lessor, the Owner Participant and,
so long as the Lessor Notes are outstanding and the Lien of the Lease Indenture
has not been discharged, the Security Agent; (ii) any Lessee Section 467 Loan
Balance as of the Termination Date; and (iii) any other payment under this
Facility Lease (other than Basic Lease Rent or Renewal Rent payable after the
Termination Date) due and unpaid on the Termination Date and any amounts due and
unpaid, or accrued and unpaid, on the Termination Date under any other Operative
Document. Concurrently with the payment of all sums specified in SECTION 13.2
and this SECTION 13.3(A), (A) Allocated Rent shall cease to accrue and the
Facility Lessee's obligation to pay Basic Lease Rent or Renewal Lease Rent, as
the case may be, shall terminate, (B) this Facility Lease shall terminate and
the Facility Lessee shall cease to have any liability to the Owner Lessor with
respect to the Undivided Interest, except for Supplemental Lease Rent and other
obligations surviving pursuant to the express terms of any Operative Document,
(C) the Owner Lessor will pay all amounts of principal and interest and any
other amounts owing under the Lessor Notes (including any Make Whole Premium, if
any, due and payable) to the Security Agent pursuant to SECTION 2.11 of the
Lease Indenture, (D) in connection with any sale of the Owner Lessor's Interest
pursuant to SECTION 13.2, the Owner Lessor shall transfer (by an appropriate
instrument of transfer in form and substance reasonably satisfactory to the
Owner Participant and Facility Lessee and prepared by and at the expense of the
Facility Lessee) all of its right, title and interest in and to the Owner
Lessor's Interest to the Facility Lessee (or its designee) or to the third party
making the accepted Qualifying Cash Bid on an "as is", "where is", "with all
faults" basis, without representation or warranty other than a warranty as to
the absence of Owner Lessor Liens and a warranty of the Owner Participant as to
the absence of Owner Participant Liens, (E) the Owner Lessor shall execute and
deliver appropriate releases and other documents or instruments necessary or
desirable to effect the foregoing all to be prepared, filed and recorded (as
appropriate) at the sole cost and expense of the Facility Lessee and (F) the
Owner Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan
Balance, if any, determined as of the Relevant Termination Date. The obligation
to make such payments shall be subject to the provisions of SECTION 3.2(D). It
shall be a condition precedent to the termination of this Facility Lease
pursuant to this SECTION 13.3, that the Owner Lessor and the Facility Lessee
shall each pay all amounts that each is obligated to pay under this SECTION
13.3.

                  (b) If the Facility Lessee fails to consummate the termination
option under this SECTION 13 after giving notice of its intention to do so
(other than in consequence of failure of the Owner Lessor or the Owner
Participant to fulfill their respective obligations under this SECTION 13), (A)
this Facility Lease shall continue, (B) such failure to consummate shall not
constitute a default under this Facility Lease, (C) the Facility Lessee will
lose its right to terminate this Facility Lease pursuant to this SECTION 13 as a
result of such event or condition during the remainder of the Facility Lease
Term but the Facility Lessee shall in any event (without relieving the Owner
Lessor of any liability

                                       31
<Page>

hereunder) pay the amounts set forth in clause (i) of the first sentence of
SECTION 13.3(A).

         SECTION 13.4 ASSUMPTION OF THE LESSOR NOTES; SPECIAL LESSEE TRANSFERS.

                  (a) Notwithstanding the foregoing provisions of SECTION 13.3
to the contrary, at the option of the Facility Lessee, if (i) the Facility
Lessee shall have executed and delivered an assumption agreement to assume the
Lessor Notes on a fully recourse basis, as permitted by and in accordance with
SECTION 2.21 of the Lease Indenture, (ii) all other conditions contained in such
SECTION 2.21 of the Lease Indenture shall have been satisfied, (iii) no Material
Lease Default or Lease Event of Default shall have occurred and be continuing
and shall not be cured by such assumption and (iv) the Facility Lessee shall
purchase the Undivided Interest pursuant to its right of first refusal or right
of offer as set forth in Section 13.2, as the case may be, then, the obligation
of the Facility Lessee to pay Termination Value shall be reduced by the
outstanding principal amount of the Lessor Notes so assumed by the Facility
Lessee and the Owner Lessor shall have no further obligation to prepay the
outstanding principal and accrued interest on the Lessor Notes to the extent of
the Lessor Notes so assumed by the Facility Lessee; PROVIDED, HOWEVER, for so
long as the Lessor Notes are outstanding, if the Facility Lessee shall have
chosen to assume the Lessor Notes pursuant to this SECTION 13.4(A), the Facility
Lessee shall acquire the Undivided Interest from the Owner Lessor subject to the
Lien of the Lease Indenture.

                  (b) If the Facility Lessee assumes the Lessor Notes under this
SECTION 13, the Facility Lessee shall, on the Termination Date, also pay
(without duplication of any other amount paid hereunder) the Owner Lessor the
following: (i) on an After-Tax Basis, all reasonable out-of-pocket costs and
expenses of the Owner Lessor, the Owner Participant, the OP Guarantor, the
Security Agent, the Lender and the Bondholder Trustee; (ii) any Lessee Section
467 Loan Balance and; (iii) any other payment under this Facility Lease (other
than Basic Lease Rent or Renewal Rent payable after the Termination Date) due
and unpaid on the Termination Date and any amounts due and unpaid, or accrued
and unpaid, on the Termination Date under any other Operative Document. The
Owner Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan
Balance, if any, determined as of such Termination Date. The obligation to make
such payment shall be subject to the provisions of SECTION 3.2(D).

                  (c) Notwithstanding the foregoing provisions of SECTION 13.3
to the contrary, if, in connection with a Burdensome Buyout Event, the Facility
Lessee elects to purchase the Facility in accordance with SECTION 13 of the
Facility Lease, the Facility Lessee (or its designee) so long as the Facility
Lessee shall remain liable under this Facility Lease to pay Basic Lease Rent and
all other payments hereunder in full, and in all respects in accordance with
SECTION XV of the Participation Agreement, may purchase the Lessor Membership
Interest, in lieu of purchasing the Undivided Interest pursuant to SECTIONS 13.1
and 13.2 hereof, and keep this Facility Lease (and Lessor Notes) in place in
consideration of the amounts set forth in SECTION XV of the Participation
Agreement.

         SECTION 13.5 CERTAIN CONDITIONS TO TERMINATION. Anything to the
contrary in this Section 13 notwithstanding, the Facility Lessee and the Owner
Lessor agree for the

                                       32
<Page>

benefit of the Lease Indenture Trustee (without relieving the Owner Lessor of
any liability hereunder) that, so long as the Lien of the Lease Indenture shall
not have been terminated or discharged, no termination pursuant to this Section
13 shall be effective and the Facility Lessee's rights and obligations under
this Facility Lease immediately prior to the election to terminate this Facility
Lease pursuant to this Section 13 shall remain in full force and effect in all
respects unless and until the Facility Lessee shall have assumed the Lessor
Notes pursuant to Section 13.4 or the Owner Lessor shall have paid all
outstanding principal and accrued interest on the Lessor Notes with respect to
such Undivided Interest or the Facility, as the case may be, and all other
amounts due under the Lease Indenture as of such proposed date of termination.

SECTION 14 TERMINATION FOR OBSOLESCENCE; PARTIAL RELEASE OF INTEREST

         SECTION 14.1 TERMINATION. Upon at least six months' prior written
notice to the Owner Lessor, (which notice shall be accompanied by a
certification by the Facility Lessee's Manager as to one or more of the matters
described below), the Facility Lessee shall have the option, so long as no Lease
Event of Default shall have occurred and be continuing on the date of such
notice or on the proposed Obsolescence Termination Date (as defined below), to
terminate this Facility Lease on any Termination Date occurring on or after the
seventh anniversary of the Closing Date (the date of termination selected by the
Facility Lessee being the "Obsolescence Termination Date") which proposed
Obsolescence Termination Date shall be set forth in the aforementioned notice,
on the terms and conditions set forth in this SECTION 14, if the Facility is
economically or technologically obsolete; as determined by the general partner
of the Facility Lessee in good faith, including, without limitation, as a result
of any change in applicable law, regulation or tariff, any material change in
the markets for the wholesale purchase and/or sale of energy or any imposition
by FERC or any other Governmental Authority having or claiming jurisdiction over
the Facility Lessee or the Facility of any burdensome conditions or requirements
including requiring capital improvements to the Facility.

                  Notwithstanding the foregoing, the Facility Lessee may elect
to terminate this Facility Lease pursuant to this SECTION 14.1 and exercise its
other rights under this SECTION 14 only if (i) concurrently with such election,
it also elects to terminate all Other Facility Leases pursuant to SECTION 14.1
thereof and (ii) concurrently with its termination hereunder, it terminates all
Other Facility Leases in accordance with SECTION 14 thereof.

         SECTION 14.2 SOLICITATION OF OFFERS. If the Facility Lessee shall give
the Owner Lessor notice pursuant to SECTION 14.1 and the Owner Lessor shall not
have elected to retain the Undivided Interest pursuant to SECTION 14.3 below,
the Facility Lessee shall (i) as non-exclusive agent for the Owner Lessor, use
commercially reasonable efforts to obtain bids from unaffiliated third parties
with the Facility Lessee and sell the Owner Lessor's Interest on the
Obsolescence Termination Date and (ii) covenant that it will not sell the Owner
Lessor's Interest to itself, an Affiliate or to any third party with whom the
Facility Lessee or its Affiliate has an arrangement to use or operate the
Facility to generate power for the Facility Lessee's or any such Affiliate's
benefit after the termination of this Facility Lease. All of the proceeds of any
such sale, will be for the

                                       33
<Page>

account of the Owner Lessor; PROVIDED THAT, so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged, the
proceeds of such sale shall be paid directly to the Security Agent. At least 120
days prior to the Obsolescence Termination Date, the Facility Lessee shall
certify to the Owner Lessor and, so long as the Lessor Notes are outstanding and
the Lien of the Lease Indenture has not been discharged, the Security Agent, the
Lender and the Bondholder Trustee each bid or offer, the amount and terms
thereof and the name and address of the party (which shall not be the Facility
Lessee, any of its Affiliates or any third party with whom it or any such
Affiliate has an arrangement to use or operate the Facility to generate power
for the benefit of the Facility Lessee or such Affiliate after the termination
of this Facility Lease) submitting such bid or offer. The Owner Lessor shall
also have the right, but not the obligation, to obtain bids for the sale of the
Owner Lessor's Interest either directly or through agents other than the
Facility Lessee.

         SECTION 14.3 RIGHT OF OWNER LESSOR TO RETAIN THE UNDIVIDED INTEREST.
The Owner Lessor may irrevocably elect to retain, rather than sell, the
Undivided Interest by giving notice to the Facility Lessee at least 90 days
prior to the Obsolescence Termination Date. If the Owner Lessor elects to retain
the Undivided Interest pursuant to this SECTION 14.3, on the Obsolescence
Termination Date the Facility Lessee shall pay to the Owner Lessor the amounts
described in clauses (i) through (iii) of SECTION 14.4 below. Upon the payment
of all sums required to be paid pursuant to this SECTION 14.3 and SECTION 14.4
below, (i) Allocated Rent shall cease to accrue, and the Facility Lessee's
obligation to pay Basic Lease Rent or Renewal Lease Rent, as the case may be,
shall terminate, (ii) this Facility Lease shall terminate and the Facility
Lessee shall cease to have any liability or obligations hereunder or any other
Operative Document with respect to the Undivided Interest, except for
Supplemental Lease Rent and other obligations surviving pursuant to the express
terms of the Operative Documents, (iii) the Owner Lessor shall pay all
outstanding principal and accrued interest on the Lessor Notes and, to the
extent actually received from the Facility Lessee as Supplemental Lease Rent,
all other amounts due under the Lease Indenture including the reimbursement of
any fees or expenses of the Security Agent, (iv) the Facility Lessee shall
return the Undivided Interest to the Owner Lessor in accordance with SECTION 5.1
hereof and (v) only with respect to the termination option of the Owner Lessor
under Section 14.4, the Owner Lessor will transfer (by an appropriate instrument
of transfer in form and substance reasonably satisfactory to the Owner Lessor
the Owner Lessor's Interest under Section 14.4 to the purchaser on "as is",
"where is", "with all faults" basis, without representations or warranties other
than a warranty as to the absence of Owner Lessor's Liens and a warranty from
the Owner Participant as to the absence of Owner Participant's Liens, (vi) the
Owner Lessor shall execute and deliver appropriate releases and other documents
or instruments necessary or desirable to effect the foregoing and (vii) the
Owner Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan
Balance, if any, determined as of such Obsolescence Termination Date. The
obligation to make such payments shall be subject to the provisions of SECTION
3.2(D). It shall be a condition precedent to the termination of this Facility
Lease pursuant to this SECTION 14.3, that the Owner Lessor and the Facility
Lessee shall each pay all amounts that each is obligated to pay under this
SECTION 14.3.

                                       34
<Page>

         SECTION 14.4 PROCEDURE FOR EXERCISE OF TERMINATION OPTION. If the Owner
Lessor has not elected to retain the Undivided Interest in accordance with
SECTION 14.3 hereof, on the Obsolescence Termination Date, the Owner Lessor
shall sell the Owner Lessor's Undivided Interest under this SECTION 14.4 and its
interest in the Ground Interest under SECTION 6 of the Facility Site Lease to
the bidder or bidders pursuant to SECTION 14.2 hereof (which shall not be
the Facility Lessee, any Affiliate thereof or any third party with whom the
Facility Lessee or any such Affiliate has an arrangement to use or operate
the Facility to generate power for the benefit of the Facility Lessee or
such Affiliate after the termination of this Facility Lease), that shall have
submitted the highest cash bid or bids with respect to the Owner Lessor's
Interest and the Facility Lessee shall certify to the Owner Lessor, the
Owner Participant and, so long as the Lien of the Lease Indenture shall not
have been terminated or discharged, the Security Agent that such buyer is not
the Facility Lessee, any Affiliate thereof or any third party with whom it or
an Affiliate has an arrangement with respect to the use or operation of the
Facility after the termination of this Facility Lease. On the Obsolescence
Termination Date, the Facility Lessee shall pay to the Owner Lessor the
excess, if any, of the applicable Termination Value determined as of such
Obsolescence Termination Date over the net proceeds from the sale of the
Undivided Interest paid to or retained by the Owner Lessor plus (without
duplication) (i) on an After-Tax Basis, all reasonable out-of-pocket costs and
expenses incurred by the Owner Lessor, the Owner Participant, the OP Guarantor,
if any, and, so long as the Lessor Notes are outstanding and the Lien of the
Lease Indenture has not been discharged, Security Agent in connection therewith
(excluding the reasonable fees and costs of any broker unless engaged by the
Facility Lessee on the Owners Lessor's behalf) plus (ii) any Lessee Section 467
Loan Balance plus (iii) any other payment of the Facility Lessee (other than
Basic Lease Rent or Renewal Rent payable after the Obsolescence Termination
Date) under this Facility Lease due and unpaid on the Obsolescence Termination
Date and any amount due and unpaid, or accrued and unpaid, on the Obsolescence
Termination Date under any Operative Document. Upon payment of all amounts due
under this section, the Owner Lessor shall pay to the Facility Lessee the Lessor
Section 467 Loan Balance, if any, determined as of the Obsolescence Termination
Date. The obligation to make such payments shall be subject to the provisions of
SECTION 3.2(D). Unless the Owner Lessor, with the consent of the Facility
Lessee, shall have entered into a legally binding contract to sell the Owner
Lessor's Interest, the Facility Lessee may, at its election, revoke its notice
of termination by giving notice to the Owner Lessor at least 30 days prior to
the proposed Obsolescence Termination Date, in which event this Facility Lease
shall continue with respect to the Undivided Interest and the Facility Lessee
shall have the right to later reissue a notice to terminate pursuant to SECTION
14.1; PROVIDED THAT the Facility Lessee may give notice that it is exercising
its Termination Option for obsolescence no more than once in any five (5) year
period. The Owner Lessor shall be under no duty to solicit bids, to inquire into
the efforts of the Facility Lessee to obtain bids or otherwise take any action
in arranging any such sale of the Owner Lessor's Interest other than, if the
Owner Lessor has not elected to retain the Owner Lessor's Interest, to transfer
the Owner Lessor's Interest in accordance with this SECTION 14.4. It shall be a
condition of the Owner Lessor's obligation to consummate a sale of the Owner
Lessor's Interest that the Facility Lessee shall pay all amounts it is obligated
to pay under

                                       35
<Page>

this SECTION 14.4. If no sale shall occur on the Obsolescence Termination Date,
the notice of termination shall be deemed revoked and this Facility Lease shall
continue with respect to the Undivided Interest in full force and effect in
accordance with its terms (without prejudice to the Facility Lessee's right to
exercise its rights under this SECTION 14); PROVIDED, HOWEVER, that the Facility
Lessee shall in any event pay, without duplication of any amounts payable
hereunder, the amounts set forth in clause (i) of this SECTION 14.4.

         SECTION 14.5 CERTAIN CONDITIONS TO TERMINATION. Anything to the
contrary in this Section 14 notwithstanding, the Facility Lessee and the Owner
Lessor agree for the benefit of the Lease Indenture Trustee (without relieving
the Owner Lessor of any liability hereunder) that, so long as the Lien of the
Lease Indenture shall not have been terminated or discharged, no termination
pursuant to this Section 14 shall be effective and the Facility Lessee's rights
and obligations under this Facility Lease immediately prior to the election to
terminate this Facility Lease pursuant to this Section 14 shall remain in full
force and effect in all respects (regardless of whether the Owner Lessor shall
elect to retain or sell such Undivided Interest or the Facilities, as
applicable, in connection with such proposed termination) unless and until the
Owner Lessor shall have paid all outstanding principal and accrued interest on
the Lessor Notes with respect to such Undivided Interest or the Facility and all
other amounts due under the Lease Indenture as of such proposed date of
termination.

SECTION 15 LEASE RENEWAL

         SECTION 15.1 RENEWAL LEASE TERMS. (a) Not earlier than 42 months prior
to, but not less than 18 months prior to, the expiration of the Basic Lease
Term, so long as no Material Lease Default or Lease Event of Default shall have
occurred and be continuing on the date any notice is given pursuant to this
SECTION 15.1(A) and no Material Lease Default or Lease Event of Default shall
have occurred and be continuing on the date the lease renewal proposed pursuant
to this SECTION 15.1(A) is to commence, the Facility Lessee may deliver to the
Owner Lessor a notice (which notice may be in addition to a notice of the
Facility Lessee's interest in electing a FMV Renewal Lease Term under SECTION
15.2) of the Facility Lessee's interest in renewing this Facility Lease at the
end of the Basic Lease Term for a term (the "FIRST RENEWAL TERM") selected by
the Facility Lessee, which term shall satisfy the following criteria: (i) the
aggregate of the proposed First Renewal Term and the Basic Lease Term shall be
no greater than 75% of the estimated remaining economic useful life of the
Facility as of the Closing Date, as determined in an appraisal to be conducted
at such time and (ii) on the last date of such proposed First Renewal Term, the
estimated Fair Market Sales Value of the Facility is expected to be no less than
20% of the Purchase Price (without taking into account inflation or deflation
subsequent to the Closing Date as determined in an appraisal to be conducted at
such time). Items (i) and (ii) of the immediately preceding sentence shall be
determined by an Independent Appraiser selected by the Facility Lessee and
reasonably acceptable to the Owner Lessor. The Facility Lessee shall pay all
expenses and fees of such Independent Appraiser. The Facility Lessee may
withdraw any notice given in accordance with this SECTION 15.1(A) by written
notice of such withdrawal to the Owner Lessor, on or prior to the date which is
18 months before the commencement of the

                                       36
<Page>

proposed First Renewal Term.

                  (b) Not earlier than 42 months prior to, but not less than 18
months prior to, the expiration of the First Renewal Term, so long as no
Material Lease Default or Lease Event of Default shall have occurred and be
continuing on the date any notice is given pursuant to this SECTION 15.1(B) and
no Material Lease Default or Lease Event of Default shall have occurred and be
continuing on the date the lease renewal proposed pursuant to this SECTION
15.1(B) is to commence, the Facility Lessee may deliver to the Owner Lessor a
notice (which notice may be in addition to a notice of the Facility Lessee's
interest in electing a FMV Renewal Lease Term under SECTION 15.2) of the
Facility Lessee's interest in renewing this Facility Lease at the end of the
First Renewal Term for a term (the "SECOND RENEWAL TERM") selected by the
Facility Lessee, which term shall satisfy the following criteria: (i) the
aggregate of the proposed Second Renewal Term, the First Renewal Term and the
Basic Lease Term shall be no greater than 75% of the estimated remaining
economic useful life of the Facility as of the Closing Date, as determined in an
appraisal to be conducted at such time and (ii) on the last date of such
proposed Second Renewal Term, the estimated Fair Market Sales Value of the
Facility is expected to be no less than 20% of the Purchase Price (without
taking into account inflation or deflation subsequent to the Closing Date as
determined in an appraisal to be conducted at such time). Items (i) and (ii) of
the immediately preceding sentence shall be determined by an Independent
Appraiser selected by the Facility Lessee and reasonably acceptable to the Owner
Lessor. The Facility Lessee shall pay all expenses and fees of such Independent
Appraiser. The Facility Lessee may withdraw any notice given in accordance with
this SECTION 15.1(B) by written notice of such withdrawal to the Owner Lessor on
or prior to 18 months before commencement of the proposed Second Renewal Lease
Term.

                  (c) Notwithstanding the foregoing, the Facility Lessee may
elect to renew this Facility Lease pursuant to subsection (a) or (b) of this
SECTION 15.1 and exercise its other rights under such subsections only if (i)
concurrently with such election, the Facility Lessee also elects to renew each
Other Facility Lease pursuant to subsection (a) or (b), as applicable, of
SECTION 15.1 thereof, (ii) concurrently with the renewal of this Facility
Lease, the Facility Lessee renews each Other Facility Lease in accordance with
subsection (a) or (b), as applicable, of SECTION 15.1 thereof, and (iii) with
regard to subsection (a) of this Section 15.1, the length of the proposed
renewal term is not less than three (3) months.

         SECTION 15.2 FAIR MARKET VALUE RENEWAL LEASE TERMS. Not earlier than 42
months prior to, but not less than 18 months prior to, the expiration of the
Basic Lease Term or any Renewal Lease Term, so long as no Material Lease Default
or Lease Event of Default shall have occurred and be continuing on the date any
notice is given pursuant to this SECTION 15.2 and no Material Lease Default or
Lease Event of Default shall have occurred and be continuing on the date the
lease renewal proposed pursuant to this SECTION 15.2 is to commence, the
Facility Lessee may deliver to the Owner Lessor a notice (which notice may be in
addition to a notice of the Facility Lessee's interest in electing the First
Renewal Term or the Second Renewal Term, as applicable) of the Facility Lessee's
interest in renewing this Facility Lease for a term (each such term, a "FMV
RENEWAL LEASE TERM") commencing upon expiration of the Basic Lease Term or the
Renewal Lease Term otherwise expiring and extending for no less than one year
and

                                       37
<Page>

no more than five years; PROVIDED THAT no such FMV Renewal Lease Term shall
extend beyond the first date (rounded to the last day of the immediately
preceding whole year) as of which 10% or less of the estimated remaining
economic useful life of the Facility as of the Closing Date would remain (such
estimated remaining economic useful life being measured as of the Closing Date)
and on or after which the estimated Fair Market Sales Value of the Facility is
expected to be less than 10% of the Purchase Price (in each case, as set forth
in the most recent of (a) the Closing Appraisal, (b) the appraisal obtained in
connection with the Facility Lessee's option to elect the First Renewal Term
(the "FIRST RENEWAL Option") and (c) the appraisal obtained in connection with
the Facility Lessee's option to elect the Second Renewal Term (the "SECOND
RENEWAL OPTION.") The Facility Lessee may withdraw any notice given in
accordance with this SECTION 15.2 by written notice of such withdrawal to the
Owner Lessor on or prior to 18 months before commencement of the proposed Fair
Market Value Renewal Lease Term.

                  Notwithstanding the foregoing, the Facility Lessee may elect
to renew this Facility Lease pursuant to this SECTION 15.2 and exercise its
other rights under such Section only if (i) concurrently with such election, the
Facility Lessee also elects to renew each Other Facility Lease pursuant to
SECTION 15.1 thereof and (ii) concurrently with the renewal of this Facility
Lease, the Facility Lessee renews each Other Facility Lease in accordance with
SECTION 15.1 thereof.

         SECTION 15.3 RENEWAL RENT AND TERMINATION VALUE FOR RENEWAL LEASE TERM.
During each Renewal Lease Term, Renewal Rent shall be paid on the Rent Payment
Dates. The installment of Renewal Rent payable on each such Rent Payment Date
during the First Renewal Term shall be equal to the lesser of (i) the Fair
Market Rental Value of the Undivided Interest (as determined at the commencement
of the First Renewal Lease Term) and (ii) 75% of the average Basic Lease Rent
payable with respect to the Basic Lease Term. The installment of Renewal Rent
payable on each such Rent Payment Date during the Second Renewal Term shall be
equal to the lesser of (i) the Fair Market Rental Value of the Undivided
Interest (determined at the commencement of the Second Renewal Term) and (ii)
75% of the average Basic Lease Rent payable with respect to the Basic Lease
Term. The installment of Renewal Rent payable on each such Rent Payment Date
during the FMV Renewal Lease Term shall be equal to the Fair Market Rental Value
of the Undivided Interest at the end of the applicable Lease Term (determined
not more than 36 months prior to the commencement of such FMV Renewal Lease
Term).

         SECTION 15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE. The Fair Market
Rental Value of the Undivided Interest as of the commencement of any Renewal
Lease Term shall be determined by agreement of the Owner Lessor and the Facility
Lessee within six months after receipt by the Owner Lessor of the notice from
the Facility Lessee of its election to renew pursuant to SECTION 15.1 or 15.2
(but not more than 36 months before the commencement of such Renewal Lease Term)
or, if they shall fail to agree within such six month period, shall be
determined by an appraisal conducted by an Independent Appraiser according to
the Appraisal Procedure. The Facility Lessee shall be responsible for such
Independent Appraiser's fees and expenses.

                                       38
<Page>

         SECTION 15.5 TERMINATION VALUE DURING RENEWAL LEASE TERMS. The amounts
which are payable during any Renewal Lease Term in respect of Termination Value
shall be determined on the basis of the Fair Market Sales Value of the Undivided
Interest as of the commencement of such Renewal Lease Term, amortized on a
straight-line basis over such Renewal Lease Term to the projected Fair Market
Sales Value of the Facility as of the expiration of such Renewal Lease Term, as
such Fair Market Sales Value in each case is determined prior to the
commencement of such Renewal Lease Term.

SECTION 16 EVENTS OF DEFAULT

                  Each of the following events shall constitute a "Lease Event
of Default" hereunder (whether any such event shall be voluntary or involuntary
or come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or regulation
of any Governmental Authority):

                  (a) the Facility Lessee shall fail to make any payment of
Basic Lease Rent, Renewal Rent, or Termination Value, when due, and such failure
shall continue unremedied for five (5) Business Days; or

                  (b) the Facility Lessee shall fail to make any other payment
required to be made under any Operative Document (other than Excepted Payments,
unless the Owner Participant shall have declared a default with respect thereto)
when due, and such failure shall have continued unremedied for 10 days after
receipt by the Facility Lessee of written notice of such failure from the Owner
Participant, the Owner Lessor or, so long as the Lessor Notes are outstanding
and the Lien of the Lease Indenture has not been discharged, the Security Agent;
or

                  (c) the Facility Lessee shall fail to maintain insurance in
the amounts and on the terms set forth in the Operative Documents, including
SECTION 11 hereof; or

                  (d) the Facility Lessee shall fail to perform or observe in
all material respects (i) the covenant set forth in SECTIONS 6.1 and 5.13 of the
Participation Agreement, or (ii) if such failure is in respect of any borrowed
money, the covenant set forth in SECTION 6.3 of the Participation Agreement; or

                  (e) the Facility Lessee shall fail to perform or observe any
other covenant set forth in the Participation Agreement, this Facility Lease,
any Project Document or in any other Operative Document (other than any of the
covenants referred to in clauses (a), (b), (c) and (d) of this SECTION 16) , in
any material respect and such failure shall continue unremedied for 30 days
after receipt by the Facility Lessee of written notice thereof from the Owner
Participant, Owner Lessor, or, so long as the Lessor Notes are outstanding and
the Lien of the Lease Indenture has not been discharged, the Security Agent;
PROVIDED, HOWEVER, that for any failure other than a failure to comply with any
covenant set forth in Article 6 of the Participation Agreement if such failure
cannot be remedied within such 30-day period, then the period within which to
remedy such failure shall be extended up to an additional 180 days, so long as
the Facility Lessee diligently pursues such remedy and such failure is
reasonably capable of being remedied within such additional 180-day

                                       39
<Page>

period; PROVIDED, FURTHER, that in the case of the Facility Lessee's obligation
set forth in clause (b) of SECTION 7.1, to the extent and for so long as a test,
challenge, appeal or proceeding to review with respect to such non-compliance
shall be prosecuted in good faith by the Facility Lessee, the failure by the
Facility Lessee to comply with the requirements thereof shall not constitute a
Lease Event of Default if such test, challenge, appeal or proceeding shall not
involve any (i) material risk of foreclosure, sale, forfeiture or loss of, or
imposition of a Lien (other than a Permitted Encumbrance) on, the Facility, the
Undivided Interest or the Facility Site or the impairment of the use, operation
or maintenance of the Facility or the Facility Site in any material respect,
(ii) risk of criminal liability being incurred by the Owner Lessor, the Owner
Participant or the OP Guarantor, or (so long as the Lessor Notes are outstanding
and the Lien of the Lease Indenture has not been discharged) the Security Agent,
the Lender or the Bondholder Trustee or any of their respective Affiliates, or
(iii) material risk of any material adverse effect on the Owner Lessor, the
Owner Participant or the OP Guarantor, or (so long as the Lessor Notes are
outstanding and the Lien of the Lease Indenture has not been discharged) the
Security Agent or any of their respective Affiliates (including, without
limitation, subjecting any such Person to regulation as a public utility under
any Requirement of Law); and PROVIDED, FURTHER, also in the case of the Facility
Lessee's obligation set forth in clause (b) of SECTION 7.1, if such
noncompliance is not of a type that can be immediately remedied, the failure to
comply shall not be a Lease Event of Default if the Facility Lessee is taking
all reasonable action to remedy such noncompliance and if, and only if, such
noncompliance shall not involve any danger described in clause (i), (ii) or
(iii) of the preceding proviso; and PROVIDED, FURTHER, such noncompliance, or
such test, challenge, appeal or proceeding to review with respect to such
noncompliance shall not extend beyond the date that is 36 months prior to the
scheduled expiration of the Basic Lease Term or any Renewal Lease Term then in
effect or already irrevocably elected by the Facility Lessee; or

                  (f) any representation or warranty of the Facility Lessee set
forth in the Operative Documents (other than a tax representation set forth in
the Tax Indemnity Agreement) shall prove to have been incorrect in any material
respect when made or misleading in any material respect when made because the
omission to state a material fact continues to be material and the circumstances
upon which such breach of representation or warranty is based continue to be
material and unremedied for a period of 30 days after receipt by the Facility
Lessee of written notice thereof from the Owner Participant, Owner Lessor, or,
so long as the Lessor Notes are outstanding and the Lien of the Lease Indenture
has not been discharged, the Security Agent; PROVIDED, HOWEVER, that if such
condition cannot be remedied within such 30-day period, then the period within
which to remedy such condition shall be extended by up to an additional 60 days,
so long as the Facility Lessee diligently pursues such remedy, such condition is
reasonably capable of being remedied within such additional 60-day period; or

                  (g) the Facility Lessee, ME Westside, Chestnut Ridge, Finance
Co., Property Co. or EMHC shall (i) commence a voluntary case or other
proceeding seeking relief under Title 11 of the Bankruptcy Code or liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect, or apply
for or consent to the appointment of a trustee,

                                       40
<Page>

receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (ii) consent to, or fail to controvert
within 60 days, any such relief or the appointment of or taking possession by
any such official in any voluntary case or other proceeding commenced against
it, or (iii) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, or (iv) make a general assignment for
the benefit of creditors; or

                  (h) an involuntary case or other proceeding shall be commenced
against the Facility Lessee, ME Westside, Chestnut Ridge, Finance Co., Property
Co. or EMHC seeking (i) liquidation, reorganization or other relief with respect
to it or its debts under Title 11 of the Bankruptcy Code or any bankruptcy,
insolvency or other similar law now or hereafter in effect, or (ii) the
appointment of a trustee, receiver, liquidator, custodian or other similar
official with respect to it or any substantial part of its property or (iii) the
winding-up or liquidation of such entity, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 90 days; or

                  (i) default under any bond, debenture, note or other evidence
of Indebtedness (but excluding non-recourse Indebtedness) for money borrowed by
the Facility Lessee under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of the Facility Lessee, whether such indebtedness now exists or
shall hereafter be created, which Indebtedness is in an aggregate principal
amount exceeding $5,000,000 at all other times and which default shall have
resulted in such Indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable, without
such Indebtedness having been discharged, or such acceleration having been
rescinded or annulled; or

                  (j) any of the Security Documents to which the Facility
Lessee, Owner Lessor, Owner Participant, the OP Guarantor or (so long as the
Lessor Notes are outstanding and the Lien of the Lease Indenture has not been
discharged) the Security Agent or the Lender is a party or the Liens created
thereunder are declared unenforceable, are terminated, or cease to be in full
force and effect and such condition shall remain unremedied for a period of 10
days; or

                  (k) any Reportable Event shall occur; (ii) there shall be
initiated any action by the Facility Lessee, the Facility Sublessee or any
member of the Controlled Group to terminate a Plan; (iii) there shall be
initiated proceedings by the PBGC under SECTION 4042 of ERISA to terminate a
Plan or to appoint a trustee to administer a Plan; (iv) any Plan shall incur an
"accumulated funding deficiency" (as defined in SECTION 412 of the Code or
SECTION 302 of ERISA), unless waived; (v) the imposition upon the Facility
Lessee, the Facility Sublessee or any member of the Controlled Group or any Plan
fiduciary of a material liability resulting from either the engagement by any
such party in a transaction prohibited under SECTION 4975 of the Code or SECTION
406 of ERISA or any other violation of Title I of ERISA; (vi) the Facility
Lessee, the Facility Sublessee or any member of the Controlled Group suffers a
partial or complete withdrawal from a Multiemployer Plan, which, with respect to
clauses (i) through (vi) above, results in a liability, individually or in the
aggregate, of at least $5,000,000; or

                                       41
<Page>

                  (l) judgments or orders for the payment of money against the
Facility Lessee, which judgments or orders, as the case may be, are in excess of
$1,000,000 in the aggregate (taking into account any insurance proceeds payable
under a policy where the insurer has accepted coverage without reservation) and
which are not vacated, discharged or effectively stayed or bonded within 60 days
from the entry thereof; or

                  (m) except as permitted by Section 6.1 of the Participation
Agreement, EME shall, without the prior written consent of the Owner Lessor, the
Owner Participant and, so long as the Lessor Notes are outstanding and the Lien
of the Lease Indenture shall have been discharged or terminated, the Lender or
the Bondholder Trustee, cease to own directly or indirectly in excess of 50% of
the Ownership Interests in the Facility Lessee; PROVIDED, HOWEVER, that the
consent of the Lender or Bondholder Trustee shall not be required if, at such
time either (i) the Fundco Bonds are rated at least BBB- by S&P, Baa3 by
Moody's, and BBB- by Duff & Phelps, and a reaffirmation of such ratings is
obtained, or (ii) the reduction of EME's interest in the Facility Lessee has
been approved by holders of more than 66 2/3% of the holders of the Lessor
Notes; or

                  (n) any of the Facility Site Lease, the Facility Site
Sublease, or any other material Project Document shall have been cancelled or
terminated, or shall otherwise cease to be in full force and effect unless, in
any such case, alternative arrangements satisfactory to the Owner Lessor, the
Owner Participant and, so long as the Lessor Notes are outstanding and the Lien
of the Lease Indenture has not been released or discharged, the Security Agent,
the Lender and the Bondholder Trustee have been made and such parties have so
acknowledged in writing; or

                  (o) at any time, funds on deposit in any Account are used by
or at the direction of the Facility Lessee other than for the purposes expressly
specified in the Operative Documents; or

                  (p) the Amended and Restated Guarantee and Collateral
Agreement or the Pledge and Collateral Agreement, once executed and delivered,
shall for any reason, cease to be in full force and effect; or

                  (q) at any time, the Facility Lessee shall fail to remain
exempt from regulation under PUHCA or to remain exempt from regulation under
state utility law which would cause a Material Adverse Effect (or would
materially adversely affect any of the Lease Financing Parties); or

                  (r) any material Operative Document to the which the Facility
Lessee or any of its Affiliates is a party is declared unenforceable against the
Facility Lessee or any of its Affiliates, is terminated by the Facility Lessee
or any of its Affiliates, or ceases to be in full force and effect in respect of
the Facility Lessee or any of its Affiliates (in each case, other than in
accordance with their terms); or

                  (s) default under any of the Other Facility Leases.

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<Page>

SECTION 17 REMEDIES

         SECTION 17.1 REMEDIES FOR LEASE EVENT OF DEFAULT. Upon the occurrence
of any Lease Event of Default and at any time thereafter so long as the same
shall be continuing, the Owner Lessor may, at its option, declare this Facility
Lease to be in default by written notice to the Facility Lessee (PROVIDED, that
this Facility Lease shall automatically be in default without the need for
giving any notice upon the occurrence of a Lease Event of Default in clause (g)
or (h) of SECTION 16) in respect of the Facility Lessee; and at any time
thereafter, so long as the Facility Lessee shall not have remedied all
outstanding Lease Events of Default, the Owner Lessor may, at the Facility
Lessee's sole cost and expense, do one or more of the following as the Owner
Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory Requirements of Law then in effect:

                  (a) proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by the Facility Lessee of the
applicable covenants and terms of this Facility Lease or to recover damages for
breach thereof;

                  (b) by notice in writing to the Facility Lessee, terminate
this Facility Lease whereupon all right of the Facility Lessee to the possession
and use of the Undivided Interest under this Facility Lease shall absolutely
cease and terminate but the Facility Lessee shall remain liable as hereinafter
provided; and thereupon, the Owner Lessor may demand that the Facility Lessee,
and the Facility Lessee shall, upon written demand of the Owner Lessor and at
the Facility Lessee's sole cost and expense, forthwith return possession of the
Undivided Interest to the Owner Lessor in the manner and condition required by,
and otherwise in accordance with all of the provisions of SECTION 5, except
those provisions relating to periods of notice; and the Owner Lessor may
thenceforth hold, possess and enjoy the same free from any right of the Facility
Lessee, or its successor or assigns, to use the Undivided Interest for any
purpose whatever;

                  (c) sell the Owner Lessor's Interest at public or private
sale, as the Owner Lessor may determine, free and clear of any rights of the
Facility Lessee under this Facility Lease and without any duty to account to the
Facility Lessee with respect to such sale or for the proceeds thereof (except to
the extent required by paragraph (f) below if the Owner Lessor elects to
exercise its rights under said paragraph and by Requirements of Law), in which
event (i) Allocated Rent shall cease to accrue and (ii) the Facility Lessee's
obligation to pay Basic Lease Rent or Renewal Rent hereunder due for any periods
subsequent to the date of such sale shall terminate (except to the extent that
Basic Lease Rent or Renewal Rent is to be included in computations under
paragraph (f) below if the Owner Lessor elects to exercise its rights under said
paragraph) and in which event the Owner Lessor shall pay to the Facility Lessee
the Lessor Section 467 Loan Balance, if any, determined as of such date,
PROVIDED, HOWEVER, that the obligation of the Owner Lessor to make such payments
shall be subject to the provisions of Section 3.2(d);

                  (d) hold, keep idle or lease to others the Owner Lessor's
Interest as the Owner Lessor in its sole discretion may determine, free and
clear of any rights of the Facility Lessee under this Facility Lease and without
any duty to account to the Facility

                                       43
<Page>

Lessee with respect to such action or inaction or for any proceeds with respect
thereto, except that the Facility Lessee's obligation to pay Basic Lease Rent or
Renewal Rent with respect to the Undivided Interest due for any periods
subsequent to the date upon which the Facility Lessee shall have been deprived
of possession and use of the Undivided Interest pursuant to this SECTION 17
shall be reduced by the net proceeds, if any, received by the Owner Lessor from
leasing the Undivided Interest to any Person other than the Facility Lessee and
in which event the Owner Lessor shall pay to the Facility Lessee the Lessor
Section 467 Loan Balance, if any, determined as of such date, PROVIDED, HOWEVER,
that the obligation of the Owner Lessor to make such payments shall be subject
to the provisions of Section 3.2(d);

                  (e) whether or not the Owner Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under paragraph (b)
above with respect to the Undivided Interest, the Owner Lessor, by written
notice to the Facility Lessee specifying a Termination Date that shall be not
earlier than 10 days after the date of such notice, may demand that the Facility
Lessee pay to the Owner Lessor, and the Facility Lessee shall pay to the Owner
Lessor, on the Termination Date specified in such notice any due and unpaid, or
accrued and unpaid, Basic Lease Rent or Renewal Rent due through the Termination
Date, any Supplemental Lease Rent due and payable as of the payment date
specified in such notice, plus as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the Basic Lease Rent or Renewal Rent due after the
Termination Date specified in such notice), (i) an amount equal to the excess,
if any, of the sum of the Termination Value plus any Lessee Section 467 Loan
Balance plus any Basic Lease Rent or Renewal Rent due and unpaid, in each case,
computed as of the Termination Date specified in such notice over the Fair
Market Sales Value of the Owner Lessor's Interest as of the Termination Date
specified in such notice; or (ii) an amount equal to the excess, if any, of the
sum of the Termination Value plus any Lessee Section 467 Loan Balance plus any
Basic Lease Rent or Renewal Rent due and unpaid, in each case, computed as of
the Termination Date specified in such notice over the Fair Market Rental Value
of the Owner Lessor's Interest until the end of the Basic Lease Term or the then
current Renewal Lease Term, after discounting such Fair Market Rental Value
semi-annually to present value as of the Termination Date specified in such
notice at a rate equal to the Discount Rate; or (iii) an amount equal to the
Termination Value computed as of the Termination Date specified in such notice
PROVIDED THAT upon payment of such Termination Value by the Facility Lessee
pursuant to this clause (iii) and all other Rent then due and unpaid, or accrued
and unpaid by the Facility Lessee and the payment of the Lessee Section 467 Loan
Balance as of such Termination Date, the Owner Lessor shall proceed to exercise
its commercially reasonable efforts promptly to sell the Undivided Interest at
public or private sale and shall pay over to the Facility Lessee upon
consummation of any such sale the net proceeds of such sale (after deducting
from such proceeds all costs and expenses incurred by the Owner Lessor in
connection therewith and all other amounts that may become payable to the Owner
Lessor, the Security Agent or any other Lease Financing Party) and the Facility
Lessee waives all claims against the Owner Lessor and the Owner Participant in
connection with the sale of the Undivided Interest or the use of commercially
reasonable efforts pursuant to this proviso; PROVIDED FURTHER that in lieu of
paying an amount equal to the Termination Value pursuant to clause (iii) above,
the Facility Lessee may make a rejectable offer in writing to the Owner

                                       44
<Page>

Lessor (within 5 days following the Facility Lessee's receipt of notice by the
Owner Lessor specifying a Termination Date) (an "OFFER") to purchase the
Undivided Interest at a purchase price equal to or greater than Termination
Value (the "OFFER PRICE"). If the Owner Lessor rejects such Offer in writing,
the Facility Lessee shall remain liable to pay Termination Value pursuant to
clause (iii) above, all other Rent then due and unpaid, or accrued and unpaid,
by the Facility Lessee and any Lessee Section 467 Loan Balance, determined as of
the Termination Date PROVIDED THAT (1) the Facility Lessee shall have no
obligation to pay the costs and expenses incurred by the Owner Lessor solely in
connection with any sale of the Undivided Interest and (2) the Owner Lessor
shall proceed to exercise its best efforts promptly to sell the Undivided
Interest at public or private sale and shall pay over to the Facility Lessee
upon consummation of any such sale the proceeds of such sale, but not to exceed
the sum of Termination Value paid by the Facility Lessee plus interest at the
Applicable Rate from the Termination Date until the date of payment of such
proceeds to the Facility Lessee. If the Facility Lessee has made an Offer and
the Owner Lessor accepts such Offer or fails to respond to such Offer within two
(2) Business Days prior to the date on which the Facility Lessee would have been
required to pay Termination Value pursuant to clause (iii) above, the Facility
Lessee shall pay to the Owner Lessor the Offer Price on or before the
Termination Date and upon such payment of the Offer Price and all other Rent
then due and unpaid, or accrued and unpaid, by the Facility Lessee and any
Lessee Section 467 Loan Balance determined as of the Termination Date on the
Termination Date, the Facility Lessee shall no longer remain liable to pay
Termination Value or other amounts pursuant to clause (iii) above and the Owner
Lessor shall forthwith transfer to the Facility Lessee (or its designee) in
accordance with this SECTION 17.1(E) hereof and SECTION 6 of the Facility Site
Lease on an "as is," "where is" and "with all faults" basis, without
representation or warranty other than a warranty as to the absence of Owner
Lessor Liens accompanied by a warranty of the Owner Participant as to the
absence of the Owner Participant Liens, all of its interest in the Owner
Lessor's Interest and execute, acknowledge and deliver, and record and file (as
appropriate), appropriate releases, including a release from the Lien of the
Lease Indenture, and all other documents or instructions necessary or desirable
to effect the foregoing all in form and substance reasonably satisfactory to the
Owner Lessor and at the cost and expense of the Facility Lessee, and upon
payment of such amounts due under this paragraph (e), (x) Allocated Rent shall
cease to accrue, (y) this Facility Lease, and the Facility Lessee's obligation
to pay Basic Lease Rent or Renewal Lease Rent hereunder, as the case may be, due
for any periods subsequent to the date of such payment shall terminate and (z)
the Owner Lessor shall pay to the Facility Lessee the Lessor Section 467 Loan
Balance, if any, determined as of the relevant Termination Date. The obligation
to make such payments shall be subject to the provisions of SECTION 3.2(D); and

                  (f) if the Owner Lessor shall have sold the Owner Lessor's
Interest pursuant to paragraph (c) above, the Owner Lessor may, if it shall so
elect, demand that the Facility Lessee pay to the Owner Lessor, and the Facility
Lessee shall pay to the Owner Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Lease Rent or Renewal Rent
due for any periods subsequent to the date of such sale), an amount equal to (i)
any unpaid Basic Lease Rent or Renewal Rent due and unpaid through the Relevant
Termination Date plus (ii) any Lessee Section 467 Loan

                                       45
<Page>

Balance plus (iii) the amount, if any, by which the Termination Value computed
as of the Termination Date next preceding the date of such sale or, if such sale
occurs on a Rent Payment Date or a Termination Date then computed as of such
date, exceeds the net proceeds of such sale, and, upon payment of such amount,
this Facility Lease and the Facility Lessee's obligation to pay Basic Lease Rent
or Renewal Rent for any periods subsequent to the date of such payment shall
terminate, Allocated Rent shall cease to accrue and the Owner Lessor shall pay
to the Facility Lessee the Lessor Section 467 Loan Balance, if any, determined
as of the relevant Termination Date. The obligation to make such payments shall
be subject to the provisions of SECTION 3.2(D). In addition, the Facility Lessee
shall be liable, except as otherwise provided above, for (i) any and all unpaid
Basic Lease Rent or Renewal Rent due hereunder before, or during the exercise of
any of the foregoing remedies, and (ii) on an After-Tax Basis, for legal fees
and other costs and expenses incurred by reason of the occurrence of any Lease
Event of Default or the exercise of the Owner Lessor's remedies with respect
thereto, including the repayment in full of any costs and expenses necessary to
be expended in connection with the return of the Undivided Interest in
accordance with SECTION 5 hereof, including, without limitation, any costs and
expenses incurred by the Owner Lessor, the Owner Participant and the Lease
Indenture Trustee in connection with retaking constructive possession of, or in
repairing, the Undivided Interest in order to cause it to be in compliance with
all maintenance standards imposed by this Facility Lease.

                  (g) upon the occurrence and during the continuance of a Rent
Default Event, the Owner Lessor may from time to time withdraw amounts from the
Equity Account pursuant to Section 4.6(b) of the Amended Security Deposit
Agreement and subject to the posting of an Equity Letter of Credit required
thereunder.

         SECTION 17.2 CUMULATIVE REMEDIES. The remedies in this Facility Lease
provided in favor of the Owner Lessor shall not be deemed exclusive, but shall
be cumulative and shall be in addition to all other remedies in the Owner
Lessor's favor existing at law or in equity; and the exercise or beginning of
exercise by the Owner Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by the Owner Lessor of any or all of
such other remedies. To the extent permitted by Requirements of Law, the
Facility Lessee hereby waives any rights now or hereafter conferred by statute
or otherwise which may require the Owner Lessor to sell, lease or otherwise use
the Undivided Interest or any Component in mitigation of Owner Lessor's damages
as set forth in this SECTION 17 or which may otherwise limit or modify any of
Owner Lessor's rights and remedies in this SECTION 17.

         SECTION 17.3 NO DELAY OR OMISSION TO BE CONSTRUED AS WAIVER. No delay
or omission to exercise any right, power or remedy accruing to the Owner Lessor
upon any breach or default by the Facility Lessee under this Facility Lease
shall impair any such right, power or remedy of the Owner Lessor, nor shall any
such delay or omission be construed as a waiver of any breach or default, or of
any similar breach or default hereafter occurring; nor shall any waiver of a
single breach or default be deemed a waiver of any subsequent breach or default.

                                       46
<Page>

SECTION 18 SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS

                  Any moneys received by the Owner Lessor or the Security Agent
pursuant to SECTION 10.3, 10.5 OR 11.2 shall, until paid to the Facility Lessee
as provided in accordance with such Sections, be held by the Owner Lessor or the
Security Agent, as the case may be, as security for the Facility Lessee's
obligations under this Facility Lease and be invested in Permitted Investments
by the Owner Lessor or the Security Agent, as the case may be, at the sole risk
of the Facility Lessee, from time to time as directed in writing by the Facility
Lessee if such investments are reasonably available for purchase. Any gain
(including interest received) realized as the result of any such Permitted
Investment (net of any fees, commissions, taxes and other expenses, if any,
incurred in connection with such Permitted Investment) shall be applied or
remitted to the Facility Lessee in the same manner as the principal invested.

SECTION 19 RIGHT TO SUBLEASE

         SECTION 19.1 SUBLEASE. The Facility Lessee shall have the right to
sublease the Undivided Interest without the consent of the Owner Lessor, the
Owner Participant, the Security Agent or the Lease Indenture Trustee if:

                  (a) the sublessee is a United States Person within the meaning
of SECTION 7701(A)(30) of the Code that (i) is a solvent corporation,
partnership, business trust, limited liability company or other person or entity
not then subject to bankruptcy proceedings; and (ii) is not involved in material
pending or unresolved litigation with the Owner Participant or any of its
Affiliates; and (iii) is, or its operating, maintenance and use obligations
under the sublease are guaranteed by, or such obligations are contracted to be
performed by, an experienced operator of United States based, coal-fired
electric generating facilities similar to the Facility;

                  (b) The Owner Lessor, the Owner Participant, so long as the
Lessor Notes are outstanding, the Security Agent and the Bondholder Trustee
shall have received an opinion of counsel, which opinion of counsel shall be
reasonably acceptable to the recipients thereof, to the effect that all material
regulatory approvals required to enter into the sublease have been obtained;

                  (c) the sublease does not extend beyond the scheduled
expiration of the Basic Lease Term or any Renewal Lease Term then in effect or
irrevocably elected by the Facility Lessee (and may be terminated upon early
termination of this Facility Lease) and is expressly subject and subordinate to
this Facility Lease;

                  (d) all terms and conditions of this Facility Lease and the
other Operative Documents and Project Documents remain in effect and the
Facility Lessee remains fully and primarily liable for its obligations under
this Facility Lease, the other Operative Documents and Project Documents;

                  (e) no Lease Default or Lease Event of Default shall have
occurred and be continuing or be created as a result of such sublease;

                                       47
<Page>

                  (f) the sublease prohibits further assignment or subletting;

                  (g) the sublease requires the sublessee to operate and
maintain the Undivided Interest (or to cause the Undivided Interest to be
operated and maintained) in a manner consistent with this Facility Lease;

                  (h) the sublease does not cause the Facility to become
"tax-exempt use property" within the meaning of SECTION 168(H) of the Code
(unless the Facility Lessee shall make a payment to the Owner Participant
contemporaneously with the execution of the sublease that, in the reasonable
judgment of the Owner Participant, compensates the Owner Participant for the
adverse tax consequences resulting from the classification of the Facility as
"tax-exempt use property");

                  (i) Neither the sublease nor the sublessee shall jeopardize
the Owner Lessor's, the Owner Participant's and the Lender or Bondholder
Trustee's exemption from regulation under PUHCA and other laws relating to
electric utilities, generators, wholesalers or retailers; and

                  (j) the Facility sublessee shall pay all reasonable documented
out-of-pocket expenses incurred by the other Lease Financing Parties in
connection with such sublease.

                  As a condition precedent to such sublease, the Facility Lessee
shall provide the Owner Lessor, the Owner Participant and, so long as the Lessor
Notes are outstanding and the Lien of the Lease Indenture shall not have been
terminated or discharged, the Security Agent with all documentation in respect
of such sublease and an opinion of counsel to the effect that such sublease
complies with the provisions of this SECTION 19 (such documentation, counsel and
opinion to be reasonably satisfactory to each such recipient).

SECTION 20 OWNER LESSOR'S RIGHT TO PERFORM

                  If the Facility Lessee fails to make any payment required to
be made by it hereunder or fails to perform or comply with any of its other
agreements contained herein after notice to the Facility Lessee and failure of
the Facility Lessee to so perform or comply within 10 Business Days thereafter,
the Owner Lessor or the Owner Participant may itself make such payment or
perform or comply with such agreement in a reasonable manner, but shall not be
obligated hereunder to do so, and the amount of such payment and of the
reasonable expenses of the Owner Lessor, the Owner Participant or the OP
Guarantor incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, together with interest
thereon at the Overdue Rate, to the extent permitted by the Requirements of Law
shall be deemed to be Supplemental Lease Rent, payable by the Facility Lessee to
the Owner Lessor on demand. Notwithstanding anything to the contrary contained
in the foregoing, the provisions of this SECTION 20 shall in no event restrict
any of the Owner Lessor's rights following the occurrence of a Lease Event of
Default, it being agreed and understood that, subject to SECTION 7.3 of the
Participation Agreement, the Owner Lessor shall be

                                       48
<Page>

entitled to exercise all of its remedies pursuant to SECTION 17 upon the
occurrence of any such event.

SECTION 21 SECURITY FOR OWNER LESSOR'S OBLIGATION TO THE LEASE INDENTURE TRUSTEE

                  In order to secure the Lessor Notes, the Owner Lessor will
assign and grant a first priority security interest in favor of the Lease
Indenture Trustee in and to all of the Owner Lessor's right, title and interest
in, to and under this Facility Lease, and the Undivided Interest (other than
Excepted Payments and the rights to enforce and collect the same). The Facility
Lessee hereby consents to such assignment and to the creation of such Lien and
security interest and acknowledges receipt of copies of the Lease Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent of the Facility Lessee under any
other circumstances. Unless and until the Facility Lessee shall have received
written notice from the Lease Indenture Trustee that the Lien of the Lease
Indenture has been fully discharged, the Lease Indenture Trustee shall have the
right to exercise the rights of the Owner Lessor under this Facility Lease
(other than Excepted Payments and the rights to enforce and collect the same) to
the extent set forth in and subject in each case to the exceptions set forth in
the Lease Indenture. TO THE EXTENT, IF ANY, THAT THIS FACILITY LEASE CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN
EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS FACILITY
LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART
HEREOF OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE LEASE INDENTURE
TRUSTEE ON THE SIGNATURE PAGE THEREOF.

SECTION 22 MISCELLANEOUS

         SECTION 22.1 AMENDMENTS AND WAIVERS. No term, covenant, agreement or
condition of this Facility Lease may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
each party hereto.

         SECTION 22.2 NOTICES. Unless otherwise expressly specified or permitted
by the terms hereof, all communications and notices provided for herein to a
party hereto shall be in writing or shall be produced by a telecommunications
device capable of creating a written record, and any such notice shall become
effective (a) upon personal delivery thereof, including, without limitation, by
overnight mail or courier service, (b) in the case of notice by United States
mail, certified or registered, postage prepaid, return receipt requested, upon
receipt thereof, or (c) in the case of notice by such a telecommunications
device, upon transmission thereof, provided such transmission is promptly
confirmed by either of the methods set forth in clauses (a) or (b) above, in
each case addressed to such party and any copy party at its address set forth
below or at such other address as such party or copy party may from time to time
designate by written notice to the other party:

                                       49
<Page>

                  If to the Owner Lessor:

                  Homer City OL[1]LLC
                  c/o Wells Fargo Bank Minnesota, N.A.
                  Corporate Trustee Services
                  MAC; N2691-090
                  213 Court Street
                  Middletown, CT 06457

                  with a copy to:

                  Wells Fargo Bank Northwest, N.A.
                  Corporate Trust Services
                  MAC; U1254-031
                  Salt Lake City, UT 84111

                  with a copy to the Owner Participant:

                  General Electric Capital Corporation
                  120 Long Ridge Road
                  Stamford, CT 06927
                  Attention: Manager Energy Portfolio
                  Telephone: 203-354-4580
                  Facsimile: 203-357-4890

                  with a copy to:

                  Amy Fisher, Esq.
                  General Electric Capital Corporation
                  120 Long Ridge Road
                  Stamford, CT 06927

                  and to the Lease Indenture Trustee:

                  The Bank of New York
                  c/o United States Trust Company of New York
                  114 West 47th Street, 25th Floor
                  New York, New York 10036
                  Attention: Corporate Trust Administration
                  Facsimile: 212-852-1625

                  with a copy to:

                  David J. Fernandez, Esq.
                  c/o Stadtmauer Bailkin LLP
                  850 Third Avenue 10022
                  Telephone: 212-822-2249
                  Facsimile: 212-980-9578

                  If to the Facility Lessee:

                  Homer City
                  1750 Power Plant Road
                  Homer City, PA 15748-8009
                  724-479-9011

                  with a copy to:

                  Edison Mission Energy
                  18101 Von Karman Avenue
                  Suite 1700
                  Irvine, CA  92612
                  Telephone No.: (949) 752-5588
                  Facsimile No.: (949)
                  Attention:  President, with a copy to General Counsel

         SECTION 22.3 SURVIVAL. Except for the provisions of SECTIONS 3.3, 3.5,
5, 9 AND 17, which shall survive, the warranties and covenants made by each
party hereto shall not survive the expiration or termination of this Facility
Lease in accordance with its terms. Notwithstanding any provisions hereof, any
indemnity contained in Sections 10.1 and 10.2 of the Participation Agreement or
elsewhere in the Operative Documents shall, subject to the provisions thereof,
survive the expiration or early termination of this Facility Lease regardless of
the cause therefor.

         SECTION 22.4 SUCCESSORS AND ASSIGNS. (a) This Facility Lease shall be
binding upon and shall inure to the benefit of, and shall be enforceable by, the
parties hereto and their respective successors and assigns as permitted by and
in accordance with the terms hereof.

                  (b) Except as expressly provided in SECTION 22.4(C), the
Facility Lessee may not assign this Facility Lease or any other Operative
Document or Project Document, or any interest therein, without the prior
written consent of the Owner Lessor.

                  (c) The Facility Lessee may, upon satisfaction of the
conditions set forth herein and in SECTION 22.4(D), without the consent of
the Owner Lessor or the Owner Participant, so long as none of the Owner
Lessor, the Owner Participant and the OP Guarantor becomes subject to
regulation as a "public utility," a "public utility company,"

                                       50
<Page>

a "holding company," a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" within the meaning of the Federal Power Act
or PUHCA as a result of such assignment, assign this Facility Lease and the
corresponding Operative Documents to any person or entity. In the case of an
assignment, upon the transferee's assumption of the Facility Lessee's
obligations under this Facility Lease and the other Operative Documents in
accordance with the terms of this SECTION 22.4(C) and SECTION 22.4(D), the
Facility Lessee shall have no further liability or obligation thereunder, except
any liability and obligation relating to the period prior to such assignment.

                  (d) Any assignment by the Facility Lessee pursuant to SECTION
22.4(B) shall be subject to satisfaction of the following additional conditions:

                                    (1) The Facility Lessee offers to assign
                           the Facility Lease and the corresponding Operative
                           Documents pursuant to Article XIII of the
                           Participation Agreement;

                                    (2) the transferee (or a party which
                           guarantees such transferee's obligations under the
                           Operative Documents assigned to such entity): (i)
                           shall have a credit rating equal to, or greater than,
                           BBB- by S&P and Baa3 by Moody's (ii) shall be
                           organized under the laws of the United States, any
                           state thereof or the District of Columbia, (iii)
                           shall be a corporation, limited liability company or
                           limited partnership; and (iv) shall be substantially
                           engaged in the wholesale power generating business,
                           experienced in coal-fired electricity generation,
                           and, together with its Affiliates, own and operate
                           facilities with not less than 5,000 MW of capacity;

                                    (3) such transfer occurs subsequent to the
                           seventh year of the Lease Term;

                                    (4) the Owner Lessor and the Owner
                           Participant (and, so long as the Lessor Notes are
                           outstanding and the Lien of the Lease Indenture has
                           not been discharged, the Security Agent) shall have
                           received an opinion of counsel, which opinion of
                           counsel shall be reasonably satisfactory to each
                           recipient thereof, to the effect that all regulatory
                           approvals required in connection with such transfer
                           or necessary to assume the Facility Lessee's
                           obligations under the Operative Documents shall have
                           been obtained and such transfer shall not subject the
                           Facility Lessee, the Owner Lessor or the Owner
                           Participant to regulation under PUHCA or state laws
                           and regulations regarding the rate and financial or
                           organizational regulation of electric utilities;

                                    (5) such transfer shall be pursuant to an
                           assignment and assumption agreement in form and
                           substance reasonably satisfactory to the Owner
                           Participant (and, so long as the Lessor Notes are
                           outstanding and the Lien of the Lease Indenture has
                           not been discharged, the Security Agent);

                                    (6) the Owner Lessor and the Owner
                           Participant (and, so long as the Lessor Notes are
                           outstanding and the Lien of the

                                       51
<Page>

                           Lease Indenture has not been discharged, the Security
                           Agent and the Pass Through Trustee) shall have
                           received an opinion of counsel, which opinion of
                           counsel shall be reasonably satisfactory to each
                           recipient thereof, in respect of such assignment and
                           assumption;

                                    (7) the Owner Participant shall have
                           received (x) an opinion reasonably satisfactory to it
                           from Owner Participant's Counsel to the effect that
                           such transfer should not result in any incremental
                           risk of material adverse federal income tax
                           consequences to the Owner Participant or (y) an
                           indemnity against such risk in form and in substance
                           reasonably satisfactory to the Owner Participant;

                                    (8) no Lease Event of Default shall have
                           occurred and be continuing, or shall be created by
                           such transfer;

                                    (9) such transfer by the Facility Lessee
                           shall not result in a Regulatory Event of Loss;

                                    (10) the transferee shall not be involved in
                           material litigation with the Owner Participant or any
                           of its Affiliates;

                                    (11) the Facility Lessee shall pay on an
                           After-Tax Basis all reasonable documented
                           out-of-pocket expenses incurred by the Owner Lessor
                           and the Owner Participant, the Lease Indenture
                           Trustee and the Pass Through Trustees, in connection
                           with such assignment;

                                    (12) concurrently with such transfer, the
                           Facility Lessee assigns to the transferee each Other
                           Facility Lease and, in each such case, the
                           corresponding Operative Documents;

                                    (13) each of the Rating Agencies shall have
                           confirmed the then existing long term secured debt
                           credit rating of the Lender and the Bondholder
                           Trustee; and

                                    (14) unless the Facility Lessee has elected
                           to provide to the Lease Indenture Trustee an
                           indemnity against the risk that such assignment will
                           cause a Tax Event to occur to any direct or indirect
                           holder of any Lessor Note, the Lease Indenture
                           Trustee shall have received an opinion of counsel to
                           the Facility Lessee (with customary qualifications
                           and limitations and otherwise reasonably satisfactory
                           to the Lease Indenture Trustee), addressed to the
                           Lease Indenture Trustee, the Lender and the
                           Bondholder Trustee, to the effect that such
                           assignment shall not cause a Tax Event to occur to
                           any direct or indirect holder of any Lessor Note.

                                       52
<Page>

         SECTION 22.5 TRUE LEASE; SEPARATE LEGAL OBLIGATIONS. This Facility
Lease shall constitute an agreement of lease and nothing herein shall be
construed as conveying to the Facility Lessee any right, title or interest in or
to the Undivided Interest except as lessee only. The parties hereto hereby agree
that the Facility Lessee's obligation to make Excepted Payments is a separate
and independent obligation from its obligation to make other Rent payments, and
that the Facility Lessee's obligation to make Excepted Payments may be assigned,
pledged or otherwise transferred separately from the Facility Lessee's
obligations to make other Rent payments. The obligation to make Excepted
Payments has been included herein for the convenience of the parties.

         SECTION 22.6 GOVERNING LAW. This Facility Lease shall be governed by,
and construed in accordance with, the laws of the State of Pennsylvania
applicable to contracts made and performed in such State and any Requirement of
Law of the United States of America. To the fullest extent permitted by law,
the Facility Lessee and the Owner Lessor hereby unconditionally and irrevocably
waive any claim to assert that the law of any other jurisdiction governs this
Facility Lease, except as expressly otherwise provided above.

         SECTION 22.7 SEVERABILITY. Any provision of this Facility Lease that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         SECTION 22.8 COUNTERPARTS. This Facility Lease may be executed by the
parties hereto in separate counterparts, each of which, subject to SECTION 21,
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

         SECTION 22.9 HEADINGS AND TABLE OF CONTENTS. The headings of the
sections of this Facility Lease and the table of contents are inserted for
purposes of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.

         SECTION 22.10 FURTHER ASSURANCES. Each party hereto will promptly and
duly execute and deliver such further documents and assurances for and take such
further

                                       53
<Page>

action reasonably requested by the other party, all as may be reasonably
necessary to carry out more effectively the intent and purpose of this Facility
Lease.

         SECTION 22.11 EFFECTIVENESS. This Facility Lease has been dated as of
the date first above written for convenience only. This Facility Lease shall be
effective on the date of execution and delivery by the Facility Lessee and the
Owner Lessor.

         SECTION 22.12 LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Facility Lease is executed and
delivered by the Trust Company, not individually or personally but solely as
manager of the Owner Lessor under the Owner Lessor LLC Agreement, in the
exercise of the powers and authority conferred and vested in it pursuant
thereto, (b) each of the representations, undertakings and agreements herein
made on the part of the Owner Lessor is made and intended not as personal a
representation, undertaking and agreement by the Trust Company but is made and
intended for the purpose for binding only the Owner Lessor, (c) nothing herein
contained shall be construed as creating any liability on the Trust Company
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto or by any Person claiming by, through or under the parties hereto
and (d) under no circumstances shall the Trust Company be personally liable for
the payment of any indebtedness or expenses of the Owner Lessor or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Owner Lessor under this Facility Lease.

         SECTION 22.13 MEASURING LIFE. If and to the extent that any of the
rights and privileges granted under this Facility Lease, would, in the absence
of the limitation imposed by this sentence, be invalid or unenforceable as being
in violation of the rule against perpetuities or any other rule or law relating
to the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Facility Lease, such options, rights and privileges, subject
to the respective conditions hereof governing the exercise of such options,
rights and privileges, will be exercisable only during (a) the longer of (i) a
period which will end twenty-one (21) years after the death of the last survivor
of the descendants living on the date of the execution of this Facility Lease of
the following Presidents of the United States: Franklin D. Roosevelt, Harry S.
Truman, Dwight D. Eisenhower, John F. Kennedy, Lyndon B. Johnson, Richard M.
Nixon, Gerald R. Ford, James E. Carter, Ronald W. Reagan, George H.W. Bush,
William J. Clinton and George W. Bush or (ii) the period provided under the
Uniform Statutory Rule Against Perpetuities or (b) the specific applicable
period of time expressed in this Facility Lease, whichever of (a) and (b) is
shorter.

                                       54
<Page>

                  IN WITNESS WHEREOF, the Owner Lessor and the Facility Lessee
have caused this Facility Lease to be duly executed and delivered under seal by
their respective officers thereunto duly authorized.

                                      HOMER CITY OL1 LLC

                                      By: Wells Fargo Bank Northwest, National
                                          Association, not in its individual
                                          capacity but solely as Owner Manager

                                      By:
                                           -------------------------------------
                                      Name:
                                      Title:

                                      EME HOMER CITY GENERATION, L.P.

                                      By:  MISSION ENERGY WESTSIDE, as its
                                           General Partner

                                      By:
                                           -------------------------------------
                                      Name:
                                      Title:

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