Document:

<PAGE>   1
                                                                  EXHIBIT 10.100

                                                                         DRAFT
                                                                        12/22/99

                                   $30,000,000

                      SENIOR SUBORDINATED CREDIT AGREEMENT

                         Dated as of December -29, 1999

                                      Among

                            EAST COAST POWER L.L.C.,

                                  as Borrower,

                             BANK OF AMERICA, N.A.,

                               as Initial Lender,

                                       and

                             BANK OF AMERICA, N.A.,

                                    as Agent

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                                        Page
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                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

<S>                                                                                                              <C>
1.01.  Certain Defined Terms......................................................................................1
1.02.  Computation of Time Periods................................................................................1
1.03.  Accounting Terms...........................................................................................1
1.04.  Best Knowledge.............................................................................................1

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
2.01.  The Advances...............................................................................................2
2.02.  Making the Advances........................................................................................2
2.03.  Repayment of Advances......................................................................................3
2.04.  Termination or Reduction of the Commitments................................................................3
2.05.  Prepayments, Etc...........................................................................................3
2.06.  Interest...................................................................................................4
2.07.  Fees.......................................................................................................6
2.08.  Conversion of Advances.....................................................................................7
2.09.  Increased Costs, Etc.......................................................................................7
2.10.  Payments and Computations..................................................................................9
2.11.  Taxes.....................................................................................................10
2.12.  Sharing of Payments, Etc.  ...............................................................................13
2.13.  Use of Proceeds...........................................................................................13
2.14.  Mandatory Assignment by a Lender; Mitigation..............................................................13

                                   ARTICLE III

                              CONDITIONS PRECEDENT
3.01.  Conditions Precedent to Initial Borrowing.................................................................14
3.02.  Conditions Precedent to Each Borrowing....................................................................18
3.03.  Conditions Precedent to Extension of Maturity Date........................................................18
3.04.  Determinations Under Sections 3.01, 3.02 and 3.03.........................................................20
</TABLE>

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<TABLE>
<S>                                                                                                              <C>
                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
4.01.  Representations and Warranties............................................................................20

                                    ARTICLE V

                                    COVENANTS
5.01.  Covenants.................................................................................................27
5.02.  Additional Covenants if Maturity Date Is Extended.........................................................28

                                   ARTICLE VI

                                EVENTS OF DEFAULT
6.01.  Events of Default.........................................................................................30

                                   ARTICLE VII

                                   THE AGENT
7.01.  Authorization and Action..................................................................................34
7.02.  Agents' Reliance, Etc.....................................................................................34
7.03.  Bank of America and Affiliates............................................................................35
7.04.  Lender Credit Decision....................................................................................36
7.05.  Indemnification...........................................................................................36
7.06.  Successor Agents..........................................................................................37

                                  ARTICLE VIII

                            SUBORDINATION PROVISIONS
8.01.  Subordinated Debt Subordinated to Senior Debt.............................................................37
8.02.  Borrower Not to Make Payments with Respect to Subordinated Debt
         in Certain Circumstances................................................................................38
8.03.  Subordinated Debt Subordinated to Prior Payment of All Senior Debt
         on Dissolution, Liquidation or Reorganization for the Benefit of
         Creditors of Borrower...................................................................................38
8.04.  Lenders to be Subrogated to Rights of Holders of Senior Debt..............................................39
8.05.  Subordinated Debt Unconditional...........................................................................40
8.06.  Subordination Rights Not Impaired by Acts or Omissions of Borrower or
         Holders of Senior Debt..................................................................................40
8.07.  Article Not to Prevent Events of Default..................................................................41
8.08.  Other Provisions Subject Hereto...........................................................................41

                                   ARTICLE IX

                                  MISCELLANEOUS
9.01.  Amendments, Etc...........................................................................................41
9.02.  Notices, Etc..............................................................................................42
9.03.  No Waiver; Remedies.......................................................................................42
</TABLE>

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<TABLE>
<S>                                                                                                              <C>
9.04.  Costs and Expenses........................................................................................42
9.05.  Right of Set-off..........................................................................................44
9.06.  Binding Effect............................................................................................45
9.07.  Assignments and Participations............................................................................45
9.08.  Execution in Counterparts.................................................................................48
9.09.  Confidentiality...........................................................................................48
9.10.  Severability..............................................................................................49
9.11.  Governing Law; Entire Agreement...........................................................................49
</TABLE>

Annex A             -  Definitions

                                    SCHEDULES

Schedule I          -  Commitments and Applicable Lending Offices
Schedule 4.01(b)    -  Subsidiaries
Schedule 4.01(x)    -  Existing Debt
Schedule 4.01(y)    -  Material Contracts
Schedule 4.01(z)    -  Investments

<PAGE>   5
                                       iv

                                    EXHIBITS

Exhibit A           -  Form of Note
Exhibit B           -  Form of Notice of Borrowing
Exhibit C           -  Form of Assignment and Acceptance
Exhibit D           -  Form of Annual Operating Budget
Exhibit E-1         -  Form of Opinion of ENA In-House Counsel
Exhibit E-2         -  Form of Opinion of Vinson & Elkins
<PAGE>   6
                                                                  EXHIBIT 10.100

                      SENIOR SUBORDINATED CREDIT AGREEMENT

                  SENIOR SUBORDINATED CREDIT AGREEMENT dated as of December 29,
1999, among (a) EAST COAST POWER L.L.C., a limited liability company organized
under the laws of Delaware (the "Borrower"), (b) BANK OF AMERICA, N.A. ("Bank of
America"), as initial lender (the "Initial Lender"), and (c) BANK OF AMERICA, as
agent (together with any successor appointed pursuant to Article VII, the
"Agent") for the Lenders (as defined in Annex A hereto).

PRELIMINARY STATEMENTS:

                  The Borrower has requested that the Lenders make a senior
subordinated credit facility available to the Borrower in the amount of
$30,000,000 for the purposes outlined herein, and the Lenders have indicated
their willingness to extend such facility to the Borrower on the terms and
conditions of this Agreement.

                  NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. Certain Defined Terms. As used in this Agreement
(including the schedules and exhibits hereto), unless otherwise defined herein,
the terms used herein have the meanings specified in Annex A hereto.

                  SECTION 1.02. Computation of Time Periods. In this Agreement
and the Notes in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding".

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(g) ("GAAP").

                  SECTION 1.04. Best Knowledge. In this Agreement, any reference
to the "best knowledge" of any Person shall mean the complete knowledge of such
Person or of each Responsible Officer of such Person, as the case may be, after
due inquiry, in good faith and with its full abilities and attention.

<PAGE>   7
                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

                  SECTION 2.01. The Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make advances (each, an
"Advance") to the Borrower from time to time on any Business Day during the
period from the date hereof until the Termination Date, in an amount for each
such Advance not to exceed such Lender's Unused Commitment at such time. Each
Borrowing shall be in an aggregate amount of $2,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of Advances made
simultaneously by the Lenders ratably according to their Unused Commitments.
Within the limits of each Lender's Unused Commitment in effect from time to
time, the Borrower may borrow under this Section 2.01. Amounts borrowed under
this Section 2.01 and repaid or prepaid may not be reborrowed.

                  SECTION 2.02. Making the Advances. (a) Each Borrowing shall be
made on notice, given not later than 11:00 A.M. (Charlotte, North Carolina time)
on the third Business Day prior to the date of such proposed Borrowing in the
case of a Borrowing consisting of Eurodollar Rate Advances, or the first
Business Day prior to the date of such proposed Borrowing in the case of a
Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which
shall give to each Lender prompt notice thereof by telex or telecopier. Such
notice of a Borrowing (the "Notice of Borrowing") shall be in writing or by
telex or telecopier, in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) aggregate amount of such
Borrowing, (iii) Type of Advances comprising such Borrowing and (iv) in the case
of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period
for each such Advance. Each Lender shall, before 11:00 A.M. (Charlotte, North
Carolina time) on the date of such Borrowing, make available for the account of
its Applicable Lending Office to the Agent at the Agent's Account, in same day
funds, such Lender's ratable portion of such Borrowing in accordance with the
respective Commitments of such Lender and the other Lenders. After the Agent's
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Borrower
in the amount set forth in the Notice of Borrowing by transferring such funds as
directed by the Borrower to the Agent in writing.

                  (b) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. The Borrower shall indemnify each Lender against any loss, cost
or expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in any Notice of Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund the Advance to be made by such Lender as part of the related Borrowing
when such Advance, as a result of such failure, is not made on such date.

                  (c) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume
that such Lender has made such portion available to the Agent on the date of
such Borrowing in accordance with subsection (a) of this Section 2.02

<PAGE>   8
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the Agent, such
Lender and the Borrower severally agree to repay or pay to the Agent forthwith
on demand such corresponding amount and to pay interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid or paid to the Agent, at (i) in the case of the Borrower, the
interest rate applicable at such time under Section 2.06 to Advances comprising
such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If
such Lender shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such Borrowing for all
purposes.

                  (d) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of such Borrowing.

                  SECTION 2.03. Repayment of Advances. (a) On the Maturity Date,
the Borrower shall repay to the Agent for the ratable account of the Lenders the
aggregate principal amount of the Advances outstanding on such date, together
with all accrued and unpaid interest on such principal amount and all fees,
expenses and other amounts owing hereunder and under the Notes.

                  (b) Subject to the satisfaction of each of the terms and
conditions set forth in Section 3.03, the Maturity Date shall automatically be
extended from the Initial Maturity Date to the Extended Maturity Date. The Agent
shall promptly notify each of the Lenders of such extension of the Maturity
Date.

                  SECTION 2.04. Termination or Reduction of the Commitments. The
Borrower may, upon at least five Business Days' notice to the Agent, terminate
in whole or reduce in part the Unused Commitments; provided, however, that each
partial reduction of the Unused Commitments (i) shall be in an aggregate amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii)
shall be made ratably among the Lenders in accordance with their Commitments.

                  SECTION 2.05. Prepayments, Etc. (a) Optional. The Borrower
may, upon at least one Business Day's notice in the case of Base Rate Advances
and three Business Days' notice in the case of Eurodollar Rate Advances stating
the proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Borrower shall, prepay the outstanding aggregate principal
amount of the Advances to it in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid;
provided, however, that (i) each partial prepayment shall be in an aggregate
principal amount of $2,000,000 or an integral multiple of $1,000,000 in excess
thereof and (ii) if any prepayment of a Eurodollar Rate Advance is made on a
date other than the last day of an Interest Period for such Advance, the
Borrower shall also pay any amounts owing pursuant to Section 9.04(c).

<PAGE>   9
                  (b) Mandatory. (i) The Borrower shall, on the date of receipt
by it of Net Proceeds from the issuance by the Borrower of the Refinancing
Securities, prepay an aggregate principal amount of the outstanding Advances
equal to the lesser of (A) the aggregate outstanding principal amount of the
Advances (plus all amounts payable pursuant to clause (iii) of this Section
2.05(b) and all fees, expenses, costs, indemnification payments and all other
amounts payable hereunder) and (B) the aggregate amount of such Net Proceeds.

                  (ii) In the event that the Maturity Date shall be extended
pursuant to Section 3.03, the Borrower shall, on the final Business Day of
September, 2000, prepay an aggregate principal amount of the outstanding
Advances equal to the lesser of (A) the aggregate outstanding principal amount
of the Advances (plus all amounts payable pursuant to clause (iii) of this
Section 2.05(b) and all fees, expenses, costs, indemnification payments and all
other amounts payable hereunder) and (B) the aggregate amount of Available Cash
of the Borrower for the period from the Initial Maturity Date through such final
Business Day of September, 2000.

                  (iii) All prepayments under this Section 2.05(b) shall be made
together with (A) all accrued interest to the date of such prepayment on the
principal amount prepaid and (B) if any prepayment of a Eurodollar Rate Advance
is made on a date other than the last day of an Interest Period for such
Advance, any amounts owing pursuant to Section 9.04(c).

                  (iv) All prepayments under this Section 2.05(b) shall be
applied first to pay fees, expenses, costs, indemnification payments and all
other amounts (other than principal and interest) payable hereunder, second to
pay interest and third to prepay the outstanding principal of the Advances.

                  SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:

                  (i) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance, a rate per annum equal at all times to the sum of
         (A) the Base Rate in effect from time to time plus (B) the Applicable
         Margin for such Advance, payable in arrears quarterly on the last
         Business Day of each March, June, September and December during such
         periods and on the date such Base Rate Advance shall be Converted or
         paid in full.

                  (ii) Eurodollar Rate Advances. During such periods as such
         Advance is a Eurodollar Rate Advance, a rate per annum equal at all
         times during each Interest Period for such Advance to the sum of (A)
         the Eurodollar Rate for such Interest Period for such Advance plus (B)
         the Applicable Margin for such Advance, payable in arrears on the last
         day of such Interest Period and, if such Interest Period has a duration
         of more than three months, on each day that occurs during such Interest
         Period every three months from the first day of such Interest Period
         and on the date such Eurodollar Rate Advance shall be Converted or paid
         in full.

<PAGE>   10
                  (b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default, the Borrower shall pay interest on (i) the
unpaid principal amount of each Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a
rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above
and (ii) to the fullest extent permitted by law, the amount of any interest, fee
or other amount payable hereunder that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of interest, on the Type of Advance on which such interest has
accrued pursuant to clause (a)(i) or (a)(ii) above, and, in all other cases, on
Base Rate Advances pursuant to clause (a)(i) above.

                  (c) Information from Reference Banks. (i) Each Reference Bank
shall furnish to the Agent timely information for the purpose of determining
each Eurodollar Rate for which such information is required under clause (c) of
the definition of "Eurodollar Rate". If any one or more of the Reference Banks
shall not furnish such timely information to the Agent for the purpose of
determining any such interest rate, the Agent shall determine such interest rate
on the basis of timely information furnished by the remaining Reference Banks.

                  (ii) If fewer than two Reference Banks are able to furnish
timely information to the Agent for determining the Eurodollar Rate for any
Eurodollar Rate Advances for which such information is required under clause (c)
of the definition of "Eurodollar Rate",

                  (A) the Agent shall forthwith notify the Borrower and the
         Lenders that the interest rate cannot be determined for such Eurodollar
         Rate Advances,

                  (B) each such Eurodollar Rate Advance will automatically, on
         the last day of the then existing Interest Period therefor, convert
         into a Base Rate Advance (or, if such Advance is then a Base Rate
         Advance, will continue as a Base Rate Advance), and

                  (C) the obligation of the Lenders to make, or to Convert
         Advances into, Eurodollar Rate Advances shall be suspended until the
         Agent shall notify the Borrower and the Lenders that the circumstances
         causing such suspension no longer exist.

                  (d) Notice of Interest Period and Interest Rate. Promptly
after receipt of the Notice of Borrowing pursuant to Section 2.02(a), a notice
of Conversion pursuant to Section 2.08 or a notice of selection of an Interest
Period pursuant to the terms of the definition of "Interest Period", the Agent
shall give notice to the Borrower and each Lender of the applicable Interest
Period and the applicable interest rate determined by the Agent for purposes of
clause (a)(i) or (ii) above, as applicable, and, if required under clause (c) of
the definition of "Eurodollar Rate", the applicable rate, if any, furnished by
each Reference Bank for the purpose of determining the applicable interest rate
under clause (a)(ii) above.

<PAGE>   11
                  (e) Adjustments to Applicable Margins. In the event that the
syndication of the Advances contemplated by Section 5.01(c) cannot be achieved
in a manner satisfactory to the Agent and the Arranger on the terms set forth
herein, the Agent may, in consultation with the Borrower, adjust the Applicable
Margin for any of the Advances and/or the applicable fees described in the Fee
Letter if the Agent and the Arranger determine that such adjustments are
advisable to ensure a successful syndication of the Advances or an optimal
credit structure of the Advances; provided that (i) the aggregate amount of the
Advances shall remain unchanged, (ii) no such adjustments shall cause the
Borrower to be in default under the Indenture and (iii) Section 6.01 and
Article III of this Agreement shall remain unchanged and (iv) such adjustments
may not be made on more than one occasion. If the Agent and the Arranger
determine to make any such change in the Applicable Margin for any Advances
and/or any of the applicable fees described in the Fee Letter, the Agent shall
give notice to the Borrower of the adjusted Applicable Margin for such Advances
and/or of such adjusted fees, and, from and after the date of such notice, (i)
the Applicable Margin for such Advances shall be equal to such adjusted
Applicable Margin and (ii) the applicable fees payable under the Fee Letter
shall be equal to such adjusted fees.

                  SECTION 2.07. Fees. (a) Commitment Fee. The Borrower shall pay
to the Agent for the account of the Lenders a commitment fee, from the date
hereof in the case of the Initial Lender and from the effective date specified
in the Assignment and Acceptance pursuant to which it became a Lender in the
case of each other Lender until the Termination Date, payable in arrears
quarterly on the last Business Day of March, 2000, and on the Termination Date,
at the rate of 1/2 of 1% per annum on the average daily Unused Commitment of
such Lender.

                  (b) Other Fees. The Borrower shall pay, or cause to be paid to
the Agent and the Arranger, all of the nonrefundable fees set forth in the Fee
Letter in accordance with the terms thereof and shall observe and perform all of
the other terms and conditions thereof. The Obligation of the Borrower to pay
the fees set forth in the Fee Letter shall not be subject to counterclaim or
setoff for, or be otherwise affected by, any claim or dispute that the Borrower
may have with any Lender, the Agent or the Arranger. Neither the Borrower nor
the Agent shall disclose the matters contained in the Fee Letter to any Person
other than their respective accountants, attorneys and other advisors, and then
only in connection with the transactions contemplated herein and on a
confidential basis, except for such disclosure of the aggregate amount of fees
payable pursuant thereto as the Borrower or the Agent is required by applicable
law, in the reasonable opinion of its counsel, to make.

                  SECTION 2.08. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (Charlotte, North Carolina time) on the third Business Day prior to
the date of the proposed Conversion and subject to the provisions of Sections
2.06 and 2.09, Convert all or any portion of the Advances of one Type into
Advances of the other Type; provided, however, that (i) any Conversion of
Eurodollar Rate Advances into Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances, (ii) any Conversion
of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not
less than $5,000,000 and (iii) each Conversion of Advances

<PAGE>   12
shall be made ratably among the Lenders in accordance with their Commitments.
Each such notice of Conversion shall, within the restrictions specified above,
specify (A) the date of such Conversion and (B) the Advances to be Converted.
Each notice of Conversion shall be irrevocable and binding on the Borrower.

                  (b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to an amount that, when divided
by the number of Lenders on such date, is less than $1,000,000, such Advances
shall automatically Convert into Base Rate Advances.

                  (ii) Upon the occurrence and during the continuance of any
Default, (A) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(B) the obligation of the Lenders to Convert Advances into Eurodollar Rate
Advances shall be suspended.

                  SECTION 2.09. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change (other than any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation by any
Governmental Authority, central bank or comparable entity or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority that becomes effective or is made after the date of this Agreement
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or of making, funding or maintaining
Eurodollar Rate Advances (excluding for purposes of this Section 2.09 any such
increased costs resulting from (A) Taxes or Other Taxes (as to which Section
2.11 shall govern) and (B) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender is organized or has
either of its Applicable Lending Offices or any political subdivision thereof),
then the Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate in reasonable detail as to the basis for and the
amount of such increased cost, submitted to the Borrower by such Lender, shall
be conclusive and binding for all purposes, absent manifest error. No Lender
shall be permitted to recover any such costs to the extent such costs were
incurred or accrued more than 60 days after such Lender first obtains knowledge
of the incurrence or accrual of such costs.

                  (b) If any Lender determines that compliance with any law or
regulation or any guideline, directive or request from any central bank or other
Governmental Authority, or any change therein or in the implementation,
administration or enforcement thereof (whether or not having the force of law)
affects or would affect the amount of capital required or expected to be
maintained by such Lender (or either of the Applicable Lending Offices of such
Lender) or any Person controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of such type (taking into account such
Lender's or such Person's policies with respect to capital adequacy), then,

<PAGE>   13
upon demand by such Lender (with a copy of such demand to the Agent), the
Borrower shall pay to the Agent for the account of such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate
such Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. A certificate in reasonable
detail as to such amounts and the basis therefor submitted to the Borrower by
such Lender shall be conclusive and binding for all purposes, absent manifest
error. No Lender shall be permitted to recover any such amount to the extent
such amount was incurred or accrued more than 60 days after such Lender first
obtains knowledge of the incurrence or accrual of such costs.

                  (c) If, with respect to any Eurodollar Rate Advances, the
Required Lenders notify the Agent that the Eurodollar Rate for any Interest
Period for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Agent shall forthwith so notify the Borrower and the Lenders,
whereupon (i) each such Eurodollar Rate Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to Convert Advances into
Eurodollar Rate Advances shall be suspended until the Agent shall notify the
Borrower that such Lenders have determined that the circumstances causing such
suspension no longer exist.

                  (d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other Governmental
Authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Agent, (i) each Eurodollar Rate Advance will automatically, upon
such demand, Convert into a Base Rate Advance and (ii) the obligation of the
Lenders to Convert Advances into Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower that such Lender has determined that
the circumstances causing such suspension no longer exist.

                  SECTION 2.10. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or set-off, not later than 11:00 A.M. (Charlotte, North Carolina
time) on the day when due in U.S. dollars to the Agent at the Agent's Account in
same day funds. The Agent will promptly thereafter cause like funds to be
distributed (i) if such payment by the Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable hereunder and
under the Notes to more than one Lender, to such Lenders for the account of
their respective Applicable Lending Offices ratably in accordance with the
amounts of such respective Obligations then payable to such Lenders and (ii) if
such payment by the Borrower is in respect of any Obligation then payable
hereunder to one Lender, to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to

<PAGE>   14
Section 9.07(d), from and after the effective date of such Assignment and
Acceptance, the Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignee thereunder, and
the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.

                  (b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under the
Note held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.

                  (c) All computations of interest based on the Eurodollar Rate
and of all fees shall be made by the Agent on the basis of a year of 360 days
(and, with respect to interest based on the Base Rate, a year of 365 or 366
days, as the case may be), in each case for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest, fees or commissions are payable. Each determination by the Agent of an
interest rate, fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.

                  (d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

                  (e) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender hereunder
or under the Notes that the Borrower will not make such payment in full, the
Agent may assume that the Borrower has made such payment in full to the Agent on
such date and the Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, each such Lender shall repay to the Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Agent, at the
Federal Funds Rate.

                  SECTION 2.11. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.10,
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes that are imposed on its overall net income by the United States and
taxes that are imposed on its overall net income (and franchise taxes imposed in
lieu thereof) by the state or foreign jurisdiction under the laws of which such
Lender (or its Applicable Lending Office) or the Agent, as the case may be, is
organized or any political subdivision thereof and, in the case of each Lender,
taxes that are imposed on its overall net income (and franchise taxes imposed in
lieu thereof) by the state or foreign

<PAGE>   15
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum
payable by the Borrower shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.11) such Lender or the Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.

                  (b) In addition, the Borrower shall pay any and all present or
future stamp, documentary taxes, excise taxes and any other property or similar
taxes or charges or similar levies that arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, performance
under, or otherwise with respect to, this Agreement or any Note (hereinafter
referred to as "Other Taxes").

                  (c) The Borrower shall indemnify each Lender and the Agent for
and hold it harmless against the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes of any kind imposed or
asserted by any jurisdiction on amounts payable under this Section 2.11) imposed
on or paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30 days from
the date such Lender or the Agent (as the case may be) makes written demand
therefor.

                  (d) Each Lender organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of the Initial Lender and on or prior to
the date of the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender, and from time to time thereafter as requested
in writing by the Borrower or Agent (but only so long thereafter as such Lender
remains lawfully able to do so), shall provide each of the Agent and the
Borrower with two original Internal Revenue Service forms 1001 or 4224 or (in
the case of a Lender that has certified in writing to the Agent that it is not a
"bank" as defined in Section 881(c)(3)(A) of the Internal Revenue Code) form W-8
(and, if such Lender delivers a form W-8, a certificate representing that such
Lender is not a "bank" for purposes of Section 881(c) of the Internal Revenue
Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or any
successor or other form prescribed by the Internal Revenue Service, certifying
that such Lender is exempt from or entitled to a reduced rate

<PAGE>   16
of United States withholding tax on payments pursuant to this Agreement or the
Notes or, in the case of a Lender providing a form W-8, certifying that such
Lender is a foreign corporation, partnership, estate or trust. If the form
provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender provides the appropriate form certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided,
however, that, if at the date of the Assignment and Acceptance pursuant to which
a Lender becomes a party to this Agreement, the Lender assignor was entitled to
payments under subsection (a) of this Section 2.11 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United
States withholding tax, if any, applicable with respect to the Lender assignee
on such date. If any form or document referred to in this subsection (e)
requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service form 1001, 4224 or W-8 (or the related certificate described
above), that the Lender reasonably considers to be confidential, the Lender
shall give notice thereof to the Borrower and shall not be obligated to include
in such form or document such confidential information.

                  (e) For any period with respect to which a Lender has failed
to provide the Borrower with the appropriate form described in subsection (d)
above (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which a form originally was required to be
provided or if such form otherwise is not required under subsection (d) above),
such Lender shall not be entitled to indemnification under subsection (a) or (c)
of this Section 2.11 with respect to Taxes imposed by the United States by
reason of such failure; provided, however, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.

                  (f) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 9.02,
the original or a certified copy of a receipt evidencing such payment.

                  (g) If any Lender determines, in its sole discretion, that it
has finally and irrevocably realized, by reason of a refund of any Taxes that
have been paid or reimbursed by the Borrower pursuant to Section 2.11(a) or
2.11(c) in respect of payments under this Agreement or any Note or credit in
respect of such Taxes against any tax payable by it, a current monetary benefit
that it would otherwise not have obtained and that would result in the total
payments made under this Section 2.11 exceeding that amount needed to make such
Lender whole, such Lender shall, to the extent that it determines in its sole
discretion that it can do so without prejudice to the retention of the amount of
such refund or credit, pay to the Borrower following actual realization of such
benefit and without any interest thereon, an amount equal to the lesser of (i)
the amount of such benefit and

<PAGE>   17
(ii) the amount of such excess, in each case after deducting therefrom all
out-of-pocket expenses incurred by or on behalf of such Lender in securing such
refund or credit; provided that the Borrower agrees, upon the request of such
Lender, to return the amount of such refund or credit to such Lender, together
with the amount of all additional out-of-pocket expenses, penalties, interest or
other charges in respect thereof, if such Lender is required to repay or
otherwise loses the benefit of such refund or credit. Nothing in this Section
2.11(g) shall be construed to interfere with the right of a Lender to arrange
its tax affairs in whatever manner it thinks fit or require any Lender to claim
any refund or credit, or to require any Lender to make available to the Borrower
any of its tax returns or any other information relating to its Taxes that it
deems to be confidential.

                  (h) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.11 shall survive the payment in full of the Notes
and all other Obligations of the Borrower hereunder.

                  SECTION 2.12. Sharing of Payments, Etc. If any Lender shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (a) on account of Obligations
due and payable to such Lender hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lenders hereunder and
under the Notes at such time) of payments on account of the Obligations due and
payable to all Lenders hereunder and under the Notes at such time obtained by
all the Lenders at such time or (b) on account of Obligations owing (but not due
and payable) to such Lender hereunder and under the Notes at such time in excess
of its ratable share (according to the proportion of (i) the amount of such
Obligations owing to such Lender at such time to (ii) the aggregate amount of
the Obligations owing (but not due and payable) to all Lenders hereunder and
under the Notes at such time) of payments on account of the Obligations owing
(but not due and payable) to all Lenders hereunder and under the Notes at such
time obtained by all of the Lenders at such time, such Lender shall forthwith
purchase from the other Lenders such participations in the Obligations due and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each other
Lender shall be rescinded and such other Lender shall repay to the purchasing
Lender the purchase price to the extent of such Lender's ratable share
(according to the proportion of (i) the purchase price paid to such Lender to
(ii) the aggregate purchase price paid to all Lenders) of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such other Lender's required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.12 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.

<PAGE>   18
                  SECTION 2.13. Use of Proceeds. The proceeds of the Advances
shall be used (and the Borrower agrees that it shall use such proceeds) solely
for general corporate purposes of the Borrower and its Subsidiaries and to pay
fees and expenses payable by the Borrower under this Agreement.

                  SECTION 2.14. Mandatory Assignment by a Lender; Mitigation. If
any Lender requests from the Borrower either reimbursement for increased costs
pursuant to Section 2.09 or payment of or reimbursement for Taxes pursuant to
Section 2.11, or if any Lender notifies the Agent that it is unlawful for such
Lender or its Eurodollar Lending Office to perform its obligations hereunder
pursuant to Section 2.09(d), (a) such Lender will, upon three Business Days'
notice by the Borrower to such Lender and the Agent, to the extent not
inconsistent with such Lender's internal policies and applicable legal and
regulatory restrictions, use reasonable efforts to make, fund or maintain its
Eurodollar Rate Advances through another Eurodollar Lending Office of such
Lender if (i) as a result thereof the additional amounts required to be paid
pursuant to Section 2.09 or 2.11, as applicable, in respect of such Eurodollar
Rate Advances would be eliminated or reduced or the provisions of Section
2.09(d) would not apply to such Lender, as applicable, and (ii) as determined by
such Lender in good faith but in its sole discretion, the making or maintaining
of such Eurodollar Rate Advances through such other Eurodollar Lending Office
would not be otherwise disadvantageous to such Lender, and (b) unless such
Lender has theretofore taken steps to remove or cure, and has removed or cured,
the conditions creating such obligation to pay such additional amounts or the
circumstances described in Section 2.09(d), the Borrower may designate an
Eligible Assignee to purchase for cash (pursuant to an Assignment and
Acceptance) all, but not less than all, of the Advances then owing to such
Lender and all, but not less than all, of such Lender's rights and obligations
hereunder, without recourse to or warranty by, or expense to, such Lender, for a
purchase price equal to the outstanding principal amount of each such Advance
then owing to such Lender plus any accrued but unpaid interest thereon and any
accrued but unpaid fees owing thereto and, in addition, (A) all additional costs
reimbursements, expense reimbursements and indemnities, if any, owing in respect
of the Advances owed to such Lender hereunder, and all other accrued and unpaid
amounts owing to such Lender hereunder, at such time shall be paid to such
Lender and (B) the applicable processing and recordation fee under Section
9.07(a) for such assignment shall have been paid.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

                  SECTION 3.01. Conditions Precedent to Initial Borrowing. The
obligation of each Lender to make an Advance on the occasion of the initial
Borrowing hereunder is subject to the satisfaction of the following conditions
precedent concurrently with such Borrowing and on or prior to December 31, 1999:

<PAGE>   19
                  (a) The Lenders shall be satisfied with the legal structure
         and capitalization of the Borrower, including the terms and conditions
         of the charter and bylaws (or equivalent constitutive or governing
         documents) of, and each class of Equity Interest in, the Borrower and
         of each agreement or instrument relating to such structure or
         capitalization.

                  (b) There shall have occurred (i) no Material Adverse Change
         nor (ii) any other event that would reasonably be expected to have a
         Material Adverse Effect, in each case since September 30, 1999.

                  (c) Since December 7, 1999 there shall have occurred no
         material adverse change in the market for syndicated bank credit
         facilities or a material disruption of, or a material adverse change
         in, financial, banking or capital market conditions, in each case as
         determined by the Agent and the Arranger in their sole discretion.

                  (d) Since December 7, 1999, there shall have occurred no
         change in any Requirement of Law or in the administration or
         interpretation thereof by any Governmental Authority charged with the
         administration or interpretation thereof which would reasonably be
         expected to subject the Borrower or any of its Subsidiaries to any
         governmental regulation that would reasonably be expected to have a
         Material Adverse Effect.

                  (e) There shall exist no action, suit, investigation,
         litigation or proceeding of any kind pending or threatened before any
         court, Governmental Authority or arbitrator (including, without
         limitation, any Environmental Action) affecting the Borrower or any of
         its Subsidiaries or any of the Facilities that (i) would reasonably be
         expected to have a Material Adverse Effect or (ii) purports to affect
         the legality, validity or enforceability of this Agreement or any Note.

                  (f) The Borrower shall have paid (or shall pay
         contemporaneously with such Borrowing) all accrued fees and expenses of
         the Agent, the Arranger and the Lenders (including the accrued fees and
         expenses of counsel to the Agent and the Arranger).

                  (g) The Agent shall have received on or before the day of the
         initial Borrowing the following, each dated such day (unless otherwise
         specified), in form and substance satisfactory to the Agent (unless
         otherwise specified) and (except for the Notes) in sufficient copies
         for each Lender:

                           (i) The Notes payable to the order of the Lenders.

                           (ii) Certified copies of the consents of the Class A
                  Members of the Borrower approving or delegating authority to
                  approve the First Amendment, this Agreement and the Notes, and
                  of all documents evidencing other necessary action and
                  governmental and other third party approvals and consents, if
                  any, with respect to this Agreement and the Notes.

<PAGE>   20
                           (iii) A copy of a certificate of the Secretary of
                  State of the jurisdiction of organization of the Borrower,
                  dated reasonably near the date of such Borrowing, certifying
                  (A) as to a true and correct copy of the charter (or the
                  equivalent constitutive or governing documents) of the
                  Borrower and each amendment thereto on file in such
                  Secretary's office and (B) that (x) such amendments are the
                  only amendments to the Borrower's charter (or such equivalent
                  documents) on file in such Secretary's office, (y) the
                  Borrower has paid all franchise taxes to the date of such
                  certificate and (z) the Borrower is duly organized and in good
                  standing or presently subsisting under the laws of the State
                  of the jurisdiction of its organization.

                           (iv) A copy of a certificate in respect of the
                  Borrower and each of its Subsidiaries (except Empire Energy
                  Supply L.L.C.), from the office of the Secretary of State of
                  the State of New Jersey, dated reasonably near the date of the
                  Borrowing, certifying that each such Person is duly qualified
                  and in good standing as a foreign corporation or other entity
                  in such State and has filed all annual reports required to be
                  filed to the date of such certificate.

                           (v) A certificate of the Borrower, signed on behalf
                  of the Borrower by a Responsible Officer thereof, dated the
                  date of such Borrowing (the statements made in which
                  certificate shall be true on and as of the date of such
                  Borrowing), certifying as to (A) the absence of any amendments
                  to the charter (or the equivalent organizational or
                  constitutive documents) of the Borrower since the date of the
                  certification referred to in Section 3.01(g)(iii), a copy of
                  which shall be attached to such certificate, (B) a true and
                  correct copy of the bylaws (or the equivalent organizational
                  documents) of the Borrower as in effect on the date of such
                  Borrowing, a copy of which shall be attached to such
                  certificate, (C) the due organization and good standing of the
                  Borrower and the absence of any proceeding for the
                  dissolution, winding-up or liquidation (or any equivalent
                  thereof) of the Borrower or any of its Subsidiaries and (D)
                  the names and true signatures of the officers or
                  representatives of the Borrower authorized to sign this
                  Agreement and the Notes and the other certificates and
                  documents to be delivered hereunder and thereunder.

                           (vi) A certificate of the Borrower, signed on behalf
                  of the Borrower by a Responsible Officer thereof, dated the
                  date of such Borrowing (the statements made in which
                  certificate shall be true on and as of the date of the
                  Borrowing), certifying that:

                                    (A) all of the representations and
                           warranties of the Borrower contained in this
                           Agreement or which are contained in any certificate,
                           document or financial or other statement furnished
                           hereunder or in connection herewith, shall be true
                           and correct in all material respects on and as of the
                           date of the initial Borrowing, before and after
                           giving effect to such

<PAGE>   21
                           Borrowing and to the application of the proceeds
                           therefrom, as though made on and as of such date
                           (other than any such representations or warranties
                           that, by their terms, refer to a specific date other
                           than the date of such Borrowing, in which case as of
                           such specific date), and

                                    (B) no event has occurred and is continuing,
                           or would result from the initial Borrowing or from
                           the application of the proceeds therefrom, that
                           constitutes a Default.

                           (vii) (A) Certified copies of the most recently
                  completed audited financial statements of the Borrower prior
                  to the date of the initial Borrowing, together with the
                  opinion of the Borrower's certified public accountants of
                  recognized standing delivered in connection with such
                  financial statements (which opinion shall include any
                  qualifications to such financial statements issued by such
                  accountants), and the most recently completed interim
                  financial statements of the Borrower, and (B) such other
                  financial, business and other information regarding the
                  Borrower, each Subsidiary of the Borrower and each of the
                  Facilities as the Lenders shall have requested, including,
                  without limitation, information as to possible contingent
                  liabilities, tax matters, environmental matters, obligations
                  under Plans, Multiemployer Plans and Welfare Plans, collective
                  bargaining agreements and other arrangements with employees,
                  audited annual financial statements dated December 31, 1998,
                  interim financial statements dated the end of the most recent
                  fiscal quarter for which financial statements are available
                  (or, in the event the Lenders' due diligence review reveals
                  material changes since such financial statements, as of a
                  later date within 45 days of the day of the initial
                  Borrowing), and forecasts prepared by management of the
                  Borrower, in form and substance satisfactory to the Lenders,
                  of balance sheets, income statements and cash flow statements
                  on a monthly basis for the first year following the day of the
                  initial Borrowing.

                           (viii) A certified copy of the Annual Operating
                  Budget of the Borrower and its Subsidiaries for fiscal year
                  2000.

                           (ix) A copy of the Fee Letter, duly executed by each
                  of the parties thereto.

                           (x) A favorable opinion of counsel to ENA in
                  substantially the form of Exhibit E-1 hereto and as to such
                  other matters as any Lender through the Agent may reasonably
                  request.

                           (xi) A favorable opinion of Vinson & Elkins L.L.P.,
                  counsel to the Borrower, in substantially the form of Exhibit
                  E-2 hereto and as to such other matters as any Lender through
                  the Agent may reasonably request.

<PAGE>   22
                           (xii) A favorable opinion of Shearman & Sterling,
                  counsel for the Agent, in form and substance satisfactory to
                  the Agent.

                           (xiii) Such other approvals, opinions or documents as
                  any Lender through the Agent may reasonably request.

                  SECTION 3.02. Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance on the occasion of each Borrowing
(including the initial Borrowing) shall be subject to the further conditions
precedent that on the date of such Borrowing (a) the following statements shall
be true (and each of the giving of the applicable Notice of Borrowing and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that both on the date of such notice
and on the date of such Borrowing such statements are true):

                  (i) the representations and warranties contained in this
         Agreement are true and correct in all material respects on and as of
         such date, before and after giving effect to such Borrowing and to the
         application of the proceeds therefrom, as though made on and as of such
         date (other than any such representations or warranties that, by their
         terms, refer to a specific date other than the date of such Borrowing,
         in which case as of such specific date); and

                  (ii) no event has occurred and is continuing, or would result
         from such Borrowing or from the application of the proceeds therefrom,
         that constitutes a Default

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request.

                  SECTION 3.03. Conditions Precedent to Extension of Maturity
Date. The extension of the Maturity Date from the Initial Maturity Date to the
Extended Maturity Date pursuant to Section 2.03(b) shall be subject to the
satisfaction of the following conditions precedent concurrently with such
extension of the Maturity Date:

                  (a) The Borrower shall have paid all accrued fees and expenses
         of the Agent, the Arranger and the Lenders (including fees and expenses
         of counsel for the Agent and the Arranger) payable under or in
         connection with the Fee Letter or this Agreement.

                  (b) Since the date of the initial Borrowing, there shall have
         occurred no change in any Requirement of Law or in the administration
         or interpretation thereof by any Governmental Authority charged with
         the administration or interpretation thereof which would reasonably be
         expected (i) to render such extension of the Maturity Date illegal or
         (ii) to subject the Borrower, any Subsidiary of the Borrower or any of
         the Facilities to any governmental regulation in connection therewith
         that would reasonably be expected to have a Material Adverse Effect.

<PAGE>   23
                  (c) All Governmental Authorizations and third party consents
         and approvals necessary in connection with the extension of the
         Maturity Date shall have been obtained (without the imposition of any
         conditions that are not acceptable to the Lenders) and shall remain in
         effect, and no law or regulation shall be applicable in the judgment of
         the Lenders, in each case that restrains, prevents or imposes
         materially adverse conditions upon the extension of the Maturity Date
         or the rights of the Borrower or any of its Subsidiaries freely to
         transfer or otherwise dispose of any properties now owned or hereafter
         acquired by any of them.

                  (d) There shall exist no action, suit, investigation,
         litigation or proceeding of any kind pending or threatened before any
         court, Governmental Authority or arbitrator (including, without
         limitation, any Environmental Action) affecting the Borrower, any
         Subsidiary of the Borrower or any of the Facilities that (i) would
         reasonably be expected to have a Material Adverse Effect or (ii)
         purports to affect the legality, validity or enforceability of this
         Agreement or the Notes or such extension of the Maturity Date.

                  (e) Each of the following statements shall be true and the
         Agent shall have received on or before the date of the extension of the
         Maturity Date, a certificate of the Borrower, signed on behalf of the
         Borrower by a Responsible Officer thereof, dated the Initial Maturity
         Date (the statements made in which certificate shall be true on and as
         of such date) certifying that (and the giving of such certificate shall
         constitute a representation and warranty by the Borrower that both on
         and as of the date of the extension of the Maturity Date) the following
         statements are true:

                           (i) all of the representations and warranties of the
                  Borrower contained in this Agreement (other than those
                  contained in the final sentence of Section 4.01(g) hereof, the
                  first sentence of Section 4.01(h) hereof and in Section
                  4.01(cc) hereof), or which are contained in any certificate,
                  document or financial or other statement furnished hereunder
                  or in connection herewith, shall be true and correct in all
                  material respects on and as of the date of the extension of
                  the Maturity Date, before and after giving effect to such
                  extension, as though made on and as of such date (other than
                  any such representations or warranties that, by their terms,
                  refer to a specific date other than the date of the extension
                  of the Maturity Date, in which case as of such specific date);

                           (ii) since September 30, 1999 there has been no
                  Material Adverse Change;

                           (iii) neither any information memorandum prepared
                  after the date of the initial Borrowing in connection with the
                  syndication of the Advances, nor any representation, warranty
                  or other statement made after the date of the initial
                  Borrowing by the Borrower or any Subsidiary of the Borrower in
                  this Agreement, or

<PAGE>   24
                  in any certificate, statement, exhibit or report furnished
                  after the date of the initial Borrowing to the Agent, the
                  Arranger or any Lender by or on behalf of such Person pursuant
                  to the terms of or in connection with the negotiation of this
                  Agreement or in connection with the syndication of the
                  Advances, contains or contained any untrue statement of a
                  material fact or omits or omitted to state a material fact
                  necessary in order to make the statements contained herein or
                  therein, in light of the circumstances under which they were
                  made, not misleading; and

                           (iv) no event has occurred and is continuing, or
                  would result from the extension of the Maturity Date, that
                  constitutes a Default.

                  SECTION 3.04. Determinations Under Sections 3.01, 3.02 and
3.03. For purposes of determining compliance with the conditions specified in
Sections 3.01, 3.02 and 3.03, each Lender shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Lenders unless an officer of the Agent responsible for the
transactions contemplated by this Agreement shall have received notice from such
Lender prior to such Borrowing or the extension of the Maturity Date, as the
case may be, specifying its objection thereto, and, in the case of any
Borrowing, such Lender shall not have made available to the Agent such Lender's
ratable portion of such Borrowing.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties. The Borrower
represents and warrants as follows:

                  (a) The Borrower and each of its Subsidiaries (i) is a Person
         duly organized, validly existing and in good standing under the laws of
         the jurisdiction of its organization, (ii) is duly authorized or
         licensed (A) in each jurisdiction in which it owns or leases property
         or in which the conduct of its business requires it to so qualify or be
         licensed except where the failure to so qualify or be licensed would
         not reasonably be expected to have a Material Adverse Effect and (B) in
         the State of New Jersey, and (iii) has all requisite power (corporate,
         partnership or otherwise) and authority (including, without limitation,
         all material Governmental Authorizations, licenses, permits and other
         approvals) (A) to own or hold under lease and to operate all of its
         property and assets, (B) to carry on its business as now conducted and
         as proposed to be conducted and (C) in the case of the Borrower, to
         execute, deliver and perform all of its Obligations under this
         Agreement and the Notes. All of the outstanding Equity Interests in the
         Borrower has been validly issued, is fully paid and non-assessable and
         is owned by East Coast Power Holding Company, LLC, JEDI II, CalPERS and
         Mesquite Investors L.L.C.

<PAGE>   25
                  (b) Set forth on Schedule 4.01(b) hereto is a complete and
         accurate list of all Subsidiaries of the Borrower, showing as of the
         date hereof (as to each such Subsidiary) the jurisdiction of its
         organization, the number of shares or units of each class of its Equity
         Interests authorized and the number outstanding (if applicable) on the
         date hereof, the percentage of each such class of its Equity Interests
         owned (directly or indirectly) by such Subsidiary, and the number of
         shares or units covered by all outstanding options, warrants, rights of
         conversion or purchase and similar rights at the date hereof. All of
         the outstanding Equity Interests in the Borrower's Subsidiaries has
         been validly issued, are fully paid and non-assessable and are owned by
         the Borrower or one or more of its Subsidiaries.

                  (c) The execution, delivery and performance by the Borrower of
         this Agreement and the Notes are within the Borrower's powers
         (corporate or otherwise), have been duly authorized by all necessary
         action (corporate or otherwise), and do not or will not:

                           (i) contravene the Borrower's charter or bylaws (or
                  similar constitutive or governing documents),

                           (ii) violate any Requirement of Law binding on or
                  applicable to the Borrower or any of its Subsidiaries or any
                  of their respective properties or assets or any of the
                  Facilities (including, without limitation, the Securities
                  Exchange Act of 1934, the Racketeer Influenced and Corrupt
                  Organizations Chapter of the Organized Crime Control Act of
                  1970, Regulation X of the Board of Governors of the Federal
                  Reserve System, the Investment Company Act of 1940, as
                  amended, PUHCA, PURPA, and the rules and regulations
                  promulgated by FERC and each applicable state regulatory
                  authority),

                           (iii) conflict with or result in the breach of, or
                  constitute a default under any contract, loan agreement,
                  indenture, mortgage, deed of trust, lease or other instrument
                  binding on or affecting the Borrower, any of its Subsidiaries
                  or any of their respective properties or assets or any of the
                  Facilities, or

                           (iv) result in or require the creation or imposition
                  of any Lien upon or with respect to any of the assets or
                  properties of the Borrower, any of its Subsidiaries or any of
                  the Facilities.

         Neither the Borrower nor any of its Subsidiaries is in violation of any
         such Requirement of Law or in breach of any such contract, loan
         agreement, indenture, mortgage, deed of trust, lease or other
         instrument, the violation or breach of which would reasonably be
         expected to have a Material Adverse Effect.

                  (d) No authorization, approval, consent or other action by,
         and no notice to or registration, recording or filing with, any
         Governmental Authority or any other Person is

<PAGE>   26
         required for the due execution, delivery or performance by the Borrower
         of this Agreement or the Notes, except for the consents of the
         Borrower's Class A Members, which have been duly obtained, taken, given
         or made and are in full force and effect.

                  (e) This Agreement has been, and each of the Notes when
         delivered hereunder will have been, duly executed and delivered by the
         Borrower. This Agreement is, and each of the Notes when delivered
         hereunder will be, the legal, valid and binding obligation of the
         Borrower, enforceable against the Borrower in accordance with its
         terms.

                  (f) There is no action, suit, investigation, litigation or
         proceeding of any kind pending or threatened before any court,
         Governmental Authority or arbitrator (including, without limitation,
         any Environmental Action) affecting the Borrower, any of its
         Subsidiaries or any of the Facilities that (i) would reasonably be
         expected to have a Material Adverse Effect (other than the Disclosed
         Litigation) or (ii) purports to affect the legality, validity or
         enforceability of this Agreement or any Note, and there has been no
         material adverse change in the status, or financial effect on the
         Borrower, any of its Subsidiaries or any of the Facilities of the
         Disclosed Litigation since December 15, 1999.

                  (g) The financial statements delivered to the Lenders pursuant
         to Section 3.01(g)(vii), together in each case with the related
         certified public accountants audit opinions, true and complete copies
         of which have been furnished to each Lender, represent in each case the
         most recently completed audited annual and unaudited interim financial
         statements of the Borrower and each of its Subsidiaries and fairly
         present, subject, in the case of such interim financial statements, to
         normal year-end adjustments, the financial condition and results of
         operations and changes in financial position of the Borrower and each
         such Subsidiary as at the dates and for the periods indicated therein,
         all in accordance with GAAP applied on a consistent basis. Since
         September 30, 1999, there has been no Material Adverse Change.

                  (h) No representation, warranty or other statement made by the
         Borrower in this Agreement, or in any certificate, statement, exhibit
         or report furnished to the Agent, the Arranger or any Lender by or on
         behalf of the Borrower pursuant to the terms of or in connection with
         the negotiation of this Agreement contains or contained any untrue
         statement of a material fact or omits or omitted to state a material
         fact necessary in order to make the statements contained herein or
         therein, in light of the circumstances under which they were made, not
         misleading. There are no facts or circumstances known to the Borrower
         or any of its Subsidiaries which, individually or in the aggregate,
         would reasonably be expected to have a Material Adverse Effect and
         which have not been disclosed to the Arranger, the Agent and the
         Lenders.

                  (i) The Borrower and each of its Subsidiaries is the legal and
         beneficial owner of, and has good and marketable title to (subject to
         the restrictions on transfer of ownership set forth in the Related
         Documents), or a valid and enforceable leasehold interests in or

<PAGE>   27
         easement on, all of its property and assets comprising part of any of
         the Facilities (including, without limitation, works in progress at the
         location of any of the Facilities) and all of their other material
         property and assets, free and clear of all Liens, except for Liens that
         are permitted to be incurred or to exist under Section 5.01(a).

                  (j) Neither the Borrower nor any of its Subsidiaries has
         conducted any business or engaged in any activities other than (i) the
         business of, and activities related to, the development, construction,
         operation and maintenance of the Facilities or (ii) businesses and
         activities otherwise permitted hereunder.

                  (k) The Borrower, each of its Subsidiaries and each of the
         Facilities is in compliance with all applicable Requirements of Law,
         except to the extent the failure to comply therewith would not be
         reasonably expected to have a Material Adverse Effect.

                  (l) The Borrower is not engaged in the business of extending
         credit for the purpose of purchasing or carrying Margin Stock, and no
         proceeds of any Advance will be used to purchase or carry any Margin
         Stock or to extend credit to others for the purpose of purchasing or
         carrying any Margin Stock.

                  (m) Neither the Borrower, any of its Subsidiaries nor any of
         their respective ERISA Affiliates has any Plans, Multiemployer Plans or
         Welfare Plans.

                  (n) Neither the business nor the properties of the Borrower,
         any of its Subsidiaries or any of the Facilities are affected by any
         fire, explosion, accident, strike, lockout or other labor dispute,
         drought, storm, hail, earthquake, embargo, act of God or of the public
         enemy or other casualty (whether or not covered by insurance) that
         would reasonably be expected to have a Material Adverse Effect.

                  (o) The operations and properties of the Borrower, each of its
         Subsidiaries and each of the Facilities comply in all material respects
         with all applicable Environmental Laws and Environmental Permits, all
         past non-compliance with such Environmental Laws and Environmental
         Permits has been resolved without ongoing material obligations or
         costs, and no circumstances exist that would reasonably be expected to
         (i) form the basis of an Environmental Action against the Borrower, any
         of its Subsidiaries, any of their properties or any of the Facilities
         that would reasonably be expected to have a Material Adverse Effect or
         (ii) other than generally applicable provisions of ISRA, cause any such
         property or Facility to be subject to any restrictions on ownership,
         occupancy, use or transferability under any Environmental Law.

                  (p) None of the properties currently or formerly owned or
         operated by the Borrower or any of its Subsidiaries (including, without
         limitation, the Facilities) is listed or proposed for listing on the
         NPL or on the CERCLIS or any analogous foreign, state or local list
         (including, without limitation, the New Jersey Compensation and Control
         Act, N.J. Stat.

<PAGE>   28
         Ann. 58: 10-23.11 et seq.); there are no underground or aboveground
         storage tanks or any surface impoundments, septic tanks, pits, sumps or
         lagoons in which Hazardous Materials are being or have been treated,
         stored or disposed on any property currently owned or operated by the
         Borrower or any of its Subsidiaries (including, without limitation, the
         Facilities) or, to the best of its knowledge, on any property formerly
         owned or operated by any Subsidiary of the Borrower (including, without
         limitation, the Facilities) in any manner that could reasonably be
         expected to have a Material Adverse Effect; there is no asbestos or
         asbestos-containing material on any property currently owned or
         operated by the Borrower or any of its Subsidiaries (including, without
         limitation, the Facilities) that in its present condition requires
         removal or other remedial action under applicable Environmental Laws;
         and Hazardous Materials have not been released, discharged or disposed
         of on any property currently owned or operated by the Borrower or any
         of its Subsidiaries (including, without limitation, the Facilities).

                  (q) Neither the Borrower nor any of its Subsidiaries is
         undertaking, and has not completed, either individually or together
         with other potentially responsible parties, any investigation or
         assessment or remedial or response action relating to any actual or
         threatened release, discharge or disposal of Hazardous Materials at any
         site, location or operation (including, without limitation, the
         Facilities), either voluntarily or pursuant to the order of any
         Governmental Authority or the requirements of any Environmental Law,
         except for such investigations, assessments or remedial or response
         actions the existence of which would not reasonably be expected to have
         a Material Adverse Effect; and all Hazardous Materials generated, used,
         treated, handled or stored at, or transported to or from, any property
         currently owned or operated by the Borrower, any of its Subsidiaries or
         any of the Facilities have been disposed of in a manner not reasonably
         expected to result in material liability to the Borrower, any of its
         Subsidiaries or any of the Facilities.

                  (r) Neither the Borrower nor any of its Subsidiaries is a
         party to any indenture, loan or credit agreement or any lease or other
         agreement or instrument or subject to any charter or corporate
         restriction that would be reasonably be expected to have a Material
         Adverse Effect.

                  (s) The Borrower and each of its Subsidiaries and Affiliates
         has filed, has caused to be filed or has been included in all tax
         returns (federal, state, local and foreign) required to be filed and
         has paid all taxes shown thereon to be due, together with applicable
         interest and penalties.

                  (t) Neither the Borrower nor any of its Subsidiaries is an
         "investment company", or an "affiliated person" of, or "promoter" or
         "principal underwriter" for, an "investment company", as such terms are
         defined in the Investment Company Act of 1940, as amended. Neither the
         making of any Advances, nor the application of the proceeds or
         repayment thereof by the Borrower, will violate any provision of such
         Act or any rule, regulation or order of the Securities and Exchange
         Commission thereunder.

<PAGE>   29
                  (u) Other than NJ Venture, Linden Venture and Camden Cogen,
         each of which is regulated under the Federal Power Act to the extent
         provided in 18 C.F.R. ' 292.601(c), neither the Borrower nor any of its
         Subsidiaries is, by reason of its ownership of any of the Facilities or
         the operation thereof by it or any such Subsidiary, (i) subject to
         regulation as a "public utility" under the Federal Power Act, an
         "electric corporation" under New York law, or a "public utility" under
         New Jersey law, or (ii) subject to regulation by the Securities and
         Exchange Commission as a "holding company" or a "subsidiary company" of
         a "holding company" under PUHCA; each of NJ Venture, Linden Venture and
         Camden Cogen is exempt from all applicable state law or regulation
         respecting the rates of "electric utilities" and the financial and
         organizational regulation of "electric utilities," as such term is used
         in 18 C.F.R. ' 292.602(c).

                  (v) Neither the Agent, the Arranger nor any Lender will,
         solely by reason of (i) the ownership and operation of the Facilities
         by the owners thereof or (ii) the making of the Advances hereunder, (A)
         be subject to regulation as a "public utility" under the Federal Power
         Act, an "electric corporation" under New York law, or a "public
         utility" under New Jersey law, or (B) be subject to regulation by the
         Securities and Exchange Commission as a "holding company" or a
         "subsidiary company" of a "holding company" under PUHCA.

                  (w) Each Facility (i) is a Qualifying Facility, (ii) is
         eligible for the benefit of the exemptions provided by 18 C.F.R. "
         292.601 and 292.602 and (iii) is exempt from all regulation under PUHCA
         (other than those regulations applicable to Qualifying Facilities) and
         the New Jersey Department of Public Utilities Act of 1948, as amended;
         and JEDI II and each of its Subsidiaries satisfy the ownership criteria
         for a cogeneration facility set forth in 18 C.F.R ' 292.203(b).

                  (x) Set forth on Schedule 4.01(x) hereto is a complete and
         accurate list of all Debt of the Borrower and its Subsidiaries (the
         "Existing Debt"), showing as of the date hereof the principal amount
         outstanding thereunder.

                  (y) Set forth on Schedule 4.01(y) hereto is a complete and
         accurate list of all Material Contracts of the Borrower and its
         Subsidiaries, showing as of the date hereof the parties, subject matter
         and term thereof. Each such Material Contract has been duly authorized,
         executed and delivered by all parties thereto, has not been amended or
         otherwise modified, is in full force and effect and is binding upon and
         enforceable against all parties thereto in accordance with its terms,
         and there exists no default under any Material Contract by any party
         thereto.

                  (z) Set forth on Schedule 4.01(z) hereto is a complete and
         accurate list of all Investments of the Borrower and its Subsidiaries
         (other than Investments by the Borrower or any of its Subsidiaries in
         any of their respective Subsidiaries), showing as of the date hereof,
         the amount, obligor or issuer and maturity, if any, thereof.

<PAGE>   30
                  (aa) Neither the Borrower nor any of its Subsidiaries is in
         default under or with respect to any Related Document to which it is a
         party in any respect which could reasonably be expected to (i) have a
         Material Adverse Effect or (ii) materially adversely affect the ability
         of the Borrower or any of its Subsidiaries to perform its obligations
         under this Agreement, any Note or any Related Document to which it is a
         party. No notice of default has been given to the Borrower or any of
         its Subsidiaries under any of the Related Documents to which it is a
         party. To the best knowledge of the Borrower, no default or incipient
         default exists under any of the Related Documents that would reasonably
         be expected to have a Material Adverse Effect. Each Power Purchase
         Agreement is in full force and effect and no default or incipient
         default has occurred thereunder. No Event of Loss has occurred.

                  (bb) The Borrower has (i) as of the date hereof, initiated a
         review and assessment of all material areas within its and each of its
         Subsidiaries' business and operations (including those affected by
         major suppliers, vendors and customers) that could be adversely
         affected by the risk that computer applications used by the Borrower or
         any of its Subsidiaries (or any of their respective major suppliers,
         vendors and customers) may be unable to recognize and perform properly
         date-sensitive functions involving certain dates prior to and any date
         after December 31, 1999 (the "Year 2000 Problem"), (ii) as of the date
         hereof, developed a plan and timeline for addressing the Year 2000
         Problem on a timely basis and (iii) to date, implemented that plan in
         accordance with that timetable. All computer applications (including,
         to the Borrower's best knowledge based on such review and assessment to
         date, those of major domestic suppliers, vendors and customers) that
         are material to any of the business and operations of the Borrower or
         any of its Subsidiaries are, as of the date hereof, reasonably expected
         on a timely basis to be able to perform properly date-sensitive
         functions for all dates before and after January 1, 2000 ("Year 2000
         Compliant"), except to the extent that a failure to do so could not
         reasonably be expected to have a Material Adverse Effect.

                                    ARTICLE V

                                    COVENANTS

                  SECTION 5.01. Covenants. So long as any Lender shall have any
Commitment or any Advance shall remain unpaid:

                  (a) The Borrower will comply, and cause each of its
         Subsidiaries to comply, (i) with each covenant set forth in Sections
         801, 1004, 1005, 1006, 1007, 1008, 1009, 1013, 1014, 1016, 1018, 1019,
         1020 and 1021 of the Indenture and (ii) through the Initial Maturity
         Date, with the covenant set forth in Section 1012 of the Indenture, in
         each case as the Indenture is in effect on the date hereof, without
         giving effect to any amendment, termination or waiver thereof, unless
         the Lenders shall otherwise consent in writing. Each such covenant and
         the terms defined in the Indenture and used in such covenants are
         incorporated by reference in this Agreement as fully as if set forth in
         full herein; provided,

<PAGE>   31
         however, that each of the terms "Default", "Event of Default",
         "Material Adverse Effect", "Notes" and "Responsible Officer", as used
         in such covenants, shall have the meaning set forth in this Credit
         Agreement rather than the meaning set forth in the Indenture for
         purposes of such covenants as incorporated herein; and provided,
         further, that each of the terms "Company", "Indenture" and "Trustee",
         as used in such covenants, shall mean "Borrower", "Credit Agreement"
         and "Agent", respectively, for purposes of such covenants as
         incorporated herein.

                  (b) Debt. The Borrower will not create, incur, assume or
         suffer to exist, or permit any of its Subsidiaries to create, incur,
         assume or suffer to exist, any Debt other than:

                           (i)      Debt under this Agreement and the Notes;

                           (ii)     the Existing Debt;

                           (iii) Debt in respect of hedging transactions to the
                  extent permitted under the Indenture; and

                           (iv) Debt incurred by NJ Venture from time to time
                  under a revolving credit facility with Southwest Bank of Texas
                  so long as the aggregate principal amount of such Debt
                  outstanding at any time does not exceed $5,000,000.

                  (c) Syndication. (i) The Borrower will actively assist, and
         cause each of its Subsidiaries to actively assist, the Agent and the
         Arranger in syndicating the Advances to one or more Eligible Assignees,
         such assistance to include, without limitation: (A) providing, and
         causing each of its Subsidiaries and their respective advisors to
         provide, the Agent, the Arranger and the Lenders upon request with all
         information reasonably deemed necessary by the Agent or the Arranger to
         complete the syndication of the Advances, (B) assisting the Agent and
         the Arranger, upon their reasonable request, in the preparation of an
         Information Memorandum to be used in connection with the syndication of
         the Advances and (C) otherwise assisting the Agent and the Arranger in
         their syndication efforts, including by making available officers and
         advisors of the Borrower and its Subsidiaries from time to time to
         attend and make presentations regarding the business and prospects of
         the Borrower, its Subsidiaries and the Facilities, as appropriate, at a
         meeting or meetings of prospective Lenders; and (ii) until the
         termination of the general syndication of the Advances (as determined
         by the Arranger in its sole discretion), (x) subject to the provisions
         of clause (y) below, the Borrower will work, and cause each of its
         Subsidiaries to work, with the Agent and the Arranger in coordinating
         the syndication (including the timing of such syndication) of the
         Advances with similar syndications and issuances (or proposed
         syndications or issuances) by any Subsidiaries of the Borrower
         (including any renewals thereof) in the domestic capital or banking
         markets in an attempt to mitigate any actual or potential material
         market disruption affecting the syndication of the Advances (including
         the timing of such syndications) and (y) not permit any Subsidiaries of
         the Borrower to syndicate or issue, or

<PAGE>   32
         attempt to syndicate or issue, any debt or equity facility (including,
         without limitation, the Subordinated Loan Agreement) or security
         (including any renewals thereof) in respect of any of the transactions
         contemplated herein in the domestic or international capital or banking
         markets.

                  (d) Use of Proceeds. The Borrower will use, and cause each of
         its Subsidiaries to use, the proceeds of the Advances solely as
         provided in Section 2.13.

                  SECTION 5.02. Additional Covenants if Maturity Date Is
Extended. In the event that the Maturity Date is extended pursuant to Section
3.03 and so long thereafter as any Advance shall remain unpaid:

                  (a) Prepayments, Etc., of Debt. The Borrower will not prepay,
         redeem, purchase, defease or otherwise satisfy prior to the scheduled
         maturity thereof in any manner, or make any payment in respect of, any
         Debt, other than (i) the prepayment of the Advances and the payment of
         interest and other amounts payable hereunder in accordance with the
         terms of this Agreement, (ii) regularly scheduled or required
         repayments or redemptions of Existing Debt, (iii) regularly scheduled
         payments of interest on Existing Debt and (iv) required funding of
         reserve accounts relating to Existing Debt; or amend, modify or change
         in any manner any term or condition of any Existing Debt; or permit any
         of its Subsidiaries to do any of the foregoing, other than to prepay
         any Debt payable to the Borrower.

                  (b) Administrative Expenses. The Borrower will not, and will
         not permit any of its Subsidiaries to, pay Administrative Expenses to
         the extent not required to permit the Facility or Facilities owned
         directly or indirectly by the Borrower or such Subsidiary and the
         business and activities carried on in connection therewith to be
         conducted at all times in accordance with prudent operating practices
         in the electrical power production industry.

                  (c) Capital Expenditures. The Borrower will not, and will not
         permit any of its Subsidiaries to, make any Capital Expenditures except
         to the extent required to make (i) repairs, additions, replacements or
         improvements to its properties and assets used in the conduct of its
         business to the extent necessary to permit the Facility or Facilities
         owned directly or indirectly by the Borrower or such Subsidiary and the
         business and activities carried on in connection therewith to be
         conducted at all times in accordance with prudent operating practices
         in the electrical power production industry and (ii) regularly
         scheduled payments required under that certain Agreement by and between
         the Borrower, as addignee of ENA, and General Electric Company dated as
         of February 4, 1999, as in effect on the date hereof.

                  (d) Distributions. To the extent not prohibited by the
         documents governing the Existing Debt or by the Partnership Agreements,
         the Borrower will cause each of its Subsidiaries to declare and pay
         cash dividends or other cash distributions in respect of its Equity
         Interests or repay or prepay in cash any Debt owed to, make loans or
         advances in cash

<PAGE>   33
         to, or otherwise transfer cash or make a cash investment in, the
         Borrower or any other Subsidiary of the Borrower, in each case on or
         prior to the final Business Day of September, 2000, and on or prior to
         the Final Maturity Date, in an aggregate amount equal to the Available
         Cash of such Subsidiary for the period from the Initial Maturity Date
         through such final Business Day and for the period from such final
         Business Day through the Final Maturity Date, respectively.

                  (e) Restricted Payments. The Borrower will not declare or pay
         any dividends, purchase, redeem, retire, defease or otherwise acquire
         for any of its Equity Interests now or hereafter outstanding, return
         any capital to its stockholders, partners or members (or the equivalent
         Persons thereof) as such, make any distribution of assets, Equity
         Interests, obligations or securities to its stockholders, partners or
         members (or the equivalent Persons thereof) as such or, except to the
         extent required under Section 5.02(d) and except to the extent required
         by the Partnership Agreements, permit any of its Subsidiaries to do any
         of the foregoing, or permit any of its Subsidiaries to purchase,
         redeem, retire, defease or otherwise acquire for value any Equity
         Interests in the Borrower or to issue or sell any Equity Interests
         therein.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION 6.01. Events of Default. If any of the following
         events ("Events of Default") shall occur and be continuing:

                  (a) (i) the Borrower shall fail to pay any principal of any
         Advance when the same shall become due and payable or (ii) the Borrower
         shall fail to pay any interest on any Advance, or the Borrower shall
         fail to make any other payment under this Agreement, in each case under
         this clause (ii) within three Business Days after the same becomes due
         and payable; or

                  (b) any representation or warranty made by the Borrower (or
         any of its officers or representatives) under or in connection with
         this Agreement (or contained in any certificate, document, financial or
         other statement furnished hereunder or in connection herewith) shall
         prove to have been incorrect in any material respect when made; or

                  (c) the Borrower shall fail to perform or observe any term,
         covenant or agreement contained in Section 2.13, 5.01 or 5.02; or

                  (d) the Borrower or any of its Subsidiaries shall fail to
         perform any other term, covenant or agreement contained in any Loan
         Document on its part to be performed or observed if such failure shall
         remain unremedied for 15 Business Days after the earlier of the

<PAGE>   34
         date on which (i) a Responsible Officer of the Borrower becomes aware
         of such failure or (ii) written notice thereof shall have been given to
         the Borrower by the Agent or any Lender; or

                  (e) the Borrower or any of its Subsidiaries shall fail to pay
         any principal of, premium or interest on or any other amount payable in
         respect of any Debt that is outstanding in a principal amount (or, in
         the case of any Hedge Agreement, an Agreement Value) of at least
         $10,000,000 either individually or in the aggregate (but excluding Debt
         outstanding hereunder) of such Person, when the same becomes due and
         payable (whether by scheduled maturity, required prepayment,
         acceleration, demand or otherwise), and such failure shall continue
         after the applicable grace period, if any, specified in the agreement
         or instrument relating to such Debt; or any other event shall occur or
         condition shall exist under any agreement or instrument relating to any
         such Debt and shall continue after the applicable grace period, if any,
         specified in such agreement or instrument, if the effect of such event
         or condition is to accelerate the maturity of such Debt or otherwise to
         cause such Debt to mature; or any such Debt shall be declared to be due
         and payable or required to be prepaid or redeemed (other than by a
         regularly scheduled required prepayment or redemption), purchased or
         defeased, or an offer to prepay, redeem, purchase or defease such Debt
         shall be required to be made, in each case prior to the stated maturity
         thereof; or

                  (f) the Borrower or any of its Subsidiaries shall generally
         not pay its debts as such debts become due, or shall admit in writing
         its inability to pay its debts generally, or shall make a general
         assignment for the benefit of creditors; or any proceeding shall be
         instituted by or against the Borrower or any of its Subsidiaries
         seeking to adjudicate it a bankrupt or insolvent, or seeking
         liquidation, winding up, reorganization, arrangement, adjustment,
         protection, relief or composition of it or its debts under any law
         relating to bankruptcy, insolvency or reorganization or relief of
         debtors, or seeking the entry of an order for relief or the appointment
         of a receiver, trustee, or other similar official for it or for any
         substantial part of its property and, in the case of any such
         proceeding that is (i) instituted against it (but not instituted by it)
         and (ii) being diligently contested by it in good faith, either (A)
         such proceeding shall remain undismissed or unstayed for a period of 30
         days or (B) any of the actions sought in such proceeding (including,
         without limitation, the entry of an order for relief against, or the
         appointment of a receiver, trustee, custodian or other similar official
         for, it or any substantial part of its property) shall occur; or the
         Borrower or any of its Subsidiaries shall take any corporate,
         partnership or equivalent action to authorize any of the actions set
         forth above in this subsection (f); or

                  (g) any judgment or order for the payment of money in excess
         of $5,000,000 shall be rendered against the Borrower or any of its
         Subsidiaries and either (i) enforcement proceedings shall have been
         commenced by any creditor upon such judgment or order or (ii) there
         shall be any period of 10 consecutive days during which a stay of
         enforcement of such judgment or order, by reason of a pending appeal or
         otherwise, shall not be in effect; or

<PAGE>   35
                  (h) any non-monetary judgment or order shall be rendered
         against the Borrower or any of its Subsidiaries that would reasonably
         be expected to have a Material Adverse Effect and there shall be any
         period of 30 consecutive days during which a stay of enforcement of
         such judgment or order, by reason of a pending appeal or otherwise,
         shall not be in effect; or

                  (i) a default under any Related Document on the part of the
         Borrower or any Subsidiary of the Borrower shall have occurred and any
         applicable grace period provided therein shall have expired; or a
         default under any Related Document on the part of any other Person
         shall have occurred, any applicable grace period provided therein shall
         have expired and such default could reasonably be expected to have a
         Material Adverse Effect; or, except in accordance with its terms and to
         the extent no Material Adverse Effect would be reasonably expected to
         result therefrom, any of the Related Documents shall have been revoked
         or terminated, or for any reason shall cease to be in full force and
         effect; or

                  (j) (i) any Governmental Authority shall take any action (A)
         to displace the management or owners of the Borrower, any Subsidiary of
         the Borrower or any Facility from carrying on any substantial part of
         its business or operations or (B) to impair the Borrower or any
         Subsidiary of the Borrower from performing any of its respective
         Obligations under this Agreement or any Related Document to which it is
         a party or (ii) any material Governmental Authorization or Third Party
         Consent shall have been effectively revoked, rescinded, withdrawn or
         terminated or otherwise shall cease to be in full force and effect; or

                  (k) any ERISA Event shall have occurred with respect to a Plan
         of the Borrower, any of its Subsidiaries or any of their respective
         ERISA Affiliates and the sum (determined as of the date of occurrence
         of such ERISA Event) of the Insufficiency of such Plan and the
         Insufficiency of any and all other such Plans with respect to which an
         ERISA Event shall have occurred and then exist (or the liability of
         such Person and its ERISA Affiliates related to such ERISA Event)
         exceeds $5,000,000; or

                  (l) the Borrower, any of its Subsidiaries or any of their
         respective ERISA Affiliates shall have been notified by the sponsor of
         a Multiemployer Plan of such Person or any of its ERISA Affiliates that
         it has incurred Withdrawal Liability to such Multiemployer Plan in an
         amount that, when aggregated with all other amounts required to be paid
         to Multiemployer Plans by such Person and its ERISA Affiliates as
         Withdrawal Liability (determined as of the date of such notification),
         exceeds $5,000,000 or requires payments exceeding $1,000,000 per annum;
         or

                  (m) the Borrower, any of its Subsidiaries or any of their
         respective ERISA Affiliates shall have been notified by the sponsor of
         a Multiemployer Plan of such Person or any of its ERISA Affiliates that
         such Multiemployer Plan is in reorganization or is being terminated,
         within the meaning of Title IV of ERISA, and as a result of such
         reorganization or termination the aggregate annual contributions of
         such Person and its ERISA Affiliates to all Multiemployer Plans of such
         Person and its ERISA Affiliates that are then in

<PAGE>   36
         reorganization or being terminated have been or will be increased over
         the amounts contributed to such Multiemployer Plans for the plan years
         of such Multiemployer Plans immediately preceding the plan year in
         which such reorganization or termination occurs by an amount exceeding
         $1,000,000; or

                  (n) (i) any Termination Event set forth in clause (ii), (iv)
         or (v) of the definition thereof with respect to a Plan of ENA or any
         of its ERISA Affiliates shall have occurred and, 30 days after notice
         thereof shall have been given to ENA by the Agent, (A) such Termination
         Event shall still exist and (B) the sum (determined as of the date of
         occurrence of such Termination Event) of the liabilities to the PBGC
         resulting from all such Termination Events is equal to or greater than
         $50,000,000; or

                  (ii) ENA or any of its ERISA Affiliates shall have been
         notified by the sponsor of a Multiemployer Plan of such Person that it
         has incurred Withdrawal Liability to such Multiemployer Plan in an
         amount which, when aggregated with all other amounts required to be
         paid to Multiemployer Plans of such Person in connection with
         Withdrawal Liabilities (determined as of the date of such
         notification), exceeds $50,000,000; or

                  (iii) ENA or any of its ERISA Affiliates shall have been
         notified by the sponsor of a Multiemployer Plan of such Person that
         such Multiemployer Plan is in reorganization or is being terminated,
         within the meaning of Title IV of ERISA, if as a result of such
         reorganization or termination the aggregate annual contributions of ENA
         and its ERISA Affiliates to all Multiemployer Plans of such Persons
         which are then in reorganization or being terminated have been or will
         be increased over the amounts contributed to such Multiemployer Plans
         for the respective plan years which include December 31, 1997 by an
         amount exceeding $50,000,000 in the aggregate; or

                  (o) a Change of Control shall have occurred; or

                  (p) an Event of Loss shall have occurred; or

                  (q) a "Special Event" (as defined in any of the Partnership
         Agreements) shall have occurred; or

                  (r) any of the Facilities shall (i) cease to be a Qualifying
         Facility, (ii) cease to be eligible for the benefit of the exemptions
         provided by 18 C.F.R. 292.601 or (iii) cease to be exempt from all
         regulation under PUHCA and the New Jersey Department of Public
         Utilities Act of 1948, as amended, unless, in the opinion of the
         Supermajority Lenders, such occurrence would not reasonably be expected
         to have a Material Adverse Effect; or

                  (s) the immediate owner of the Borrower, the Borrower or any
         of the Borrower's Subsidiaries shall fail to satisfy the ownership
         criteria for a cogeneration facility set forth in

<PAGE>   37
         18 C.F.R ' 292.203(b), unless, in the opinion of the Supermajority
         Lenders, such failure would not reasonably be expected to have a
         Material Adverse Effect; or

                  (t) the Borrower or any of the Borrower's Subsidiaries shall
         abandon any of the Facilities;

then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code, the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower; and provided, further, however, that unless and until the Senior
Debt has been paid in full or the principal of the Senior Secured Notes has been
accelerated pursuant to Section 5.02 of the Indenture, the Required Lenders
shall not take any action to accelerate the maturity of the Subordinated Debt
pursuant to this Section 6.01 or the Notes.

                                   ARTICLE VII

                                    THE AGENT

                  SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement and the Notes as are
delegated to the Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but the Agent shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement or
applicable law or unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking such action. The Agent agrees to give to each Lender
prompt notice of each notice given to it by the Borrower pursuant to the terms
of this Agreement.

                  SECTION 7.02. Agents' Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement or the Notes, except for its or their own gross negligence

<PAGE>   38
or willful misconduct. Without limitation of the generality of the foregoing,
the Agent: (a) may treat the payee of any Note as the holder thereof until the
Agent receives and accepts an Assignment and Acceptance entered into by the
Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as
assignee, as provided in Section 8.07; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it, shall not be liable for any action taken or omitted to
be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and shall not be responsible for the negligence or
misconduct of any counsel, accountants and other experts selected by it without
gross negligence or wilful misconduct; (c) makes no warranty or representation
to any Lender and shall not be responsible to any Lender for any recitals,
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement or any certificate or any other document
referred to or provided for in, or received under, this Agreement, or for the
value, validity, effectiveness, genuineness, enforceability, or sufficiency of
this Agreement, or any other document referred to or provided for herein or for
any failure by the Borrower to perform any of its obligations hereunder; (d)
shall not be responsible for or have any duty to ascertain, inquire into or
verify the performance or observance of any of the terms, covenants or
conditions of this Agreement or the Notes on the part of the Borrower or to
inspect the property (including the books and records) of the Borrower or any of
its Subsidiaries or Affiliates; (e) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or the Notes or any other instrument or document
furnished pursuant hereto; (f) shall incur no liability under or in respect of
this Agreement or the Notes by acting or refraining from acting upon any notice,
consent, certificate, resolution, statement, request, order, approval, opinion
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties;
(g) shall not be required to initiate or conduct any litigation or collection
proceedings under this Agreement or the Notes; and (h) shall not be under any
obligation to undertake or omit to be undertaken any action or duty in
connection with this Agreement or the Notes if it does not reasonably believe it
has been first provided with an indemnity from parties satisfactory to it (and
in addition to any indemnity provided for herein). The Agent shall not be liable
for any error of judgment or for any act done or omitted to be done by it in
good faith or for any mistake of fact or law, or for anything which it may do or
refrain from doing, except for its own gross negligence or willful misconduct.

                  SECTION 7.03. Bank of America and Affiliates. With respect to
its Commitment, the Advances made by it and the Notes issued to it, Bank of
America (and any successor acting as Agent) shall have the same rights and
powers under this Agreement and the Notes as any other Lender and may exercise
the same as though it were not an Agent; and the terms "Lender" and "Lenders"
shall, unless otherwise expressly indicated, include Bank of America (or such
successor) in its individual capacity. Bank of America (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Lender) accept deposits from, lend money to, make investments in, provide
services to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the Borrower
or any of its Subsidiaries or Affiliates and any Person who may do business with
or own securities of the Borrower or any such Subsidiary or Affiliate, all as if
it were not an Agent, and Bank of America (and any

<PAGE>   39
successor acting as Agent) and its Affiliates may accept fees and other
consideration from the Borrower or any of its Subsidiaries or Affiliates for
services in connection with this Agreement or otherwise without any duty to
account therefor to the Lenders.

                  SECTION 7.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon any Agent or any other
Lender and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. The Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower of this
Agreement or any other document referred to or provided for herein or to inspect
the properties or books of the Borrower or any of its Affiliates. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder (as to which such Agent only
shall have the duty to forward what it has received), the Agent shall have no
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower or any of its Affiliates that may come into its possession or that of
any of its Affiliates.

                  SECTION 7.05. Indemnification. (a) Each Lender severally
agrees to indemnify the Agent and its officers, directors, agents and employees
(to the extent not promptly reimbursed by the Borrower, but without limiting the
obligations of the Borrower hereunder) from and against such Lender's ratable
share (determined as provided below) of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys' fees and expenses) or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent
(including by any Lender) in any way relating to or arising out of this
Agreement or the Notes, out of any document or transaction contemplated
hereunder or hereby or any action taken or omitted by such Agent under this
Agreement or the Notes, in each case whether or not such liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement is
imposed on, incurred by or asserted against the Agent by the Borrower, its
directors, shareholders or creditors or any Lender, or any Lender is a party
thereto, and whether or not any Borrowing occurs; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under Section
9.04, to the extent that such Agent is not promptly reimbursed for such costs
and expenses by the Borrower. The agreements contained in this Section 7.05
shall survive payment in full of the Advances and all other amounts payable
under this Agreement and the Notes and the termination of this Agreement.

<PAGE>   40
                  (b) For purposes of this Section 7.05, the Lenders' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of the aggregate principal amount of the Advances outstanding at such time
and owing to the respective Lenders or, if no Advances are at the time
outstanding, according to the aggregate Commitments at such time of the
respective Lenders. The failure of any Lender to reimburse any Agent promptly
upon demand for its ratable share of any amount required to be paid by such
Lender to the Agent as provided herein shall not relieve any other Lender of its
obligation hereunder to reimburse the Agent for its ratable share of such
amount, but no Lender shall be responsible for the failure of any other Lender
to reimburse the Agent for such other Lender's ratable share of such amount.
Without prejudice to the survival of any other agreement of any Lender
hereunder, the agreement and obligations of each Lender contained in this
Section 7.05 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the Notes.

                  SECTION 7.06. Successor Agents. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders appoint, or petition any court of competent jurisdiction to appoint, a
successor Agent, which shall be a commercial bank organized under the laws of
the United States or of any State thereof and having a combined capital and
surplus of at least $250,000,000. Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement and the Notes. After the retiring Agent's
resignation or removal hereunder as an Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent under this Agreement.

                                  ARTICLE VIII

                            SUBORDINATION PROVISIONS

                  SECTION 8.01. Subordinated Debt Subordinated to Senior Debt.
The Borrower and the Lenders agree that the payment of the Subordinated Debt is
subordinated, to the extent and in the manner provided in this Article, to the
prior payment in full in cash or cash equivalents of all Senior Debt. This
Article is intended for the benefit of all Persons who hold, or, in reliance on
the provisions of this Article, become holders of, or continue to hold, Senior
Debt, and each such Person shall be entitled to enforce such provisions.

<PAGE>   41
                  SECTION 8.02. Borrower Not to Make Payments with Respect to
Subordinated Debt in Certain Circumstances. (a) Upon the maturity of all of the
principal of the Senior Debt by lapse of time, acceleration (unless rescinded or
annulled) or otherwise, all Senior Debt shall first be paid in full in cash or
cash equivalents, or such payment shall be duly provided for the benefit of the
holders of the Senior Debt in cash in a manner satisfactory to all of the
holders of such Senior Debt, before any payment (in cash, property or securities
or by set-off or otherwise (other than Replacement Subordinated Securities)) is
made, directly or indirectly, by the Borrower on account of the Subordinated
Debt and before the Borrower is entitled to acquire, directly or indirectly, any
portion of Subordinated Debt.

                  (b) Upon the occurrence of an "Event of Default" under the
Indenture (an "Indenture Default"), then, unless and until such Indenture
Default shall have been waived or cured to the reasonable satisfaction of the
Required Holders or shall have ceased to exist in the reasonable judgment of the
Required Holders, (i) no payment (whether of principal, interest, fees, or other
amounts) shall be made, directly or indirectly, by the Borrower on account of
the Subordinated Debt and (ii) the Borrower shall not acquire, directly or
indirectly, any of the Subordinated Debt. If, during the occurrence and
continuance of an Event of Default hereunder due to an Insolvency Event with
respect to the Borrower, the holders of the Senior Debt have been prohibited
from accelerating the Senior Debt, then such prohibition shall be deemed to
constitute an Indenture Default under this Section 8.02(b).

                  (c) In the event that notwithstanding the provisions of this
Section 8.02, the Borrower shall make any payment to any of the Lenders on
account of the Subordinated Debt or acquire any of the Subordinated Debt or any
of the Lenders shall receive or retain any such payment at any time when such
acquisition or payment is prohibited pursuant to clauses (a) and (b) of this
Section 8.02, then, such payment shall be held by such Lender in trust for the
benefit of, and shall be paid forthwith over and delivered to, the holders of
Senior Debt (pro rata as to each of such holders on the basis of the respective
amounts of Senior Debt held by them) or their representative under the
Indenture, as their respective interests may appear, for application to the
payment of all Senior Debt remaining unpaid to the extent necessary to pay in
full all Senior Debt in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.

                  SECTION 8.03. Subordinated Debt Subordinated to Prior Payment
of All Senior Debt on Dissolution, Liquidation or Reorganization for the Benefit
of Creditors of Borrower. Upon any distribution of assets of the Borrower in any
dissolution, winding up, liquidation or reorganization for the benefit of
creditors of the Borrower (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):

                  (a) the holders of all Senior Debt shall first be entitled to
receive payments in full of all amounts in respect of Senior Debt (including
without limitation interest accruing after the commencement of any such
proceeding at the rate specified in the documentation governing the terms of the
Senior Debt) in cash or cash equivalents or in a manner satisfactory to all of
its holders

<PAGE>   42
before (i) any Lender is entitled to receive any payment (in cash, property or
securities or by set-off or otherwise (other than Replacement Subordinated
Securities)), directly or indirectly, from the Borrower on account of the
Subordinated Debt and (ii) the Borrower is entitled to acquire, directly or
indirectly, any of the Subordinated Debt;

                  (b) any payment or distribution of assets of the Borrower of
any kind or character, (whether in cash, property or securities or by set-off or
otherwise (other than Replacement Subordinated Securities)), to which any Lender
would be entitled except for the provisions of this Article, shall be paid by
the liquidating trustee or agent or other Person making such payment or
distribution directly to the holders of the Senior Debt or their representative
under the Indenture (pro rata as to each such holder, on the basis of the
respective amounts of unpaid Senior Debt held by each), to the extent necessary
to make payment in full of all amounts in respect of the Senior Debt remaining
unpaid, after giving effect to any concurrent payment or distribution to or for
the benefit of the holders of such Senior Debt, except that the Lenders shall be
entitled to receive Replacement Subordinated Securities;

                  (c) in the event that, notwithstanding the foregoing
provisions of this Section 8.03, any direct or indirect payment or distribution
of assets of the Borrower of any kind or character (whether in cash, property or
securities or by set-off or otherwise (other than Replacement Subordinated
Securities)) shall be received by any Lender on account of the Subordinated Debt
or in connection with the acquisition of any Note by the Borrower before all
Senior Debt is paid in full in cash or cash equivalents, such payment or
distribution shall be received and held in trust for the benefit of, and shall
be paid forthwith over and delivered to the holders of the Senior Debt or their
representative under the Indenture (pro rata as provided in subsection (b)
above), to the extent necessary to make payment in full all unpaid Senior Debt,
after giving effect to any concurrent payment or distribution to or for the
benefit of the holders of such Senior Debt, except that the Lenders shall be
entitled to receive Replacement Subordinated Securities; and

                  (d) the Borrower shall give prompt written notice to the Agent
and the Lenders of any dissolution, winding up, liquidation or reorganization of
Borrower.

                  SECTION 8.04. Lenders to be Subrogated to Rights of Holders of
Senior Debt. Subject to the payment in full, in cash or cash equivalents, of all
Senior Debt, the Lenders shall be subrogated equally and ratably to the rights
of the holders of the Senior Debt to receive payments or distributions of assets
of the Borrower (whether in cash, property or securities or by set-off or
otherwise), applicable to the Senior Debt until all amounts owing on the Senior
Debt shall be paid in full, and for the purpose of such subrogation no payments
or distributions to the holders of the Senior Debt by or on behalf of the
Borrower or by or on behalf of the Lenders by virtue of this Article which
otherwise would have been made to any Lender shall, as between the Borrower, its
creditors other than holders of the Senior Debt, and the Lenders be deemed to be
payment by the Borrower to or on account of the Subordinated Debt.

<PAGE>   43
                  SECTION 8.05. Subordinated Debt Unconditional. (a) The
provisions of this Article are intended solely for the purpose of defining the
relative rights of the Lenders, on the one hand, and the holders of the Senior
Debt, on the other hand, and nothing contained in this Article or elsewhere in
this Agreement is intended to or shall impair as between the Borrower, its
creditors other than holders of Senior Debt, and the Lenders, the obligation of
the Borrower, which is absolute and unconditional, to pay to the Lenders the
principal of interest on the Advances as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Lenders and creditors of the Borrower other than the
holders of the Senior Debt, nor shall anything herein or therein prevent any
Lender from exercising all remedies otherwise permitted by applicable law upon
default under this Agreement, subject to the rights, if any, under this Article
VIII, of the holders of Senior Debt in respect of cash, property, or securities
of the Borrower received upon the exercise of such remedy. Upon any distribution
of assets of the Borrower referred to in this Article VIII, the Lenders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any such distribution for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other Debt of the Borrower, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon, and all
other facts pertinent thereto or to this Article VIII.

                  (b) Nothing contained in this Article VIII or elsewhere in
this Agreement or in the Notes is intended to or shall affect the obligation of
the Borrower to make, or prevent the Borrower from making, at any time except
during the pendency of any liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of the Borrower or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, and except during the continuance of any Indenture Default specified in
Section 8.02 (not cured or waived), payments at any time of the principal of or
interest on the Notes.

                  SECTION 8.06. Subordination Rights Not Impaired by Acts or
Omissions of Borrower or Holders of Senior Debt. The right or interest of any
present or future holders of any Senior Debt, and all agreements and obligations
of the Lenders under this Article, shall remain in full force and effect
irrespective of: (a) any change in the time, manner or place of payment of, or
in any other term in respect of, all or any of the Senior Debt, or any amendment
or waiver of any agreement or instrument related thereto; (b) any exchange or
release of, or non-perfection of any lien on or security interest in, any
collateral, or any release from, amendment or waiver of or consent to departure
from any guaranty or other obligation, for all or any of the Senior Debt; (c)
any other circumstance which might otherwise constitute a defense available to
or discharge of any Lender in respect of the provisions of this Article VIII; or
(d) any act or failure to act on the part of the Borrower or by any act or
failure to act by any holder of the Senior Debt, or by any noncompliance by the
Borrower with the terms of this Agreement, regardless of any knowledge thereof
which any holder of Senior Debt may have or be otherwise charged with.

<PAGE>   44
                  SECTION 8.07. Article Not to Prevent Events of Default. The
failure to make a payment on account of principal of or interest on any
Subordinated Debt by reason of any provision in this Article shall not be
construed as preventing the occurrence of an Event of Default under this
Agreement.

                  SECTION 8.08. Other Provisions Subject Hereto. Except as
expressly stated in this Article VIII, notwithstanding anything contained in
this Agreement to the contrary, all provisions of this Agreement are subject to
the provisions of this Article VIII. The provisions of this Article VIII shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment in respect of Senior Debt is rescinded or must otherwise be
returned on the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.

                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all of the Lenders, do any of the following at
any time: (i) amend or waive any of the conditions specified in Article III;
(ii) change the number of Lenders or the percentage of (A) the Commitments or
(B) the aggregate unpaid principal amount of the Advances that, in each case,
shall be required for the Lenders or any of them to take any action hereunder;
(iii) reduce or limit the obligations of the Borrower under this Agreement or
the Notes; (iv) amend this Section 9.01; (v) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations; (vi) reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder; (vii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder or amend
Section 2.06; (viii) amend, waive or otherwise modify the provisions of Section
5.01 or 5.02 or of Article III; or (ix) amend, waive or otherwise modify any of
the terms of subordination contained in, or any term relating to the date on
which any payment may be made under, the Subordinated Loan Agreement or any
definitions relating thereto; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by the appropriate Agent in addition
to the Lenders required above to take such action, affect the rights, immunities
or duties of such Agent under this Agreement.

                  SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered:

<PAGE>   45
                  (a) if to the Borrower, at its address at 711 Louisiana
         Street, Suite 3200, Houston, Texas 77002, Telecopier No.:
         (713)345-9702, Telephone No.: (713)345-9709, Attention: Christine Lee;

                  (b) if to any Initial Lender or at its Domestic Lending Office
         specified opposite its name on Schedule I hereto;

                  (c) if to any other Lender, at its Domestic Lending Office
         specified in the Assignment and Acceptance pursuant to which it became
         a Lender; and

                  (d) if to the Agent, at its address at Bank of America
         Corporate Center, 100 North Tryon Street, NC1-007-10-07, Charlotte,
         North Carolina 28255, Telecopier No.: (704) 386-3324, Telephone No.:
         (704) 388-6833, Attention: Laura Ryan;

or, as to the Borrower and each of the Agents, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and each of the Agents. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively, except
that notices and communications to any Agent pursuant to Article II, III or VII
shall not be effective until received by such Agent. Delivery by telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.

                  SECTION 9.03. No Waiver; Remedies. No failure on the part of
the Agent or any Lender to exercise, and no delay in exercising, any right,
power or privilege hereunder or under any Note shall operate as a waiver thereof
or a consent thereto; nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.

                  SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand (i) all reasonable out-of-pocket costs and expenses of the Agent
incurred from time to time in connection with the preparation, execution,
delivery, administration, modification and amendment of this Agreement and the
Notes (including, without limitation, (A) all due diligence, syndication,
transportation, computer, duplication, appraisal, audit, insurance, consultant,
search, filing and recording fees and expenses) and (B) the reasonable fees and
expenses of counsel for the Agent with respect thereto, with respect to advising
the Agent as to its rights and responsibilities under this Agreement and the
Notes, with respect to negotiations with the Borrower or with other creditors of
the Borrower or any of its Subsidiaries arising out of any Default or any events
or circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights

<PAGE>   46
generally and any proceeding ancillary thereto) and (ii) all costs and expenses
of the Agent and the Lenders in connection with the enforcement of this
Agreement and the Notes, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally or in any negotiated settlement or workout (including, without
limitation, the fees and expenses of counsel for the Agent and each Lender with
respect thereto).

                  (b) The Borrower agrees to indemnify and hold harmless the
Agent, the Arranger and each Lender and each of their Affiliates and each of
their respective officers, directors, employees, agents, advisors and
representatives (each, an "Indemnified Party"), from and against any and all
claims, penalties, damages, losses, liabilities, obligations, costs, expenses
and disbursements (including, without limitation, reasonable fees and expenses
of counsel), joint or several, of any kind or nature whatsoever, that may be
imposed upon, incurred by or asserted or awarded against any Indemnified Party,
in any way relating to, arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation
or proceeding or preparation of a defense, action, consent agreement, consent
decree, consent order or demand in connection therewith) (i) any of the matters
contemplated by this Agreement, including, without limitation, the operation and
maintenance of the Facilities by Subsidiaries of the Borrower, (ii) the
Commitments of the Lenders and the engagement of the Agent and the Arranger
hereunder, (iii) the actual or proposed use of the proceeds of the Advances,
(iv) any information memorandum or the other information prepared or approved by
the Borrower or any of its Affiliates and made available to third parties in
connection with the transactions contemplated hereby (including, without
limitation, arising out of or based upon any misstatement or alleged
misstatement of a material fact or omission or alleged omission to state a
material fact in any verbal or written communication made in connection with the
transactions contemplated hereby made by the Borrower or any of its
Subsidiaries), (v) any default or alleged default, or any act or failure to act,
or any alleged act or failure to act, by the Borrower in the performance of any
of its Obligations under this Agreement, any of the Notes or any Related
Documents to which it is a party or any related claim or investigation,
litigation or proceeding (including any arising out of any negligence of any
Indemnified Party) or (vi) the actual or alleged presence of Hazardous Materials
on any property of the Borrower or any of its Subsidiaries, including any of the
Facilities, or any Environmental Action relating in any way to the Borrower or
any of its Subsidiaries, in each case whether or not such action, consent
agreement, consent decree, consent order, demand, investigation, litigation,
proceeding or suit is brought by the Borrower or any of its directors,
shareholders, creditors or Affiliates or by an Indemnified Party or an
Indemnified Party is otherwise a party thereto and whether or not any of the
transactions contemplated hereby are consummated, except to the extent such
claim, penalty, damage, loss, liability, obligation, cost, expense or
disbursement is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted directly and primarily from such
Indemnified Party's gross negligence or wilful misconduct; provided, however,
that in no event shall the Borrower be liable for any Indemnified Party's loss
of profits, business or anticipated savings or for any special, indirect,
consequential or punitive damages whatsoever, other than any such losses or
damages imposed upon or asserted or awarded against any Indemnified Party by a
third party (except to the extent such losses or damages are found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
directly and primarily from such

<PAGE>   47
Indemnified Party's gross negligence or wilful misconduct). The Borrower also
agrees that no Indemnified Party shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Borrower or any of its
security holders, creditors or Affiliates arising out of, related to or in
connection with this Agreement, the Notes, the Related Documents or any of the
transactions contemplated hereby or thereby, whether or not any such transaction
is consummated, except to the extent that such liability is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
directly and primarily from such Indemnified Party's gross negligence or willful
misconduct; provided, however, that in no event shall any Indemnified Party be
liable to the Borrower or any of its security holders, creditors or Affiliates
for any loss of profits, business or anticipated savings or for any special,
indirect, consequential or punitive damages whatsoever.

                  (c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such Advance, as a
result of a payment or Conversion pursuant to Section 2.05, 2.08(b)(i) or
2.09(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, the Borrower shall, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses that it may reasonably incur as a result of such payment,
including, without limitation, any loss (including loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such Advance.

                  (d) If the Borrower fails to pay when due any costs, expenses
or other amounts payable by it under this Agreement or the Notes, including,
without limitation, fees and expenses of counsel and indemnities, such amount
may be paid on behalf of the Borrower by the Agent or any Lender, in its sole
discretion.

                  (e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in Sections 2.09 and 2.11 and this Section 9.04 shall survive the
payment in full of principal, interest and all other amounts payable hereunder
and under the Notes.

                  SECTION 9.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the Agent
to declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its respective Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender or such Affiliate to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower now or hereafter
existing under this Agreement and the Note or Notes (if any) held by such
Lender, irrespective of whether such Lender shall have made any demand under
this Agreement or such Note or Notes and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower

<PAGE>   48
after any such set-off and application; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and its respective Affiliates under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender and its respective Affiliates may have.

                  SECTION 9.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Agent and
when the Agent shall have been notified by the Initial Lender that the Initial
Lender has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agents and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder, or any interest herein or therein, without the
prior written consent of all of the Lenders.

                  SECTION 9.07. Assignments and Participations. (a) Each Lender
may and, so long as no Default shall have occurred and be continuing, if
demanded by the Borrower (following a demand by such Lender pursuant to Section
2.09 or 2.11) upon at least three Business Days' notice to such Lender and the
Agent, will assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a uniform, and not
a varying, percentage of all rights and obligations under this Agreement, (ii)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Advances owing to the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000, (iii) each such assignment shall be
to an Eligible Assignee, (iv) each such assignment made as a result of a demand
by the Borrower pursuant to this Section 9.07(a) shall be arranged by the
Borrower after consultation with the Agent and shall be either an assignment of
all of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made concurrently
with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement, (v)
no Lender shall be obligated to make any such assignment as a result of a demand
by the Borrower pursuant to this Section 9.07(a) unless and until such Lender
shall have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, (vi) no such
assignments shall be permitted without the consent of the Agent until the Agent
shall have notified the Lender that syndication of the Advances hereunder has
been completed and (vii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,500; provided, however,
that for each such assignment made as a result of a demand by the Borrower
pursuant to this Section 9.07(a), the Borrower shall pay to the Agent the
applicable processing and recordation fee.

<PAGE>   49
                  (b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (ii) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

                  (c) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any of the Notes or any other
instrument or document furnished pursuant hereto or thereto; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or the
Notes or any other instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as an agent on its behalf and to exercise such powers
and discretion under this Agreement and the Notes as are delegated to the Agent
by the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; (vii) such assignee agrees that it will perform in
accordance with its terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender; and (viii) if not
incorporated under the laws of the United States of America or a state thereof,
such assignee agrees to deliver to the Borrower and the Agent certification as
to exemption from deduction or withholding of Taxes in accordance with Section
2.11.

                  (d) The Agent, acting for this purpose (but only for this
purpose) as the agent of the Borrower, shall maintain at its address referred to
in Section 9.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the principal amount of the Advances owing to each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders shall treat each Person whose

<PAGE>   50
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

                  (e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, together with any Note or Notes subject
to such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. In the case of
any assignment by a Lender, within five Business Days after its receipt of such
notice, the Borrower, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such Eligible Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder, a new Note to the order of the assigning Lender
in an amount equal to the Commitment retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A hereto.

                  (f) Each Lender may sell participations to one or more Persons
(other than the Borrower or any of its Affiliates) in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection provisions contained in
Article II and the right of set-off contained in Section 9.05, (iv) such Lender
shall remain the holder of any such Note for all purposes of this Agreement, (v)
the Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Advances owing to it and
its Note or Notes and (vi) no participant under any such participation shall
have any right to approve any amendment or waiver of any provision of this
Agreement or the Notes, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, or
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation.

                  (g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided, however, that, prior to any such
disclosure,

<PAGE>   51
the assignee or participant or proposed assignee or participant shall agree to
comply with the provisions of Section 9.09 with respect to any information
received by it from such Lender.

                  (h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System. No such assignment shall release the assigning Lender
from its obligations hereunder.

                  SECTION 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  SECTION 9.09. Confidentiality. The Agent and each Lender
(each, a "Lending Party") agree not to disclose without the prior consent of the
Borrower any information that the Borrower or any of its Affiliates furnishes to
the Agent or any Lender in a writing designated as confidential; provided that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any Affiliate of any Lending Party, or any
officer, director, employee, agent, attorney, independent or internal auditor or
advisor of any Lending Party or Affiliate of any Lending Party, (b) to any other
Person if such disclosure is reasonably incidental to the administration of this
Agreement or the Notes, (c) as may be required by any applicable Requirement of
Law, (d) upon the order of any court or administrative agency, (e) upon the
request or demand of any Governmental Authority having jurisdiction, (f) that is
or becomes available to the public or that is or becomes available to any
Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) as may be required or appropriate in response
to any summons or subpoena or in connection with any litigation or arbitration,
(h) to the extent necessary in connection with the exercise of any right or
remedy under this Agreement or any Note, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.

                  SECTION 9.10. Severability. Any provision of this Agreement
which 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 9.11. Governing Law; Entire Agreement. This Agreement
and the Notes shall be governed by, and construed in accordance with, the laws
of the State of New York. This Agreement and the Notes constitute the entire
understanding among the parties hereto with respect

<PAGE>   52
to the subject matter hereof and supercede any prior agreements, written or
oral, with respect thereto, except that the Fee Letter shall remain in full
force and effect.

<PAGE>   53
                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                     EAST COAST POWER L.L.C.

                                     By: /s/ Robert J. Licato
                                        ----------------------------------------
                                        Name: Robert J. Licato
                                        Title: Vice President-Operations

                                     Bank of America, N.A., as Agent

                                     By: /s/ Michael F. Hinds
                                        ----------------------------------------
                                     Name:  Michael F. Hinds
                                     Title: Director

                                     Bank of America, N.A., as
                                         Initial Lender

                                     By: /s/ Michael F. Hinds
                                        ----------------------------------------
                                     Name:  Michael F. Hinds
                                     Title: Director

<PAGE>   54
                                     ANNEX A

                                   DEFINITIONS

                  As used in this Annex A, the following terms shall have the
following meanings (such meanings to be equally applicable to the singular and
plural forms of the terms defined):

                  "Additional Notes" has the meaning assigned thereto in the
         Indenture.

                  "Administrative Expenses" means, for any period with respect
         to the Borrower or any of its Subsidiaries, administrative and
         operating expenses of the Borrower or of such Subsidiary, as the case
         may be, due and payable, or expected to be due and payable, in cash
         during such period to the extent such expenses are budgeted for such
         period as set forth in the Annual Operating Budget delivered to the
         Agent pursuant to Section 3.01 of the Credit Agreement.

                  "Advance" has the meaning specified in Section 2.01 of the
         Credit Agreement.

                  "Affiliate" means, as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or is a director or officer of such Person.
         For purposes of this definition, the term "control" (including the
         terms "controlling", "controlled by" and "under common control with")
         of a Person means the possession, direct or indirect, of the power to
         vote 10% or more of the Voting Interests of such Person or to
         ordinarily, in the absence of contingencies, direct or cause the
         direction of the management and policies of such Person, whether
         through the ownership of Voting Interests, by contract or otherwise.

                  "Agent" means Bank of America, N.A., as agent (together with
         any successor appointed pursuant to Article VII of the Credit
         Agreement) for the Lenders.

                  "Agent's Account" means the account of the Agent maintained by
         the Agent at its office at Bank of America Corporate Center, 101 North
         Tryon Street, Charlotte, North Carolina 28255, Account No.:
         136621-2250600, Routing No.: ABA No. 053-000-196, Attention: CCS/Agency
         Services - Lynne Cole (704-386-9068), Reference: East Coast Power
         L.L.C.

                  "Agreement Value" means, for each Hedge Agreement of any
         Person, on any date of determination, an amount determined by the Agent
         equal to: (a) in the case of a Hedge Agreement documented pursuant to
         the Master Agreement (Multicurrency-Cross Border) published by the
         International Swap and Derivatives Association, Inc. (the "Master
         Agreement"), the amount, if any, that would be payable by such Person
         or any of its Subsidiaries to its counterparty to such Hedge Agreement,
         as if (i) such Hedge Agreement was being terminated early on such date
         of determination, (ii) such Person or such Subsidiary

<PAGE>   55
         was the sole "Affected Party", and (iii) the Agent was the sole party
         determining such payment amount (with the Agent making such
         determination pursuant to the provisions of the form of Master
         Agreement); or (b) in the case of a Hedge Agreement traded on an
         exchange, the mark-to-market value of such Hedge Agreement, which will
         be the unrealized loss on such Hedge Agreement to such Person or any of
         its Subsidiaries party to such Hedge Agreement determined by the Agent
         based on the settlement price of such Hedge Agreement on such date of
         determination; or (c) in all other cases, the mark-to-market value of
         such Hedge Agreement, which will be the unrealized loss on such Hedge
         Agreement to such Person or any of its Subsidiaries party to such Hedge
         Agreement determined by the Agent as the amount, if any, by which (i)
         the present value of the future cash flows to be paid by such Person or
         such Subsidiary exceeds (ii) the present value of the future cash flows
         to be received by such Person or such Subsidiary pursuant to such Hedge
         Agreement; capitalized terms used and not otherwise defined in this
         definition shall have the respective meanings set forth in the above
         described Master Agreement.

                  "Annual Operating Budget" means the annual budget of the
         Borrower and of each of its Subsidiaries for fiscal year 2000, in
         substantially the form of Exhibit D to the Credit Agreement, for
         Administrative Expenses, which shall specify the aggregate amount of
         Administrative Expenses of the Borrower and of each of its Subsidiaries
         that are projected to be required during such fiscal year.

                  "Applicable Lending Office" means, with respect to each
         Lender, such Lender's Domestic Lending Office in the case of a Base
         Rate Advance and such Lender's Eurodollar Lending Office in the case of
         a Eurodollar Rate Advance.

                  "Applicable Margin" means, subject to adjustment pursuant to
         Section 2.06(e) of the Credit Agreement, (a) during the period from the
         date of the Credit Agreement through the Initial Maturity Date (i)
         2.50% per annum for Eurodollar Rate Advances and (ii) 1.50% per annum
         for Base Rate Advances and (b) thereafter, if the Maturity Date is
         extended pursuant to Section 3.03 of the Credit Agreement (i) 3.00% per
         annum for Eurodollar Rate Advances and (ii) 2.00% per annum for Base
         Rate Advances.

                  "Arranger" means Banc of America Securities LLC.

                  "Assignment and Acceptance" means an assignment and acceptance
         entered into by a Lender and an Eligible Assignee, and accepted by the
         Agent, in accordance with Section 9.07 of the Credit Agreement and in
         substantially the form of Exhibit C thereto.

                  "Available Cash" means, with respect to any Person for any
         period (a) the aggregate amount of Revenues of such Person for such
         period, minus (b) the sum of (i) the aggregate amount of Administrative
         Expenses of such Person paid in cash by such Person during such period
         to the extent permitted by the Credit Agreement plus (ii) the aggregate
         amount of Capital Expenditures of such Person paid in cash by such
         Person during such period to the

<PAGE>   56
         extent permitted by the Credit Agreement plus (iii) the aggregate
         amount of all regularly scheduled payments of principal of and interest
         on Existing Debt of such Person made by such Person during such period
         to the extent permitted by the Credit Agreement plus (iv) the aggregate
         amount of all payments made by such Person during such period to
         reserve accounts relating to Existing Debt of such Person to the extent
         required to be made by such Person during such period under the
         documents governing such Existing Debt to the extent permitted by the
         Credit Agreement plus (v) the aggregate amount of all taxes paid in
         cash by such Person during such period plus (vi) in the case of the
         Borrower, the sum of (A) the aggregate amount of all payments of
         interest on the Advances made by the Borrower during such period plus
         (B) the aggregate amount of all optional prepayments of Advances made
         by the Borrower during such period pursuant to Section 2.05(a) of the
         Credit Agreement

                  "Bank of America" means Bank of America, N.A.

                  "Base Rate" means, for any day, the rate per annum equal to
         the higher of (a) the Federal Funds Rate for such day plus one-half of
         one percent (0.5%) and (b) the Prime Rate for such day. Any change in
         the Base Rate due to a change in the Prime Rate or the Federal Funds
         Rate shall be effective on the effective date of such change in the
         Prime Rate or Federal Funds Rate.

                  "Base Rate Advance" means an Advance that bears interest as
         provided in Section 2.06(a)(i) of the Credit Agreement.

                  "Bayonne Financing Agreement" means the Term Loan Agreement
         dated as of November 1, 1987, between NJ Venture and the Prudential
         Insurance Company of America, as amended by First Amendment dated as of
         December 15, 1988 and by Second Amendment dated as of July 31, 1996.

                  "Bayonne Plant" means the 176 megawatt gas-fired, combined
         cycle cogeneration facility owned by NJ Venture and located on the site
         of the IMTT Facility in Bayonne, New Jersey, including all equipment
         related thereto, all fixtures and all parts thereof and all accessions
         thereto.

                  "Borrower" means East Coast Power L.L.C., a Delaware limited
         liability company.

                  "Borrowing" means a borrowing consisting of simultaneous
         Advances made by the Lenders.

                  "Business Day" means a day of the year on which banks are not
         required or authorized by law to close in New York, New York,
         Charlotte, North Carolina or Houston, Texas and, if the applicable
         Business Day relates to any Eurodollar Rate Advances, on which dealings
         are carried on in the London interbank market.

<PAGE>   57
                  "CalPERS" means California Public Employees' Retirement
         System, a unit of the State and Consumer Services Agency of the State
         of California.

                  "Camden Cogen means Camden Cogen .L.P., a Delaware limited
         partnership.

                  "Camden Cogen Partnership Agreement" means the Amended and
         Restated Agreement of Limited Partnership of Camden Cogen L.P. dated as
         of February 9, 1993, by and among CT Camden, Robert C. McNair and
         General Electric Capital Corporation, as amended as of April 1, 1993,
         December 22, 1993 and February 4, 1999.

                  "Camden Financing Agreement" means the Amendment and
         Restatement dated as of April 1, 1993, of the Construction and Term
         Loan Agreement dated as of February 4, 1992, among Camden Cogen and
         General Electric Capital Corporation, as amended by Amendment No. 1
         dated as of December 22, 1993, Amendment No. 2 dated as of July 31,
         1998 and Amendment No. 3 dated as of February 4, 1999.

                  "Camden Plant" means the 146 megawatt gas-fired, combined
         cycle cogeneration facility owned by Camden Cogen and located in
         Camden, New Jersey, including all equipment related thereto, all
         fixtures and all parts thereof and all accessions thereto.

                  "Capital Expenditures" means, for any Person for any period,
         the sum (without duplication for such period or any other period) of
         (a) all expenditures made, directly or indirectly, by such Person or
         any of its Subsidiaries during such period for equipment, fixed assets,
         real property or improvements, or for replacements or substitutions
         therefor or additions thereto, that have been or should be, in
         accordance with GAAP, reflected as additions to property, plant or
         equipment on a Consolidated balance sheet of such Person or have a
         useful life of more than one year plus (b) the aggregate principal
         amount of all Debt (including Obligations under Capitalized Leases)
         assumed or incurred during such period to finance any expenditures for
         equipment, fixed assets, real property or improvements, or for
         replacements or substitutions therefor or additions thereto, that
         should be, in accordance with GAAP, reflected, when such expenditures
         are made, as additions to property, plant or equipment on a
         Consolidated balance sheet of such Person or would have a useful life
         of more than one year.

                  "Capitalized Leases" means all leases that have been or should
         be, in accordance with GAAP, recorded as capitalized leases.

                  "CERCLA" means the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, as amended, and any rules or
         regulations promulgated under such Act.

                  "CERCLIS" means the Comprehensive Environmental Response,
         Compensation and Liability Information System maintained by the U.S.
         Environmental Protection Agency.

<PAGE>   58
                  "Change of Control" means the occurrence of any of the
         following:

                           (a) (i) JEDI II shall cease to own 100% of the Equity
                  Interests in ECP Holding or (ii) ECP Holding shall cease to
                  own 51% of the Equity Interests in the Borrower (other than
                  Preferred Interests in the Borrower);

                           (b) the Borrower shall cease to own 100% of the
                  Equity Interests in JEDI Linden NB, JEDI GP Camden, JEDI LP
                  Camden or JEDI Bayonne GP; or

                           (c) JEDI Linden NB shall cease to own (i) 100% of the
                  Equity Interests in JEDI Linden LP or JEDI Linden Inc. or (ii)
                  at least 99% of the Equity Interests in JEDI Linden GP; or

                           (d) JEDI Linden Inc. shall cease to own all of the
                  Equity Interests in JEDI Linden GP not owned by JEDI Linden
                  NB; or

                           (e) JEDI Linden GP shall cease to own 100% of the
                  general partnership interests in Linden Ltd.; or

                           (f) JEDI Linden LP shall cease to own 100% of the
                  limited partnership interests in Linden Ltd.; or

                           (g) Linden Ltd. shall cease to own 100% of the
                  general partnership interests in Linden Venture; or

                           (h) JEDI Camden GP shall cease to own 100% of the
                  general partnership interests in CT Camden; or

                           (i) JEDI Camden LP shall cease to own 100% of the
                  limited partnership interests in CT Camden; or

                           (j) CT Camden shall cease to own 100% of the general
                  partnership interests in Camden Cogen; or (k) JEDI Bayonne GP
                  shall cease to own at least 91.75% of the partnership
                  interests in NJ Venture; or

                           (l) Enron shall cease to own directly or indirectly
                  100% of the Equity Interests in each of ECM II and ECM III
                  (or, with respect to either such Person, 100% of the Equity
                  Interests in a Permitted Enron Substitute); or

                           (m) ECM II (or a Permitted Enron Substitute) shall
                  cease to own 100% of the general partnership interests in JEDI
                  II; or

<PAGE>   59
                           (n) ECM III (or a Permitted Enron Substitute) shall
                  cease to own 50% of the limited partnership interests and 49%
                  of the economic interest in JEDI II; or

                           (o) any change otherwise permitted under any of
                  clauses (a) through (n) above that would reasonably be
                  expected (i) to result in the loss by any of the Facilities of
                  its status as a Qualified Facility, unless, in the opinion of
                  the Supermajority Lenders, such loss of status would not
                  reasonably be expected to have a Material Adverse Effect, or
                  (ii) to cause the Borrower or any of its Subsidiaries to be an
                  "investment company" or an "affiliated person" of an
                  "investment company", as such terms are defined in the
                  Investment Company Act of 1940, as amended.

                  "Commitment" means, with respect to any Lender at any time,
         the amount set forth opposite such Lender's name on Schedule I hereto
         under the caption "Commitment" or, if such Lender has entered into one
         or more Assignments and Acceptances, set forth for such Lender in the
         Register maintained by the Agent pursuant to Section 9.07(d) of the
         Credit Agreement as such Lender's "Commitment", as such amount may be
         reduced at or prior to such time pursuant to Section 2.04 of the Credit
         Agreement.

                  "Consolidated" refers to the consolidation of accounts in
         accordance with GAAP.

                  "Contingent Obligation" means, with respect to any Person, any
         Obligation or arrangement of such Person to guarantee or intended to
         guarantee any Debt, leases, dividends or other payment Obligations
         ("primary obligations") of any other Person (the "primary obligor") in
         any manner, whether directly or indirectly, including, without
         limitation, (a) the direct or indirect guarantee, endorsement (other
         than for collection or deposit in the ordinary course of business),
         co-making, discounting with recourse or sale with recourse by such
         Person of the Obligation of a primary obligor, (b) the Obligation to
         make take-or-pay or similar payments, if required, regardless of
         nonperformance by any other party or parties to an agreement or (c) any
         Obligation of such Person, whether or not contingent, (i) to purchase
         any such primary obligation or any property constituting direct or
         indirect security therefor, (ii) to advance or supply funds (A) for the
         purchase or payment of any such primary obligation or (B) to maintain
         working capital or equity capital of the primary obligor or otherwise
         to maintain the net worth or solvency of the primary obligor, (iii) to
         purchase property, assets, securities or services primarily for the
         purpose of assuring the owner of any such primary obligation of the
         ability of the primary obligor to make payment of such primary
         obligation or (iv) otherwise to assure or hold harmless the holder of
         such primary obligation against loss in respect thereof. The amount of
         any Contingent Obligation shall be deemed to be an amount equal to the
         stated or determinable amount of the primary obligation in respect of
         which such Contingent Obligation is made (or, if less, the maximum
         amount of such primary obligation for which such Person may be liable
         pursuant to the terms of the instrument evidencing such Contingent
         Obligation) or, if not stated or determinable, the maximum reasonably
         anticipated liability in respect thereof (assuming such Person is
         required to perform thereunder), as determined by such Person in good
         faith.

<PAGE>   60
                  "Conversion", "Convert" and "Converted" each refer to a
         conversion of Advances of one Type into Advances of the other Type
         pursuant to Section 2.08 or 2.09 of the Credit Agreement.

                  "Credit Agreement" means the $30,000,000 Senior Subordinated
         Credit Agreement dated as of December 29, 1999, among the Borrower, the
         Lenders and the Agent, as amended, supplemented or otherwise modified
         from time to time.

                  "CT Camden" means Cogen Technologies Camden GP Limited
         Partnership, a Delaware limited partnership.

                  "CT Camden Partnership Agreement" means the Agreement of
         Limited Partnership of CT Camden dated as of July 26, 1991, by and
         among Cogen Technologies Camden, Inc. and CTLPJV, as amended by First
         Amendment dated as of December 1, 1991.

                  "CTLPJV" means Cogen Technologies Limited Partners Joint
         Venture, a Texas general partnership.

                  "Debt" of any Person means, without duplication, (a) all
         indebtedness of such Person for borrowed money, (b) all Obligations of
         such Person for the deferred purchase price of property or services,
         (c) all Obligations of such Person evidenced by notes, bonds,
         debentures or other similar instruments, (d) all Obligations of such
         Person created or arising under any conditional sale or other title
         retention agreement with respect to property acquired by such Person
         (even though the rights and remedies of the seller or lender under such
         agreement in the event of default are limited to repossession or sale
         of such property), (e) all Obligations of such Person as lessee under
         Capitalized Leases, (f) all Obligations, contingent or otherwise, of
         such Person under acceptance, letter of credit or similar facilities,
         (g) all Obligations of such Person to purchase, redeem, retire, defease
         or otherwise make any payment in respect of any Equity Interest in such
         Person or any other Person or any warrants, rights or options to
         acquire such Equity Interest, valued, in the case of Redeemable
         Preferred Interests, at the greater of its voluntary or involuntary
         liquidation preference plus accrued and unpaid dividends, (h) all
         Obligations of such Person in respect of Hedge Agreements, valued at
         the Agreement Value thereof, (i) all Contingent Obligations of such
         Person, and (j) all indebtedness and other payment Obligations referred
         to in clauses (a) through (i) above of another Person secured by (or
         for which the holder of such Debt has an existing right, contingent or
         otherwise, to be secured by) any Lien on property (including, without
         limitation, accounts and contract rights) owned by such Person, even
         though such Person has not assumed or become liable for the payment of
         such indebtedness or other payment Obligations.

                  "Default" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.

<PAGE>   61
                  "Domestic Lending Office" means, with respect to any Lender,
         the office of such Lender specified as its "Domestic Lending Office"
         opposite its name on Schedule I hereto or in the Assignment and
         Acceptance pursuant to which it became a Lender, as the case may be, or
         such other office of such Lender as such Lender may from time to time
         specify to the Borrower and the Agent.

                  "ECM II" means Enron Capital Management II Limited
         Partnership, a Delaware limited partnership and the general partner of
         JEDI II, or a Permitted Enron Substitute therefor.

                  "ECM III" means Enron Capital Management III Limited
         Partnership, a Delaware limited partnership and limited partner of JEDI
         II, or a Permitted Enron Substitute therefor.

                  "ECP Holding" means East Coast Power Holding Company L.L.C., a
         Delaware limited liability company.

                  "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a
         Lender; (c) a commercial bank organized under the laws of the United
         States, or any State thereof, and having total assets in excess of $1
         billion; (d) a savings and loan association or savings bank organized
         under the laws of the United States, or any State thereof, and having
         total assets in excess of $1 billion; (e) a commercial bank organized
         under the laws of any other country that is a member of the OECD or has
         concluded special lending arrangements with the International Monetary
         Fund associated with its General Arrangements to Borrow or of the
         Cayman Islands, or a political subdivision of any such country, and
         having total assets in excess of $1 billion, so long as such bank is
         acting through a branch or agency located in the country in which it is
         organized or another country that is described in this clause (e); (f)
         the central bank of any country that is a member of the OECD; (g) a
         finance company, insurance company or other financial institution or
         fund (whether a corporation, partnership, trust or other entity) that
         is engaged in making, purchasing or otherwise investing in commercial
         loans in the ordinary course of its business and having total assets in
         excess of $1 billion; or (h) any other Person approved by the Agent and
         the Borrower, such approval (except in the case of an Enron Competitor)
         not to be unreasonably withheld or delayed; provided, however, that
         neither the Borrower nor any Affiliate of the Borrower shall qualify as
         an Eligible Assignee under this definition.

                  "ENA" means Enron North America Corp., a Delaware corporation.

                  "Enron" means, Enron Corp., an Oregon corporation.

                  "Enron Competitor" means, as of any date of determination, any
         Person (other than a Financial Institution) that derived more than 5%
         of its revenues from activities relating to or in connection with Enron
         Industries, or which otherwise had at least 5% of its operations

<PAGE>   62
         in Enron Industries (or risk management activities related thereto), in
         each case in the preceding fiscal year of such Person.

                  "Enron Industries" means, as of any date of determination, the
         development, operation or ownership of domestic or international
         energy, electric, water or other infrastructure projects in the natural
         gas, petroleum and petroleum products, electric utility, electricity or
         other energy related industries,; provided that none of the foregoing
         activities or industries shall be an "Enron Industry" unless Enron
         derived at least 5% of its revenues from or in connection with such
         activity or industry in its preceding fiscal year.

                  "Environmental Action" means any action, suit, demand, claim,
         notice of non-compliance or violation, notice of liability or
         threatened liability, investigation, proceeding, consent order or
         consent agreement relating in any way to any Environmental Law, any
         Environmental Permit or Hazardous Material or arising from alleged
         injury or threat to health, safety or the environment, including,
         without limitation, (a) by any Governmental Authority for enforcement,
         cleanup, removal, response, remedial or other actions or damages and
         (b) by any governmental or regulatory authority or third party for
         damages, contribution, indemnification, cost recovery, compensation or
         injunctive relief.

                  "Environmental Law" means any statute, law, ordinance, rule,
         regulation, order, writ, judgment, injunction, decree or judicial or
         agency interpretation relating to pollution or protection of the
         environment, health, safety or natural resources, including, without
         limitation, those relating to the use, handling, transportation,
         treatment, storage, disposal, release or discharge of Hazardous
         Materials.

                  "Environmental Permit" means any permit, approval, license or
         other legal authorization required under any Environmental Law.

                  "Equity Interests" means, with respect to any Person, shares
         of capital stock of (or other ownership or profit interests in) such
         Person, warrants, options or other rights for the purchase or other
         acquisition from such Person of shares of capital stock of (or other
         ownership or profit interests in) such Person, securities convertible
         into or exchangeable for shares of capital stock of (or other ownership
         or profit interests in) such Person or warrants, rights or options for
         the purchase or other acquisition from such Person of such shares (or
         such other interests), and other ownership or profit interests in such
         Person (including, without limitation, partnership, member or trust
         interests therein), whether voting or nonvoting, and whether or not
         such shares, warrants, options, rights or other interests are
         authorized or otherwise existing on any date of determination.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

<PAGE>   63
                  "ERISA Affiliate" means, with respect to any Person, any
         entity that for purposes of Title IV of ERISA is a member of the
         controlled group of such Person, or is under common control with such
         Person, within the meaning of Section 414 of the Internal Revenue Code.

                  "ERISA Event" means (a) (i) the occurrence of a reportable
         event, within the meaning of Section 4043 of ERISA, with respect to any
         Plan unless the 30-day notice requirement with respect to such event
         has been waived by the PBGC, or (ii) the requirements of subsection (1)
         of Section 4043(b) of ERISA (without regard to subsection (2) of such
         Section) are met with respect to a contributing sponsor, as defined in
         Section 4001(a)(13) of ERISA, of a Plan, and an event described in
         paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
         reasonably expected to occur with respect to such Plan within the
         following 30 days; (b) the application for a minimum funding waiver
         with respect to a Plan; (c) the provision by the administrator of any
         Plan of a notice of intent to terminate such Plan, pursuant to Section
         4041(a)(2) of ERISA (including any such notice with respect to a plan
         amendment referred to in Section 4041(e) of ERISA); (d) the cessation
         of operations at a facility of the Borrower or any ERISA Affiliate in
         the circumstances described in Section 4062(e) of ERISA; (e) the
         withdrawal by the Borrower or any ERISA Affiliate from a Multiple
         Employer Plan during a plan year for which it was a substantial
         employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
         for imposition of a lien under Section 302(f) of ERISA shall have been
         met with respect to any Plan; (g) the adoption of an amendment to a
         Plan requiring the provision of security to such Plan pursuant to
         Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
         to terminate a Plan of a Person pursuant to Section 4042 of ERISA, or
         the occurrence of any event or condition described in Section 4042 of
         ERISA that constitutes grounds for the termination of, or the
         appointment of a trustee to administer, such Plan, provided, however,
         that the occurrence of an event or condition described in Section
         4042(a)(4) of ERISA shall be an ERISA Event only if (i) such Person or
         any of its ERISA Affiliates knows thereof or (ii) the PBGC has notified
         such Person or any of its ERISA Affiliates that it is considering
         termination of such Plan on such basis.

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

                  "Eurodollar Lending Office" means, with respect to any Lender,
         the office of such Lender specified as its "Eurodollar Lending Office"
         opposite its name on Schedule I hereto or in the Assignment and
         Acceptance pursuant to which it became a Lender (or, if no such office
         is specified, its Domestic Lending Office), or such other office of
         such Lender as such Lender may from time to time specify to the
         Borrower and the Agent.

                  "Eurodollar Rate" means, for any Interest Period for all
         Eurodollar Rate Advances, an interest rate per annum equal to the rate
         per annum obtained by dividing:

<PAGE>   64
                           (a) the rate per annum for U.S. dollar deposits for a
                  period equal to (or if there is no equal period, then the
                  period most comparable to) such Interest Period that appears
                  on the page designated Page 3750 on the Dow Jones Telerate
                  Service (or such other page as may replace that page on that
                  service for the purpose of displaying the British Bankers
                  Association Interest Settlement Rate) at approximately 11:00
                  A.M. (London time) on the date two Business Days prior to the
                  first day of such Interest Period;

                           (b) if no such rate is shown on the page designated
                  Page 3750 on the Dow Jones Telerate Service (or such other
                  page as may replace that page on that service for the purposes
                  of displaying the British Bankers Association Interest
                  Settlement Rate) at such time, the rate per annum determined
                  by the Agent to be equal to the arithmetic mean (rounded
                  upwards to the nearest whole multiple of 1/16th of 1% per
                  annum, if such average is not such a multiple) of the rates
                  per annum for U.S. dollar deposits for a period equal to (or
                  if there is no equal period, then the period most comparable
                  to) such Interest Period that appear on the display designated
                  "LIBO" on the Reuter Monitor Money Rates Service (or such
                  other page as may replace the LIBO page on that service for
                  the purpose of displaying London interbank offered rates for
                  U.S. dollar deposits) at approximately 11:00 A.M. (London
                  time) on the date two Business Days prior to the first day of
                  such Interest Period; or

                           (c) if no such rates so appear on the display
                  designated (i) Page 3750 on the Dow Jones Telerate Service (or
                  such other page as may replace that page on that service for
                  the purpose of displaying the British Bankers Association
                  Interest Settlement Rate) or (ii) "LIBO" on the Reuter Monitor
                  Money Rates Service (or such other page as may replace the
                  LIBO page on that service for the purpose of displaying London
                  interbank offered rates for U.S. dollar deposits) at such date
                  and time, the average (rounded upwards to the nearest whole
                  multiple of 1/16th of 1% per annum, if such average is not
                  such a multiple) of the rates per annum at which deposits in
                  U.S. dollars are offered by each of the Reference Banks in the
                  London interbank market at approximately 11:00 A.M. (London
                  time) on the date two Business Days before the first day of
                  such Interest Period in immediately available funds in an
                  amount approximately equal to the principal amount of the
                  Eurodollar Rate Advance of such Reference Bank and for a
                  period of time comparable to such Interest Period,

         by a percentage equal to 100% minus the Eurodollar Rate Reserve
         Percentage for such Interest Period.

                  "Eurodollar Rate Advance" means an Advance that bears interest
         as provided in Section 2.06(a)(ii) of the Credit Agreement.

                  "Eurodollar Rate Reserve Percentage" for any Interest Period
         for all Eurodollar Rate Advances means the reserve percentage
         applicable two Business Days before the first day of

<PAGE>   65
         such Interest Period under regulations issued from time to time by the
         Board of Governors of the Federal Reserve System (or any successor) for
         determining the maximum reserve requirement (including, without
         limitation, any emergency, supplemental or other marginal reserve
         requirement) for a member bank of the Federal Reserve System in New
         York City with respect to liabilities or assets consisting of or
         including Eurocurrency Liabilities (or with respect to any other
         category of liabilities that includes deposits by reference to which
         the interest rate on Eurodollar Rate Advances is determined) having a
         term equal to such Interest Period.

                  "Event of Loss" means (a) the actual or constructive total
         loss of all or any substantial portion of any of the Facilities, or the
         appropriation, condemnation, confiscation, nationalization, seizure,
         forfeiture or expropriation of, or requisition of title to, all or any
         substantial portion of such Facility, or the requisition by any
         Governmental Authority for a period exceeding six months of the use of
         all or a substantial portion of such Facility; (b) the loss,
         destruction or damage of, or appropriation, condemnation, confiscation,
         nationalization, seizure, forfeiture or expropriation of, or
         requisition of title to, or requisition by any Governmental Authority
         of the use of, such portion of such Facility as shall render such
         Facility unable to operate at substantially its designed level of
         output or as a Qualifying Facility on a commercially reasonable basis
         unless (in a situation in which clauses (a) and (c) are not applicable)
         (i) no Event of Default shall have occurred and be continuing at the
         time of occurrence of any of the events specified above in this clause
         (b) and (ii) in the reasonable opinion of the Supermajority Lenders,
         (A) no Material Adverse Effect would reasonably be expected to result
         from such occurrence, (B) it is feasible to restore, rebuild or replace
         the affected portion of such Facility, and (C) sufficient funds are or
         will be available (1) to restore, rebuild or replace the affected
         portion of such Facility so that such Facility will be able to operate
         at substantially its designed level of output and to operate as a
         Qualifying Facility within 18 months after the occurrence of such Event
         of Loss and (2) to pay all principal of and interest on the then
         outstanding Advances and to pay all other amounts due or to become due
         under the Credit Agreement until such restoration, rebuilding or
         replacement is completed; (c) any of the Facilities, JEDI II, the
         Borrower or any of the Borrower's Subsidiaries is subject to being
         deemed by any Governmental Authority having jurisdiction to be, or is
         subject to regulation as, an "electric utility", "electric
         corporation", "electrical company", "public utility" or a "public
         utility holding company" under any law, rule or regulation of any
         Governmental Authority, unless, in the reasonable opinion of the
         Supermajority Lenders, a Material Adverse Effect would not reasonably
         be expected to result therefrom; (d) a change shall have occurred after
         the date hereof in any applicable law or regulation or in the
         interpretation thereof by any Governmental Authority charged with the
         administration or interpretation thereof which, in the opinion of the
         Required Lenders, would make any of the Related Documents subject to
         cancellation, suspension or termination, which cancellation, suspension
         or termination, in the opinion of the Required Lenders, would
         reasonably be expected to have a Material Adverse Effect; or (e) an
         event of force majeure or other event or condition shall exist which
         permits or requires any party to any of the Related Documents to
         cancel, suspend or terminate its performance thereunder

<PAGE>   66
         in accordance with the terms thereof or which could excuse any such
         party from liability for non-performance thereunder, unless (i) the
         parties to such Related Documents shall have effectively waived the
         condition giving rise to such right or requirement with respect to such
         cancellation, suspension, termination or release from liability, or
         (ii) in the opinion of the Required Lenders, such cancellation,
         suspension, termination or release from liability would not reasonably
         be expected to have a Material Adverse Effect.

                  "Events of Default" has the meaning specified in Section 6.01
         of the Credit Agreement.

                  "Existing Debt" has the meaning specified in Section 4.01(x)
         of the Credit Agreement.

                  "Existing Financing Agreements" means, collectively, the
         Linden Financing Agreement, the Camden Financing Agreement and the
         Bayonne Financing Agreement.

                  "Extended Maturity Date" means December 29, 2000.

                  "Facilities" means the Bayonne Plant, the Camden Plant and the
         Linden Plant.

                  "Federal Funds Rate" means, for any day, the rate per annum
         (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
         the weighted average of the rates on overnight Federal funds
         transactions with members of the Federal Reserve System arranged by
         Federal funds brokers on such day, as published by the Federal Reserve
         Bank of New York on the Business Day next succeeding such day; provided
         that (a) if such day is not a Business Day, the Federal Funds Rate for
         such day shall be such rate on such transactions on the next preceding
         Business Day as so published on the next succeeding Business Day, and
         (b) if no such rate is so published on such next succeeding Business
         Day, the Federal Funds Rate for such day shall be the average rate
         charged to the Agent (in its individual capacity) on such day on such
         transactions as determined by the Agent.

                  "Fee Letter" means the fee letter dated December 7, 1999,
         among the Borrower, the Arranger and the Agent, as amended,
         supplemented or otherwise modified from time to time.

                  "FERC" means the Federal Energy Regulatory Commission or any
         successor or analogous federal Governmental Authority.

                  "Financial Institution" means any Person that is, or whose
         principal business is that of, a bank holding company, insurance
         holding company, savings and loan holding company, commercial or
         savings bank, central bank, finance, investment or insurance company,
         savings and loan association or company, or private or governmental
         employee benefit plan, together, in each case with their respective
         Subsidiaries and Affiliates.

<PAGE>   67
                  "First Amendment" means the First Amendment to First Amended
         and Restated Credit and Subordination Agreement, dated as of December
         29, 1999, between the Borrower and ENA.

                  "GAAP" has the meaning specified in Section 1.03 of the Credit
         Agreement.

                  "Governmental Authority" means any nation or government, any
         state, province or other political subdivision thereof, and any
         governmental, executive, legislative, judicial, administrative or
         regulatory agency, department, authority, instrumentality, commission,
         board or similar body, whether federal, state, provincial, territorial,
         local or foreign.

                  "Hazardous Materials" means (a) petroleum or petroleum
         products or any by-products or derivatives thereof, radioactive
         materials, asbestos-containing materials, polychlorinated biphenyls and
         radon gas and (b) any other chemicals, materials or substances
         designated, classified or regulated as hazardous or toxic or as a
         pollutant or contaminant under any Environmental Law.

                  "Hedge Agreements" means interest rate swap, cap or collar
         agreements, interest rate future or option contracts, currency swap
         agreements, currency future or option contracts and other similar
         agreements.

                  "Indenture" means the Indenture dated April 20, 1999, between
         the Borrower and the Trustee.

                  "Initial Lender" means Bank of America.

                  "Initial Maturity Date" means June 29, 2000.

                  "Insolvency Event" means, with respect to any Person, (a) the
         declaration or commencement of insolvency or bankruptcy proceedings by,
         or the commencement of such proceedings against, such Person, (b) the
         appointment of a receiver, trustee custodian or similar official with
         respect to such Person or (c) the liquidation, reorganization,
         dissolution, winding up, arrangement, protection, relief, composition
         or similar proceeding in respect of such Person or any of its
         Obligations.

                  "Insufficiency" means, with respect to any Plan, the amount,
         if any, of its unfunded benefit liabilities, as defined in Section
         4001(a)(18) of ERISA.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period commencing on the
         date of such Eurodollar Rate Advance or the date of the Conversion of
         any Base Rate Advance into such Eurodollar Rate Advance, and ending on
         the last day of the period selected by the Borrower pursuant to the
         provisions below and, thereafter, each subsequent period commencing on
         the last day of the

<PAGE>   68
         immediately preceding Interest Period and ending on the last day of the
         period selected by the Borrower pursuant to the provisions below. The
         duration of each such Interest Period shall be three or six months, as
         the Borrower may, upon notice received by the Agent not later than
         11:00 A.M. (New York City time) on the third Business Day prior to the
         first day of such Interest Period, select; provided, however, that:

                           (a) the Borrower may not select any Interest Period
                  with respect to any Advances that ends after the Maturity
                  Date;

                           (b) no more than three Interest Periods shall be
                  outstanding at any time;

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

                           (d) whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of months in such Interest Period, such
                  Interest Period shall end on the last Business Day of such
                  succeeding calendar month.

                  "Internal Revenue Code" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "Investment" in any Person means any loan or advance to such
         Person, any purchase or other acquisition of any Equity Interest,
         warrants, rights, options, obligations or other securities of such
         Person, any capital contribution to such Person or any other investment
         in such Person, including, without limitation, any arrangement pursuant
         to which the investor incurs Debt of the types referred to in clause
         (i) or (j) of the definition of "Debt" in respect of such Person.

                  "ISRA" means the New Jersey Industrial Site Recovery Act, as
         amended.

                  "JEDI Bayonne GP" means JEDI Bayonne GP, L.L.C., a Delaware
         limited liability company and wholly owned Subsidiary of the Borrower.

                  "JEDI Camden GP" means JEDI Camden GP, L.L.C., a Delaware
         limited liability company and wholly owned Subsidiary of the Borrower.

<PAGE>   69
                  "JEDI Camden LP" means JEDI Camden LP, L.L.C., a Delaware
         limited liability company and wholly owned Subsidiary of the Borrower.

                  "JEDI Linden GP" means JEDI Linden GP, L.L.C., a Delaware
         limited liability company and 99% owned Subsidiary of JEDI Linden NB.

                  "JEDI Linden Inc." means JEDI Linden, Inc., a Delaware
         corporation and wholly owned Subsidiary of JEDI Linden NB.

                  "JEDI Linden LP" means JEDI Linden LP, L.L.C., a Delaware
         limited liability company and wholly owned Subsidiary of JEDI Linden
         NB.

                  "JEDI Linden NB" means JEDI Linden NB, L.L.C., a Delaware
         limited liability company and wholly owned Subsidiary of the Borrower.

                  "JEDI II" means Joint Energy Development Investments II
         Limited Partnership, a Delaware limited partnership.

                  "JEDI II Partnership Agreement" means the Partnership
         Agreement of JEDI II dated as of December 30, 1997, by and among ECM
         II, ECM III and CalPERS, as amended, waived or other modified to the
         extent any such amendment, waiver or other modification does not
         constitute a JEDI II Event of Default.

                  "Lenders" means the Initial Lender and each Person that shall
         become a Lender hereunder pursuant to Section 9.07 of the Credit
         Agreement.

                  "Lien" means any lien, security interest or other charge or
         encumbrance of any kind, or any other type of preferential arrangement,
         including, without limitation, the lien or retained security title of a
         conditional vendor and any easement, right of way or other encumbrance
         on title to real property.

                  "Linden Financing Agreement" means the Amended and Restated
         Term Loan Agreement dated as of September 15, 1992, between Linden Ltd.
         and the Owner Trustee, as amended by First Amendment dated as of April
         30, 1993 and Second Amendment dated as of February 4, 1999.

                  "Linden Ltd." means Cogen Technologies Linden, Ltd., a Texas
         limited partnership.

                  "Linden Ltd. Partnership Agreement" means the Agreement of
         Limited Partnership of Linden Ltd. dated as of June 28, 1989, by and
         between RCM Holdings and CTLPJV, as amended as of February 14, 1990,
         July 31, 1990 and February 4, 1999.

<PAGE>   70
                  "Linden Plant" means the 715 megawatt gas-fired, combined
         cycle cogeneration facility owned by Linden Venture and located in
         Linden, New Jersey on the site of the Bayway Refinery facility,
         including all equipment related thereto, all fixtures and all parts
         thereof and all accessions thereto.

                  "Linden Venture" means Cogen Technologies Linden Venture,
         L.P., a Delaware limited partnership.

                  "Linden Venture Partnership Agreement" means the Amended and
         Restated Agreement of Limited Partnership of Cogen Technologies Linden
         Venture, L.P. dated as of September 15, 1992, by and among Linden Ltd.,
         Robert C. McNair and the Owner Trustee, as amended as of April 30, 1993
         and February 4, 1999.

                  "Margin Stock" has the meaning specified in Regulation U of
         the Board of Governors of the Federal Reserve System (or any successor
         or replacement regulation).

                  "Material Adverse Change" means any material adverse change in
         the business, condition (financial or otherwise), operations,
         performance, properties or prospects of the Borrower or any of its
         Subsidiaries or any Facility, either individually or taken together.

                  "Material Adverse Effect" means a material adverse effect on
         (a) the business, condition (financial or otherwise), operations,
         performance, properties or prospects of the Borrower or any of its
         Subsidiaries or any Facility, either individually or taken together,
         (b) the rights and remedies of any Agent or any Lender under the Credit
         Agreement or any of the Notes or (c) the ability of the Borrower to
         perform its Obligations under the Credit Agreement or the Notes.

                  "Material Contract" means, collectively, (a) the contracts set
         forth on Schedule 4.01(y) of the Credit Agreement and (b) each other
         contract of the Borrower or any of its Subsidiaries involving aggregate
         consideration payable to or by the Borrower or such Subsidiary of
         $10,000,000 or more in any fiscal year of such Person or which is
         otherwise material to the business, condition (financial or otherwise),
         operations, performance, properties or prospects of such Person or the
         ability of the Borrower to perform any of its Obligations under the
         Credit Agreement or the Notes.

                  "Maturity Date" means the Initial Maturity or, if the Maturity
         Date is extended pursuant to Section 3.03 the Credit Agreement, the
         Extended Maturity Date.

                  "Multiemployer Plan" means, in respect of any Person, a
         multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which
         such Person or any of its ERISA Affiliates is making or accruing an
         obligation to make contributions, or has within any of the preceding
         five plan years made or accrued an obligation to make contributions.

<PAGE>   71
                  "Multiple Employer Plan" means, in respect of any Person, a
         single employer plan, as defined in Section 4001(a)(15) of ERISA, that
         (a) is maintained for employees of such Person or any of its ERISA
         Affiliates and at least one entity other than such Person and its ERISA
         Affiliates or (b) was so maintained and in respect of which such Person
         or any of its ERISA Affiliates could have liability under Section 4064
         or 4069 of ERISA in the event such plan has been or were to be
         terminated.

                  "Net Proceeds" means, with respect to any sale, lease,
         transfer or other disposition of any asset or the incurrence or
         issuance of any Debt or the sale or issuance of any Equity Interests
         (including, without limitation, any capital contribution) by any
         Person, the cash proceeds received from time to time (whether as
         initial consideration or through payment or disposition of deferred
         consideration) by or on behalf of such Person or any of its Affiliates
         in connection with such transaction after deducting therefrom only
         (without duplication) (a) commercially reasonable and customary
         brokerage commissions, underwriting fees and discounts, legal fees,
         finder's fees and other similar fees and commissions and (b) the amount
         of taxes payable in connection with or as a result of such transaction,
         in each case to the extent, but only to the extent, that the amounts so
         deducted are, at the time of receipt of such cash, actually paid to a
         Person that is not an Affiliate of such Person or the Borrower or any
         Affiliate of the Borrower and are properly attributable to such
         transaction or to the asset that is the subject thereof.

                  "NJ Venture" means Cogen Technologies NJ Venture, a New Jersey
         general partnership.

                  "NJ Venture Partnership Agreement" means the Amended and
         Restated Joint Venture Agreement of Cogen Technologies NJ Venture dated
         as of August 25, 1986, by and among Cogen Technologies NJ, Inc., Enron
         Cogeneration Five Company, Bayonne Inc., CEA Bayonne, Inc. (the name of
         which was changed to PSEG Bayonne Inc. and was recently merged into
         Cogen Technologies NJ, Inc.), PSVO Bayonne, Inc. and Transco
         Cogeneration Company.

                  "Note" means a promissory note of the Borrower payable to the
         order of any Lender, in substantially the form of Exhibit A to the
         Credit Agreement, evidencing the indebtedness of the Borrower to such
         Lender resulting from the Advances payable to such Lender by the
         Borrower, as amended, supplemented or otherwise modified from time to
         time.

                  "Notice of Borrowing" has the meaning specified in Section
         2.02(a).

                  "NPL" means the National Priorities List under CERCLA.

                  "Obligation" means, with respect to any Person, any payment,
         performance or other obligation of such Person of any kind, including,
         without limitation, any liability of such Person on any claim, whether
         or not the right of any creditor to payment in respect of such

<PAGE>   72
         claim is reduced to judgment, liquidated, unliquidated, fixed,
         contingent, matured, disputed, undisputed, legal, equitable, secured or
         unsecured, and whether or not such claim is discharged, stayed or
         otherwise affected by any proceeding referred to in Section 6.01(f).
         Without limiting the generality of the foregoing, the Obligations of
         the Borrower under the Credit Agreement and the Notes include (a) any
         obligation to pay principal, interest, charges, expenses, fees,
         attorneys' fees and disbursements, indemnities and other amounts
         payable by the Borrower under the Credit Agreement and the Notes and
         (b) any obligation of the Borrower to reimburse any amount in respect
         of any of the foregoing that any Lender, in its sole discretion, may
         elect to pay or advance on behalf of the Borrower.

                  "OECD" means the Organization for Economic Cooperation and
         Development.

                  "Other Taxes" has the meaning specified in Section 2.11(b) of
         the Credit Agreement.

                  "Owner Trustee" means State Street Bank and Trust Company of
         Connecticut National Association, as trustee under a Trust Agreement
         dated as of December 28, 1990, between State Street Bank and Trust
         Company of Connecticut National Association and Linden Owner
         Partnership, a Delaware partnership.

                  "Partnership Agreements" means, collectively, the Linden Ltd.
         Partnership Agreement, the Linden Venture Partnership Agreement, the
         Camden Cogen Partnership Agreement, the CT Camden Partnership Agreement
         and the NJ Venture Partnership Agreement.

                  "PBGC" means the Pension Benefit Guaranty Corporation (or any
         successor).

                  "Person" means an individual, partnership, corporation
         (including a business trust), limited liability company, joint stock
         company, trust, unincorporated association, joint venture or other
         entity, or a government or any political subdivision or agency thereof.

                  "Permitted Enron Substitute" means a direct or indirect wholly
         owned Subsidiary of Enron that (a) has been substituted for ECM II or
         ECM III, as the case may be, and admitted as the sole general partner
         or a limited partner, respectively, of JEDI II in accordance with the
         JEDI II Partnership Agreement and (b) has assumed all Obligations of
         such substituted Person under the JEDI II Partnership Agreement (and,
         in the case of ECM II, at any time prior to the termination of the
         General Partner Undertaking in accordance with its terms) pursuant to a
         written agreement.

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

                  "Power Purchase Agreements" means, collectively, (a) the Power
         Purchase Agreement dated as of April 14, 1989, by and between
         Consolidated Edison Company of New York, Inc. and Cogen Technologies,
         Inc., as assigned by Cogen Technologies, Inc. to Linden Ltd. with the
         consent of Consolidated Edison Company of New York, Inc. on August

<PAGE>   73
         3, 1989 and as further assigned by Linden Ltd. to Linden Venture with
         the consent of Consolidated Edison Company of New York, Inc. on
         December 22, 1989, and as amended as of September 17, 1990 and as of
         December 22, 1993, (b) the Power Purchase and Interconnection Agreement
         dated as of April 15, 1988, by and between Public Service Electric and
         Gas Company and Camden Cogen, as amended as of June 12, 1990 and as of
         August 21, 1990, (c) the Power Purchase and Operations Coordination
         Agreement dated as of June 5, 1989, by and between Public Service
         Electric and Gas Company and NJ Venture and (d) the Agreement for
         Purchase of Electric Power dated as of October 29, 1985, by and between
         Cogen Technologies NJ, Inc. and Jersey Central Power & Light Company,
         as amended as of September 5, 1986, as assigned to NJ Venture as of
         September 8, 1986 and as amended as of August 1, 1988.

                  "Preferred Interest" means, with respect to any Person, Equity
         Interests issued by such Person that are entitled to a preference or
         priority over any other Equity Interests issued by such Person upon any
         distribution of such Person's assets, whether by dividend or upon
         liquidation or otherwise.

                  "Prime Rate" means the per annum rate of interest established
         from time to time by Bank of America as its prime rate, which rate may
         not be the lowest rate of interest charged by Bank of America to its
         customers.

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

                  "PURPA" means the Public Utility Regulatory Policies Act of
         1978, as amended, and the regulations thereunder.

                  "Qualifying Facility" means a cogeneration facility meeting
         all of the requirements for a "qualifying cogeneration facility" set
         forth in PURPA and in Part 292 of the rules and regulations of FERC
         under PURPA.

                  "Redeemable" means, with respect to any Equity Interest, Debt
         or other right or Obligation, any such Equity Interest, Debt or other
         right or Obligation that (a) the issuer has undertaken to redeem at a
         fixed or determinable date or dates, whether by operation of a sinking
         fund or otherwise, or upon the occurrence of a condition not solely
         within the control of the issuer or (b) is redeemable at the option of
         the holder.

                  "Reference Banks" means Bank of America, Citibank, N.A., and
         The Chase Manhattan Bank.

                  "Refinancing" means the offering, issue and private sale by
         the Borrower of debt securities of the Borrower (the "Refinancing
         Securities") to Persons other than Affiliates of the Borrower for the
         purpose, among other things, of refinancing all or any portion of the
         principal amount of the Advances and paying interest accrued thereon
         and all fees, expenses,

<PAGE>   74
         commissions and other amounts payable by the Borrower under the Credit
         Agreement and in connection with the Refinancing.

                  "Refinancing Securities" has the meaning specified in the
         definition of "Refinancing".

                  "Register" has the meaning specified in Section 9.07(d) of the
         Credit Agreement.

                  "Related Documents" means the Partnership Agreements, the
         Power Purchase Agreements, the Steam Sales Contracts, the Existing
         Financing Agreements and each Material Contract to which the Borrower
         or any of its Subsidiaries is a party.

                  "Replacement Subordinated Securities" means any securities or
         notes that are received by any of the Lenders in exchange for or in
         replacement of all or a portion of the Subordinated Debt to the extent
         that such exchanged or replacement securities or notes are subordinated
         to the Senior Debt to at least the same extent as the Subordinated Debt
         is subordinated to the Senior Debt pursuant to Article VIII of the
         Credit Agreement.

                  "Required Holders" means at any time Holders (as defined in
         the Indenture) of at least a majority in interest of the aggregate
         principal amount of the Senior Secured Notes.

                  "Required Lenders" means at any time Lenders owed or holding
         at least a majority in interest of the aggregate principal amount of
         the Advances outstanding at such time, or, if no such principal amount
         is outstanding at such time, Lenders holding at least a majority in
         interest of the aggregate of the Commitments.

                  "Requirements of Law" means, with respect to any Person, all
         laws, statutes, treaties, rules, regulations, determinations, orders,
         writs, decrees, injunctions, judgments, determinations or awards of an
         arbitrator, a court or any other Governmental Authority, and all
         Governmental Authorizations, binding upon or applicable to such Person
         or to any of its properties or assets.

                  "Responsible Officer" means any officer (or other person
         performing the equivalent functions) of the Borrower or any of its
         Subsidiaries.

                  "Revenues" means, with respect to any Person, all dividends,
         interest, principal, fees, profits, receipts, bonuses, premiums,
         income, cash, distributions (in cash or other property), damages,
         indemnity or other awards and other property, assets and amounts
         received by or distributed to such Person (or any of its Affiliates)
         from time to time (including, without limitation, net payments received
         by such Person under Hedge Agreements) from any source, including,
         without limitation, in respect of or in exchange for any or all of the
         Equity Interests of such Person in any of its Subsidiaries.

<PAGE>   75
                  "Senior Debt" means all obligations of the Borrower now or
         hereafter existing under the Senior Secured Notes (whether created
         directly or acquired by assignment or otherwise), whether for principal
         or interest (including, without limitation, interest, as provided in
         the Senior Secured Notes and the Indenture, accruing after the filing
         of a petition initiating any proceeding referred to in Section 2.15(b),
         whether or not such interest accrues after the filing of such petition
         for purposes of the Bankruptcy Code or is an allowed claim in such
         proceeding), fees, expenses or otherwise.

                  "Senior Secured Notes" means the 6.737% Senior Secured Notes
         due 2008, the 7.066% Senior Secured Notes due 2012, the 7.536% Senior
         Secured Notes due 2017 and any Additional Notes, in each case issued or
         to be issued by the Borrower under, and subject to the conditions and
         limitations contained in, the Indenture.

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

                  "Steam Sales Contracts" means, collectively, (a) the Agreement
         for the Sale of Steam dated as of August 1, 1990, between Linden
         Venture and Exxon Corporation, as amended and restated as of January 1,
         1999, by and between Linden Venture and Infineum USA L.P.; (b) the
         Agreement for the Sale of Steam dated as of April 8, 1993, between
         Linden Venture and Bayway Refining Company; (c) the Energy Purchase
         Agreement dated as of December 18, 1989, between Camden Cogen and
         Camden Paperboard Corporation; (d) the Agreement for the Sale of Steam
         and Electricity from a Cogeneration Plant dated as of June 13, 1985,
         between Cogen Technologies NJ, Inc. and IMTT-Bayonne; and (e) the
         Agreement for the Sale of Steam from a Cogeneration Plant dated as of
         February 27, 1987, between NJ Venture and Exxon Company, U.S.A., as
         amended as of August 21, 1988 and as assigned to General Electric Power
         Funding Corporation pursuant to an assignment agreement dated as of
         February 27, 1987, by and between NJ Venture and General Electric Power
         Funding Corporation.

                  "Subordinated Debt" means all obligations of the Borrower now
         or hereafter existing under the Credit Agreement and the Notes (whether
         created directly or acquired by assignment or otherwise), whether for
         principal, interest (including, without limitation, interest, as
         provided in the Credit Agreement and the Notes, accruing after the
         filing of a petition initiating any proceeding referred to in Section
         2.15(b) whether or not such interest accrues after the filing of such
         petition for purposes of the Bankruptcy Code or is an allowed claim in
         such proceeding), fees, expenses or otherwise.

<PAGE>   76
                  "Subordinated Loan Agreement" means the First Amended and
         Restated Credit and Subordination Agreement dated as of April 20, 1999,
         between Enron North America Corp. and the Borrower, as amended by the
         First Amendment.

                  "Subsidiary" of any Person means any corporation, partnership,
         joint venture, limited liability company, trust or estate of which (or
         in which) more than 50% of (a) the issued and outstanding capital stock
         having ordinary voting power to elect a majority of the Board of
         Directors of such corporation (irrespective of whether at the time
         capital stock of any other class or classes of such corporation shall
         or might have voting power upon the occurrence of any contingency), (b)
         the interest in the capital or profits of such partnership, joint
         venture or limited liability company or (c) the beneficial interest in
         such trust or estate is at the time directly or indirectly owned or
         controlled by such Person, by such Person and one or more of its other
         Subsidiaries or by one or more of such Person's other Subsidiaries.

                  "Supermajority Lenders" means, at any time, Lenders owed or
         holding at least 66-2/3% of the aggregate principal amount of the
         Advances outstanding at such time, or, if no such principal amount is
         outstanding at such time, Lenders holding at least 66-2/3% of the
         aggregate of the Commitments.

                  "Taxes" has the meaning specified in Section 2.11(a) of the
         Credit Agreement.

                  "Termination Date" means the earlier of June 30, 2000, and the
         date of termination in whole of the Commitments pursuant to Section
         2.04 or Section 6.01.

                  "Termination Event" means (a) a "reportable event", as such
         term is described in Section 4043 of ERISA (other than a "reportable
         event" not subject to the provision for 30-day notice to the PBGC), or
         an event described in Section 4062(e) of ERISA, or (b) the withdrawal
         of ENA or any ERISA Affiliate from a Multiemployer Plan during a plan
         year in which it was a "substantial employer", as such term is defined
         in Section 4001(a)(2) of ERISA, or the incurrence of liability by ENA
         or any ERISA Affiliate under Section 4064 of ERISA upon the termination
         of a Multiple Employer Plan, or (c) the distribution of a notice of
         intent to terminate a Plan pursuant to Section 4041(a)(2) of ERISA or
         the treatment of a Plan amendment as a termination under Section 4041
         of ERISA or (d) the institution of proceedings to terminate a Plan by
         the PBGC under Section 4042 of ERISA, or (e) any other event or
         condition which might constitute grounds under Section 4042 of ERISA
         for the termination of, or the appointment of a trustee to administer,
         any Plan.

                  "Trustee" means The Bank of New York, as trustee (together
         with any successor appointed pursuant to Article Six of the Indenture)
         for the holders of Senior Debt.

                  "Type" refers to the distinction between Advances bearing
         interest at the Base Rate and Advances bearing interest at the
         Eurodollar Rate.

<PAGE>   77
                  "Unused Commitment" means, with respect to any Lender at any
         time, such Lender's Commitment at such time minus the aggregate
         principal amount of all Advances made by such Lender.

                  "Voting Interests" means shares of capital stock issued by a
         corporation, or any other Equity Interest in or issued by any other
         Person, the holders of which are ordinarily, in the absence of
         contingencies, entitled to vote for the election of directors (or
         persons performing similar functions) of such Person, even if the right
         so to vote has been suspended by the happening of such a contingency.

                  "Welfare Plan" means, with respect to any Person, a welfare
         plan, as defined in Section 3(1) of ERISA, that is maintained for
         employees of such Person or in respect of which such Person could have
         liability.

                  "Withdrawal Liability" has the meaning specified in Part I of
         Subtitle E of Title IV of ERISA.

                  "Year 2000 Compliant" has the meaning specified in Section
         4.01(cc) of the Credit Agreement.

                  "Year 2000 Problem" has the meaning specified in Section
         4.01(cc) of the Credit Agreement.

<PAGE>   78
                                   SCHEDULE I

                   COMMITMENTS AND APPLICABLE LENDING OFFICES

<TABLE>
<CAPTION>
=================================================================================================
                                   Domestic                Eurodollar
                                   Lending                  Lending
  Name of Initial Lender            Office                   Office              Commitment
=================================================================================================
<S>                           <C>                     <C>                       <C>
  Bank of America, N.A.       100 North Tryon St.     100 North Tryon St.       $30,000,000
                              Charlotte, NC  28255    Charlotte, NC  28255
=================================================================================================
</TABLE>

<PAGE>   79
                                    EXHIBIT A

                                  FORM OF NOTE

U.S.$_______________                                           Dated:  _________

                  FOR VALUE RECEIVED, the undersigned, East Coast Power L.L.C.,
a limited liability company organized under the laws of Delaware (the
"Borrower"), HEREBY PROMISES TO PAY to the order of _________________________ or
its registered assigns (the "Lender") for the account of its Applicable Lending
Office (as defined in the Credit Agreement referred to below) the aggregate
principal amount of the Advances (as defined below) owing to the Lender by the
Borrower pursuant to the Senior Subordinated Credit Agreement dated as of
December 29, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"; terms defined therein being used herein as therein
defined), among the Borrower, the Lenders party thereto and Bank of America,
N.A., as Agent for the Lenders, on the Maturity Date.

                  The Borrower promises to pay to ___________________ or its
registered assigns interest on the unpaid principal amount of each Advance from
the date of such Advance until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement.

                  Both principal and interest are payable in lawful money of the
United States of America to Bank of America, N.A., as Agent, at 100 North Tryon
Street, Charlotte, North Carolina 28255, in same day funds. Each Advance owing
to the Lender by the Borrower and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto, which is part of this
Promissory Note.

                  This Promissory Note is one of the Notes referred to in, and
is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of advances (each, an "Advance")
by the Lender to the Borrower in an aggregate amount not to exceed the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Advance being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

                                            EAST COAST POWER L.L.C.

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

<PAGE>   80
                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
=================== ======================= ======================= ======================= ========================
                                                  Amount of                 Unpaid
                          Amount of             Principal Paid             Principal               Notation
       Date                Advance                or Prepaid               Balance                  Made By
=================== ======================= ======================= ======================= ========================
<S>                 <C>                     <C>                     <C>                     <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

=================== ======================= ======================= ======================= ========================
</TABLE>

<PAGE>   81
                                       B-3

                                    EXHIBIT B

                           FORM OF NOTICE OF BORROWING

Bank of America, N.A., as Agent under
the Credit Agreement referred to below
Bank of America Corporate Center
101 North Tryon Street
10th Floor                                                    [Date]
Charlotte, North Carolina 28255

              Attention:  _______________

Ladies and Gentlemen:

                  The undersigned refers to the Senior Subordinated Credit
Agreement dated as of December 29, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement", the terms defined therein
being used herein as therein defined), among the undersigned, the Lenders party
thereto, and Bank of America, N.A., as Agent, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to the Borrowing (the
"Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement:

         (a)  The Business Day of the Proposed Borrowing is _________ __, ____.

         (b)  The aggregate amount of the Proposed Borrowing is $______________.

         (c)  The Type of Advances comprising the Proposed Borrowing is
              [Base Rate Advances][Eurodollar Rate Advances and the initial
              Interest Period for each such Advance is [three] [six]
              months].

              The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:

<PAGE>   82
                                      B-4

                  (a) the representations and warranties contained in the Credit
         Agreement are correct on and as of the date of the Proposed Borrowing,
         before and after giving effect to the Proposed Borrowing and to the
         application of the proceeds therefrom, as though made on and as of such
         date, other than any such representations or warranties that, by their
         terms, refer to a specific date other than the date of the Proposed
         Borrowing, in which case, as of such specific date; and

                  (b) no event has occurred and is continuing, or would result
         from such Proposed Borrowing or from the application of the proceeds
         therefrom, that constitutes a Default.

                                              Very truly yours,

                                              EAST COAST POWER L.L.C.

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

<PAGE>   83
                                    EXHIBIT C

                        FORM OF ASSIGNMENT AND ACCEPTANCE

                  Reference is made to the Senior Subordinated Credit Agreement
dated as of December 29, 1999 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement") among East Coast Power L.L.C., a
limited liability company organized under the laws of Delaware (the "Borrower"),
the Lenders party thereto and Bank of America, N.A., as Agent for the Lenders
(the "Agent"). Terms defined in the Credit Agreement are used herein with the
same meaning.

                  The "Assignor" and the "Assignee" referred to on Schedule 1
hereto agree as follows:

                  1. The Assignor hereby sells and assigns to the Assignee,
without recourse and without representation or warranty except as expressly set
forth herein, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 hereto of all outstanding rights and obligations under the Credit
Agreement. After giving effect to such sale and assignment, the Assignee's
Commitments and the amount of the Advances owing to the Assignee will be as set
forth on Schedule 1 hereto.

                  2. The Assignor (a) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or the Notes or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under Credit Agreement or the Notes or any
other instrument or document furnished pursuant thereto; and (d) attaches the
Note or Notes held by the Assignor and requests that the Agent exchange such
Note or Notes for a new Note or Notes payable to the order of the Assignee in an
amount equal to the Commitments assumed by the Assignee pursuant hereto or new
Notes payable to the order of the Assignee in an amount equal to the Commitments
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitments retained by the Assignor under the Credit Agreement,
respectively, as specified on Schedule 1 hereto.

                  3. The Assignee (a) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis

<PAGE>   84
and decision to enter into this Assignment and Acceptance; (b) agrees that it
will, independently and without reliance upon the Agent, the Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (c) confirms that it is an
Eligible Assignee; (d) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the Credit
Agreement and the Notes as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(e) agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (f) attaches any U.S. Internal Revenue Service
forms required under Section 2.11 of the Credit Agreement.

                  4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.

                  5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (a) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (b) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

                  6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes for
periods prior to the Effective Date directly between themselves.

                  7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.

<PAGE>   85
                  IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
hereunto duly authorized as of the date specified thereon.

<PAGE>   86
                                   SCHEDULE 1
                                       to
                            ASSIGNMENT AND ACCEPTANCE

<TABLE>
         <S>                                                                                           <C>
         Percentage interest assigned:.................................................................__________%

         Assignee's Commitment:........................................................................$_________

         Aggregate outstanding principal amount of:

                  Advances assigned....................................................................$_________

         Principal amount of Note payable to Assignee..................................................$_________

         Principal amount of Note payable to Assignor..................................................$_________

         Effective Date (if other than date of acceptance by Agent): ___________
</TABLE>

                                                [NAME OF ASSIGNOR], as Assignor

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

                                                 Dated: _____________

                                                 [NAME OF ASSIGNEE], as Assignee

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

                                                  Dated:

------------------
1        This date should be no earlier than five Business Days after the
         delivery of this Assignment and Acceptance to the Agent.

<PAGE>   87
                                                  Domestic Lending Office:

                                                  Eurodollar Lending Office:

Accepted [and Approved] this ____
day of ___________, ___

Bank of America, N.A., as Agent

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

[Approved this ____ day
of _____________, ____

EAST COAST POWER L.L.C.

By:
   -------------------------------
   Name:
   Title:]**

------------------
2        Required if the Assignee is an Eligible Assignee solely by reason of
         clause (h) of the definition thereof.<PAGE>   1
                                                                  EXHIBIT 10.101

                                                                  Execution Copy

                            ENERGY SERVICES AGREEMENT

                                     BETWEEN

                       EAST COAST POWER L.L.C., AS SELLER

                                       AND

                         TOSCO REFINING, L.P., AS BUYER

                          DATED AS OF FEBRUARY 14, 2000

<PAGE>   2
                                TABLE OF CONTENTS

                            ENERGY SERVICES AGREEMENT

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
      Article 1.      DEFINITIONS AND INTERPRETATION...........................................................   4
         1.1          Definitions..............................................................................   4
         1.2          Interpretation...........................................................................  39

      Article 2.      TERM OF THIS AGREEMENT...................................................................  41
         2.1          Term.....................................................................................  41
         2.2          Early Termination by Seller..............................................................  41

      Article 3.      REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS..........................................  42
         3.1          Representations and Warranties of the
                      Parties.  ...............................................................................  42
         3.2          Additional Representations and Warranties of
                      Buyer....................................................................................  43
         3.3          Additional Representations and Warranties of
                      Seller...................................................................................  44
         3.4          Buyer's Acknowledgment...................................................................  46

      Article 4.      CONSTRUCTION AND OPERATION OF THE FACILITY...............................................  47
         4.1          Construction and Operation of the Facility...............................................  47
         4.2          In-Service Date..........................................................................  53
         4.3          Incentives for Timely Completion.........................................................  58
         4.4          Ownership of Facility and Appurtenant
                      Systems.  ...............................................................................  60
         4.5          Information from Buyer...................................................................  60
         4.6          Operational Testing and Purchase of Test
                      Period Electricity.......................................................................  61
         4.7          Commercial Operation Notices.............................................................  62
         4.8          Termination on Account of Delay in Commercial
                      Operations Date..........................................................................  62

      Article 5.      ELECTRICITY SUPPLY.......................................................................  63
         5.1          Electricity Quality......................................................................  63
         5.2          Electricity Quantity.....................................................................  64
         5.3          Nominated Load...........................................................................  66
         5.4          Interim Changes to Nominated Load........................................................  66
         5.5          Electricity Scheduling...................................................................  68
         5.6          Title; Risk of Loss......................................................................  68
         5.7          Back-up Electricity Arrangements.........................................................  68
         5.8          Closure of Buyer's Facilities............................................................  73
         5.9          Sales of Electricity to Third Parties....................................................  74
         5.10         Replacements, Improvements or Additions to
                      the Facility.............................................................................  77
         5.11         Qualifying Facility Status...............................................................  82
         5.12         On-site Generation Facility Status.......................................................  82
</TABLE>

                                       -i-

<PAGE>   3
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
      Article 6.      PRICE FOR ELECTRICITY...................................................................   82
         6.1          Price...................................................................................   82
         6.2          Annual Budget...........................................................................   84
         6.3          Purchases of Fuel; Use of Distillate....................................................   88
         6.4          Optional Electricity Purchases from a Third
                      Party...................................................................................   91
         6.5          Optional Long Term Electricity Purchases from
                      Third Parties...........................................................................   94
         6.6          Adjustments to Fixed Facility Charge
                      Component...............................................................................   97
         6.7          Insurance...............................................................................  100

      Article 7.      ALLOCATION OF NET REVENUES OR LOSSES AND BACK-UP
                      ENERGY COSTS............................................................................  103
         7.1          Defined Terms...........................................................................  103
         7.2          Allocation of Net Revenues or Losses....................................................  108
         7.3          Minimum Allocation to Seller............................................................  111
         7.4          Allocation of Infineum Net Revenues or Losses
                      and Power Augmentation Revenues.........................................................  112
         7.5          Distribution of Buyer's Share of Net Revenues
                      or Losses, Infineum Net Revenues or Losses
                      and Power Augmentation Revenues.........................................................  112
         7.6          Allocation and Reconciliation of Net Back-up
                      Energy Costs............................................................................  112

      Article 8.      METERING................................................................................  113
         8.1          Measurement Location....................................................................  113
         8.2          Electricity Measuring Equipment and Stations............................................  113
         8.3          Fuel Measuring Equipment and Stations...................................................  116
         8.4          Testing.................................................................................  117
         8.5          Corrections.............................................................................  118
         8.6          Maintenance and Records.................................................................  119

      Article 9.      INVOICES AND PAYMENT....................................................................  119
         9.1          Billing.................................................................................  119
         9.2          Payment.................................................................................  121
         9.3          Annual Reconciliation of Steam Btu Credit and
                      Related Calculations....................................................................  121
         9.4          Adjustments.............................................................................  122
         9.5          Audit Rights............................................................................  123
         9.6          Books and Records.......................................................................  123

      Article 10.     TAXES...................................................................................  124

      Article 11.     DEFAULT AND REMEDIES....................................................................  124
         11.1         Seller Default..........................................................................  124
         11.2         Buyer Default...........................................................................  126
</TABLE>

                                      -ii-
<PAGE>   4
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
         11.3         Remedies................................................................................  128
         11.4         Damages.................................................................................  128
         11.5         Limitation on Liability for Damages.....................................................  128
         11.6         Duty to Mitigate........................................................................  130

      Article 12.     FORCE MAJEURE...........................................................................  130
         12.1         Force Majeure...........................................................................  130
         12.2         Force Majeure Defined...................................................................  131

      Article 13.     INDEMNIFICATION.........................................................................  133
         13.1         Indemnification for Claims..............................................................  133
         13.2         Notice..................................................................................  133
         13.3         Defense.................................................................................  134
         13.4         Survival of Indemnifications............................................................  135

      Article 14.     DISPUTE RESOLUTION......................................................................  135
         14.1         Dispute Resolution......................................................................  135
         14.2         Binding Arbitration.....................................................................  136
         14.3         Presumptions............................................................................  139

      Article 15.     ASSIGNMENT..............................................................................  140
         15.1         General.................................................................................  140
         15.2         Permitted Assignments...................................................................  140
         15.3         Sale of Bayway Refinery.................................................................  140
         15.4         Assignment Conditions...................................................................  140
         15.5         Survival of Guarantees; Substitute
                      Guarantors..............................................................................  142
         15.6         Further Assurances......................................................................  147
         15.7         Violations a Default; Further Remedies..................................................  147

      Article 16.     NOTICES.................................................................................  148
         16.1         General.................................................................................  148
         16.2         Changes.................................................................................  150
         16.3         Holidays................................................................................  150

      Article 17.     CONFIDENTIALITY.........................................................................  150

      Article 18.     FURTHER ASSURANCES; OTHER FACILITIES....................................................  152
         18.1         General.................................................................................  152
         18.2         First Amendment to the Steam Agreement..................................................  152
         18.3         Permits and Governmental Approvals......................................................  153
         18.4         Financing...............................................................................  153
         18.5         Additional Consideration................................................................  154

      Article 19.     MISCELLANEOUS...........................................................................  154
         19.1         Severability............................................................................  154
         19.2         Captions, Titles and Headings...........................................................  155
         19.3         Governing Law...........................................................................  155
</TABLE>

                                      -iii-
<PAGE>   5
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                   <C>                                                                                      <C>
         19.4         Non-Waiver..............................................................................  155
         19.5         Relationship of the Parties.............................................................  155
         19.6         Existing Plant..........................................................................  156
         19.7         Parties in Interest.....................................................................  156
         19.8         Non-Dedication of Facility..............................................................  157
         19.9         Modification............................................................................  157
         19.10        Entire Agreement........................................................................  157
         19.11        Attorneys' Fees.........................................................................  157
         19.12        Costs and Expenses......................................................................  157
         19.13        Counterparts............................................................................  158
         19.14        Survival of Obligations.................................................................  158

         Exhibits

         Exhibit A       Delivery Point and Metering Point
         Exhibit B       Heat Rate Table
         Exhibit C       Parent Guaranty
         Exhibit D       Pro Forma Analysis of Project
         Exhibit E       Scope Description
         Exhibit F       Steam Btu Credit
         Exhibit G       Sample of Facility Budget
         Exhibit H       Reimbursement Agreement
         Exhibit I       Construction Contract Terms and Conditions
         Exhibit J       O&M Contract Terms and Conditions
         Exhibit K       Electricity Specifications Sheet
         Exhibit L       Fuel Specifications
         Exhibit M       Sample Reallocation of Back-up Electricity
                         Charges
         Exhibit N       Sample Invoice
         Exhibit O       Form of Assignment and Assumption
                         Agreement
         Exhibit P       Form of First Amendment to Steam Agreement
</TABLE>

                                      -iv-
<PAGE>   6
                            ENERGY SERVICES AGREEMENT

         This ENERGY SERVICES AGREEMENT (this "Agreement"), dated as of February
14, 2000, between EAST COAST POWER L.L.C., a Delaware limited liability company
("Seller"), and TOSCO REFINING, L.P., a Delaware limited partnership ("Buyer").

                              W I T N E S S E T H:

         WHEREAS, Buyer presently operates and maintains the Bayway Refinery (as
hereinafter defined), which requires steam and electricity in its industrial
processes and for other purposes;

         WHEREAS, Cogen Technologies Linden Venture, L.P., a Delaware limited
partnership and an Affiliate of Seller ("Cogen"), presently owns, operates and
maintains the Existing Plant (as hereinafter defined), which produces steam for
delivery to the Bayway Refinery;

         WHEREAS, Seller wishes to construct the Facility (as
hereinafter defined);

         WHEREAS, Buyer wishes to purchase from Seller Electricity from the
Facility, and Seller wishes to sell Electricity to Buyer, upon the terms and
subject to the conditions set forth

                                        1
<PAGE>   7
herein, and Seller and Buyer further desire that Seller shall sell excess
Electricity from the Facility to Third Parties and share in any net benefits
from those sales upon the terms and subject to the conditions set forth herein;

         WHEREAS, Cogen presently sells steam from the Existing Plant to Bayway
Refining Company, a Delaware corporation ("Bayway"), for use at the Bayway
Refinery under the Agreement for the Sale of Steam between Cogen and Bayway,
dated as of April 8, 1993 (as amended from time to time, the "Steam Agreement"),
and Bayway may require additional steam for use at the Bayway Refinery and
wishes to purchase from Cogen, and Cogen wishes to sell to Bayway, additional
steam, and Seller and Bayway have agreed to provide for such purchase and sale
by amending the Steam Agreement;

         WHEREAS, Buyer presently owns and operates a 27kV substation situated
within the Bayway Refinery that is presently in working condition and which will
be upgraded or replaced (the "27kV Substation"), and Seller and Buyer wish to
interconnect the 27kV Substation and the Facility with the transmission
facilities of the PJM Interconnection, L.L.C. at a new 230kV interconnection;

         WHEREAS, the Parties contemplate that the Facility will be located on
land owned by Bayway and leased to Cogen (the

                                        2
<PAGE>   8
"Existing Site") in accordance with the Ground Lease Agreement, dated as of
August 1, 1990, between Cogen and Exxon Corporation ("Exxon"), and subsequently
assigned by Exxon to Bayway, as in effect on the date hereof, relating to the
Existing Site, (as amended from time to time, the "Existing Ground Lease
Agreement");

         WHEREAS, the development and construction of the Facility and the
transactions contemplated hereby, subject to the limitations and qualifications
herein, are intended to satisfy any rights or obligations of either Cogen or
Bayway pursuant to Article 7 of the Existing Ground Lease Agreement; and

         WHEREAS, Seller and Buyer wish to set forth herein their respective
rights and obligations relative to the development, construction and operation
of the Facility, the integration of the Facility and the Bayway Refinery and
other matters set forth above.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending legally to be bound, agree as
follows:

                                        3
<PAGE>   9
ARTICLE 1.        DEFINITIONS AND INTERPRETATION

         1.1 Definitions. As used in this Agreement, the following terms when
initially capitalized in this Agreement shall have the following meanings:

         "27kV Substation" has the meaning assigned to it in the recitals
hereof.

         "Additional Generation Facility" means the additional generation
facility that may be developed by Seller on property leased from Buyer or
Buyer's Affiliate at the Bayway Property pursuant to a lease executed
simultaneously with this Agreement.

         "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such Person. Solely for the
purposes of defining the term Affiliate, "Control," when used with respect to
any Person, means the possession of the power to direct or cause the direction
of management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "Controlling" and "Controlled" have meanings correlative to the foregoing.
The ownership, directly or indirectly, of 10% or more of the voting

                                        4
<PAGE>   10
securities of any Person shall constitute "Control" of such Person. Enron Corp.,
El Paso Energy Corporation and their respective affiliates shall be deemed to be
Affiliates of Seller.

         "Agreement" means this Energy Services Agreement, including all
exhibits hereto, as amended from time to time.

         "Annual Budget" has the meaning assigned to it in Section 6.2.

         "Annual Period" means any one of a succession of consecutive twelve
(12) Month periods beginning on January 1st and ending on December 31st, except
for the first such period, which shall begin on the Commercial Operations Date
and end on the following December 31st, and the last such period, which shall
begin on January 1, 2017 and end on April 30, 2017.

         "Appurtenant Systems" means the equipment and facilities, including
measuring equipment, metering stations, Seller's on-site natural gas facilities,
condensate pipelines, wastewater discharge pipelines, Steam pipelines, a day
tank with associated pumps, piping and controls for distillate Fuel on the
Existing Site, to be installed by Seller and located at the Facility.

                                        5
<PAGE>   11
         "Average Heat Rate" means, for any hour, the quotient of:

                  (a)      the quantity of Fuel consumed in the Facility
                           expressed in Btu, less
                  (b)      the Steam Btu Credit,
                           divided by
                  (c)      the total quantity of Electricity (in kWh) produced
                           by the Facility during such hour, as measured by the
                           meter designated as "ECP #1" on Exhibit A.

         "Avoided Cost of Fuel" means the cost of fuel, in $/MMBtu, that would
otherwise have been consumed at the Existing Plant (including the cost of
transportation and related services necessary for the purchase of such fuel,
inclusive of all Taxes) to produce Steam, when such Steam is delivered to the
Existing Plant from the Facility or, if the Existing Plant is not operating, the
Cost of Fuel.

         "Back-up Demand Charge Component" means (a) the actual charges incurred
by Seller to reserve back-up Electricity for Buyer at the Bayway Refinery
pursuant to Section 5.7A, less (b) any Back-up Demand Costs Chargeable to
Infineum Sales.

                                        6
<PAGE>   12
         "Back-up Demand Costs Chargeable to Infineum Sales" means the
allocation for back-up demand costs agreed to by the Parties pursuant to Section
5.9C(ii).

         "Back-up Energy Component" means, for any Month:

         (a)      the product of:
                  (i)      an estimate of the quantity of Fuel that would have
                           been consumed at the Facility had the Facility
                           generated a quantity of energy equivalent to the
                           quantity of back-up energy delivered to Buyer (less
                           the quantity of any back-up energy Buyer is
                           responsible to pay for pursuant to Section
                           5.7B(i)-(vi)) and
                  (ii)     an estimate of the price of Fuel that would have
                           been consumed at the Facility had the Facility
                           generated such quantity of energy,
         plus

         (b)      an estimate of the cost of Variable O&M Charges that
                  would have been incurred if the Facility had generated
                  such quantity of energy,

         less

         (c)      an estimate of the Steam Credit that would have
                  resulted had the Facility generated such quantity of
                  energy.

                                        7
<PAGE>   13
For purposes of estimating the quantity of Fuel, Variable O&M Charges and Steam
Credit in (a), (b) and (c) above, it shall be assumed that the Facility operated
to produce such energy at normal operating conditions experienced during the
first Month prior to the Month in which such quantity of back-up energy was
purchased during which normal operating conditions prevailed and, for the price
of Fuel and the Avoided Cost of Fuel (used in the estimate of the Steam Credit),
the prices available to the Facility and the Existing Plant, respectively,
during the period in which such quantity of back-up energy was purchased shall
be used.

         "Back-up Energy Costs Chargeable to Infineum Sales" means the
allocation for back-up energy costs agreed to by the Parties pursuant to Section
5.9C(ii).

         "Bayway Property" means the land upon which the Bayway Refinery is
located at Linden, N.J. and Elizabeth, N.J. and such other properties that could
be served by the Facility without adversely affecting the Facility's
qualification as an On-Site Generation Facility.

         "Bayway Refinery" means the (i) oil refinery, marketing terminal,
petrochemical plant and associated facilities owned or operated by Buyer or
Buyer's Affiliate on the Bayway Property

                                        8
<PAGE>   14
(ii) the operations of Exxon Company, U.S.A., Turbo Oil and Exxon Company,
U.S.A., Site Remediation on the Bayway Property at levels existing as of the
Effective Date, and (iii) any other facilities or operations located on the
Bayway Property that are related to and integrated with the industrial processes
or marketing terminal operations of the Bayway Refinery, (whether or not owned
or operated by Buyer or an Affiliate or a Third Party) provided that such term
shall not include the facilities or operations currently or in the future owned
by Infineum. The shared use of steam or Electricity or both shall not of itself
qualify facilities or operations as related to and integrated with the
industrial processes or marketing terminal operations of the Bayway Refinery.

         "Btu" means one British Thermal Unit of energy.

         "Budget Plan" has the meaning assigned to it in Section 6.2.

         "Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City or Linden, New Jersey, are authorized
or required by law to close.

         "Buyer" means Tosco Refining, L.P., a Delaware limited partnership, and
its permitted successors and assigns.

                                        9
<PAGE>   15
         "Buyer's Requirements" means Buyer's Electricity requirements for the
Bayway Refinery commencing on the Commercial Operations Date; provided, however,
Buyer's Requirements shall not include Electricity generated at the Bayway
Refinery by (i) Buyer or Buyer's Affiliates or (ii) an electric generation
facility (a) owned by a Third Party, (b) located on Bayway Property owned as of
the date hereof by Buyer or Buyer's Affiliates and (c) related to and integrated
with the industrial processes or marketing terminal operations of the Bayway
Refinery. The shared use of steam or Electricity or both shall not of itself
qualify facilities or operations as related to and integrated with the
industrial processes or marketing terminal operations of the Bayway Refinery.

         "Change in Law" means a change which occurs after the Effective Date in
any statute, ordinance, regulation or policy of any Governmental Authority or
the policies, rules or procedures of PJM or any other legal requirements
applicable to the construction, operation or maintenance of the Facility.

         "Claiming Party" means a Party claiming Force Majeure.

         "Claims" has the meaning assigned to it in Section 13.1.

                                       10
<PAGE>   16
         "Commercial Operations Date" means the date declared by Seller in a
notice to Buyer on or after the date on which (i) Electricity generated
hereunder is first available to be delivered from the Facility to the Delivery
Point by Seller following successful completion of Operational Testing of the
Facility, consistent with Prudent Electric Industry Practice and (ii) Seller has
presented to Buyer the amendment to the Steam Agreement executed by Cogen in
accordance with Section 18.2.

         "Commercial Operations Year" means any year commencing on the
Commercial Operations Date or on the anniversary thereof, and ending on the
earlier of (i) the next anniversary of the Commercial Operations Date or (ii)
April 30, 2017.

         "Construction Contract" has the meaning assigned to it in Section 4.1A.

         "Cost of Fuel" means the actual price or charge for Fuel, expressed in
$/MMBtu, delivered to the Facility, including the cost of transportation and
related services necessary for the purchase of such Fuel, inclusive of all
Taxes.

         "Default" has the meaning assigned to it in Article 11.

         "Delivery Point" means the point as described in Exhibit A.

                                       11
<PAGE>   17
         "Distillate Interconnection Point" means the point within the Existing
Site at the inlet flange of the distillate day tank to which Buyer will
construct or cause to be constructed equipment capable of delivering distillate
at a pressure, quantity and in accordance with the specification for distillate
set forth in the Section 6.3 and Exhibit L.

         "Eastern Prevailing Time" or "EPT" means the time in effect (i.e.,
Eastern Standard Time or Eastern Daylight Savings Time) in Linden, New Jersey.

         "Effective Date" means the date set forth in the first paragraph of
this Agreement.

         "Eight Percent Proxy Component" means, for any Month, the product of:

                  (i) eight percent (8%);

                  (ii) Buyer's load (in kWh) during such Month, less any back-up
         energy for which Buyer is responsible to pay pursuant to Section
         5.7B(i)-(vi); and

                  (iii) (a) the average price per kWh weighted for all hours
         during such Month for back-up energy pursuant to PSE&G's applicable
         tariff, less (b) the quotient of (x) the Fuel Component plus the
         Variable O&M Component (less any Variable O&M Costs Chargeable to Third
         Party Sales as

                                       12
<PAGE>   18
         described in (b) of the definition thereof and less any Variable O&M
         Costs Chargeable to Infineum Sales) divided by (y) the quantity of
         energy (in kWh) generated by the Facility and delivered to Buyer in
         such Month.

         "Electricity" means capacity, expressed in megawatts (MW), or energy,
expressed in kilowatt hours (kWh), or both, as the context requires.

         "Environmental Remediation and Relocation Costs" means the sum of (i)
all "Excess Relocation Costs" and (ii) all "Unreimbursed Excess Costs" incurred
by Seller, as such terms are defined (a) in Sections 2.12 and 10.2,
respectively, in each of the Ground Lease Agreement for Additional Generation
Facility, the Ground Lease Agreement for TES Facility and the Ground Lease
Agreement for Greywater Facility, each entered into as of the date hereof
between Bayway and Seller, and (b) in Section 7.4 of the Interconnection Lease.

         "Excess Capacity" means, for any period, any electric generating
capacity from the Facility available for sale to Third Parties in excess of the
capacity required by the PJM rules to supply (i) the Nominated Load or (ii) the
Interim Nominated Load, whichever is in effect, for such period.

                                       13
<PAGE>   19
         "Excess Energy" means, for any period, any available electric energy
from the Facility available for sale to Third Parties in excess of Buyer's
Requirements, as Buyer has provided to Seller pursuant to Section 5.2C. Any
Electricity provided to the Additional Generation Facility from the Facility
shall be deemed to be a sale of Excess Energy to an Affiliate for purposes of
this Agreement.

         "Excluded Peril" means any occurrence which results in an Uninsurable
loss or damage to the Facility or Appurtenant Systems caused by acts of God, war
or foreign enemy, sabotage, nuclear reaction, radiation or radioactive
contamination, confiscation by order of any Governmental Authority, strikes,
lockouts or similar labor disputes or acts or omissions of Buyer or Buyer's
Affiliates. "Uninsurable," as used in this definition, means insurance coverage
(i) for such loss or damage was not available at commercially reasonable rates
from internationally recognized insurance markets or (ii) that Seller has
presented to Buyer but which has not been accepted by Buyer pursuant to Section
6.7.

         "Existing Ground Lease Agreement" has the meaning assigned to it in the
recitals hereof.

         "Existing Plant" means the cogeneration facility and all appurtenant
structures and equipment owned by Cogen in Linden,

                                       14

<PAGE>   20
New Jersey, as of the date hereof and as generally described in the filing made
with the FERC in docket no. QF90-65-000, for the purpose of producing steam and
generating electricity.

         "Existing Plant Lenders" means any Person designated from time to time
by Seller in a notice to Buyer as an "Existing Plant Lender."

         "Existing Site" has the meaning assigned to it in the recitals hereof.

         "Exxon System" has the meaning assigned to it in the Existing Ground
Lease Agreement.

         "Facility" means that certain facility designed to generate Electricity
and to produce Steam as described in the Scope Description.

         "Facility Force Majeure" means a Force Majeure of Seller the proximate
cause of which is an event occurring within the Existing Site that is not an
Excluded Peril.

         "FERC" means the Federal Energy Regulatory Commission.

                                       15
<PAGE>   21
         "FERC Rules" means the regulations promulgated by the FERC under PURPA
that are set forth in 18 C.F.R. Part 292, or successor regulations and any other
applicable regulations promulgated by the FERC.

         "Five-Year Projection" has the meaning assigned to it in Section 6.2.

         "Fixed Charges" means the Fixed Facility Charge Component and the Fixed
O&M Component.

         "Fixed Costs Chargeable to Infineum Sales" means, in any Month, the
product of (a) the Fixed Charges and (b) the quotient of (i) the lesser of (1)
the quantity of Electricity generated in such Month by the Facility to serve
Infineum's Load (in kWh) or (2) 5,500 multiplied by the number of hours in such
Month, divided by (ii) 134,500 multiplied by the number of hours in such Month;
provided, however that in the event Seller or its Affiliate has not entered into
an agreement with Infineum to sell Electricity from the Facility to Infineum,
Fixed Costs Chargeable to Infineum Sales shall be zero.

         "Fixed Facility Charge Component" means, for any Month, an amount equal
to nine hundred eighty-six thousand five hundred sixty-seven dollars ($986,567),
such amount to be adjusted by the

                                       16
<PAGE>   22
Parties pursuant to Section 6.6 and such amount to be paid each Month for 192
Months, or such lesser number of Months, as determined pursuant to Sections
4.2D(ii) and 6.6C.

         "Fixed O&M Component" means, for any Month, the sum of the following
costs reasonably incurred by Seller in the operation and maintenance of the
Facility (excluding costs to be included in the Fuel Component or the Variable
O&M Component) in each case in accordance with the Annual Budget for the Annual
Period that includes such Month: insurance; Taxes; planned preventive
maintenance expense; apparatus, machinery and equipment costs necessary to
maintain Facility performance; all O&M contractor expenses, including fees,
payroll, benefits, and home office support; environmental expenses; Facility
office expenses; community relations expenses; service contract costs; and costs
for other personnel (however employed) devoted full-time to the Facility
(including one business manager and one accountant expected to be employed by
Seller); and a general administrative expense component (including the following
in-house services: accounting, legal, compliance, audit and other components
performed by Seller or any Affiliate of Seller, comparable to the degree to
which such services are performed as in-house services for the Existing Plant
unless such services required are different) of fifteen percent (15%) of the
Annual Budget divided by twelve (12); and any other expense reasonably incurred
by

                                       17
<PAGE>   23
Seller in the operation and maintenance of the Facility that does not vary with
the operation of the Facility other than the Fixed Facility Charge Component and
similar charges as set forth in Exhibit G. In no event shall Buyer be liable for
any cost of financing the purchase of items or services that Buyer is otherwise
liable to reimburse Seller for as part of the Fixed O&M Component. To the extent
reasonable and prudent, the costs incurred on behalf of the Facility will
recognize the incremental economies of scale and efficiencies (if any) made
possible by virtue of the location of the Facility adjacent to the Existing
Plant, however, Seller in no fashion guarantees nor warrants to Buyer that any
such economies of scale or efficiencies will in fact be realized.

         "Force Majeure" has the meaning assigned to it in Section 12.2.

         "Fuel" means natural gas or any petroleum product used as energy input
to the Facility, including distillate, as the case may be.

         "Fuel Component" means, for any Month,

                  (a)      the product of:

                           (i)        the Cost of Fuel (in $/MMBtu), and

                                       18
<PAGE>   24
                           (ii)       the quantity of Fuel utilized in the
                                      Facility during such Month (in MMBtu),
                           less

                  (b)      the sum of:

                           (i)        Fuel Costs Chargeable to Infineum Sales,
                           (ii)       Fuel Costs Chargeable to Power
                                      Augmentation,
                           (iii)      Fuel Costs Chargeable to Third Party
                                      Sales, and
                           (iv)       the Steam Credit.

         "Fuel Costs Chargeable to Infineum Sales" means, for each Month, the
sum, for all hours in such Month, of

                  (a)      the product of:

                           (i)        the Cost of Fuel, in $/MMBtu, consumed to
                                      generate Electricity at the Facility for
                                      sale to Infineum;
                           (ii)       the Average Heat Rate;
                           (iii)      the quantity of Electricity sold to
                                      Infineum in such hour by Seller, in kWh,
                                      as determined by the Parties pursuant to
                                      Section 8.2C;

                  divided by

                  (b)      1,000,000;

                                       19
<PAGE>   25
provided, however, that in the event Seller or its Affiliate has not entered
into an agreement with Infineum to sell Electricity from the Facility to
Infineum, Fuel Costs Chargeable to Infineum Sales shall be zero.

         "Fuel Costs Chargeable to Power Augmentation" means, for each Month,
the sum, for all hours in such Month, of

                  (a)      the product of:

                           (i)        the quantity of Electricity sold to Third
                                      Parties in any hour, in kWh, as a result
                                      of Power Augmentation;
                           (ii)       the Cost of Fuel, in $/MMBtu, consumed to
                                      generate Electricity for sale to Third
                                      Parties as a result of Power Augmentation;
                                      and
                           (iii)      the Power Augmentation Heat Rate
                                      applicable to such sales to Third Parties,
                                      which shall be 6,023 Btu/kWh (until such
                                      time as it may be redetermined as
                                      contemplated below);

                  divided by

                  (b)      1,000,000.

As soon as practicable after the Commercial Operations Date, Seller shall
demonstrate, and Buyer shall be allowed to witness and audit, the capability of
the Facility to generate Electricity by Power Augmentation, and such
demonstration shall determine the

                                       20
<PAGE>   26
Power Augmentation Heat Rate to be used thereafter. Buyer may, from time to
time, reasonably request that Seller, and Seller on its own may, demonstrate the
capability of the Facility to generate Electricity by Power Augmentation and
redetermine the Power Augmentation Heat Rate as may be appropriate.

         "Fuel Costs Chargeable to Third Party Sales" means, for each Month, the
sum, for all hours in such Month, of

                  (a)      the product of:

                           (i)        the Cost of Fuel, in $/MMBtu, consumed to
                                      generate Electricity for sale to Third
                                      Parties;
                           (ii)       the Incremental Heat Rate applicable to
                                      such sales to Third Parties; and
                           (iii)      the quantity of Electricity sold to Third
                                      Parties in such hour, in kWh;

                  divided by

                  (b)      1,000,000,

For purposes of this definition, the Cost of Fuel consumed to generate
Electricity for sale to Third Parties and the quantity of Electricity sold to
Third Parties shall not include any Fuel consumed or Electricity sold (i) as a
result of Seller's reasonable efforts to cause the Facility to follow changes in
Buyer's load in accordance with Section 5.2C, (ii) as a result of

                                       21
<PAGE>   27
sales or inadvertent provision of Electricity to Infineum or (iii) as a result
of Power Augmentation.

         "Generally Accepted Accounting Principles" means generally accepted
accounting principles in the United States of America consistently applied.

         "Governmental Authority" means any governmental, legislative, judicial
or administrative body or court or any other Person authorized to make or
enforce laws or regulations or exercising executive, legislative, judicial,
regulatory or administrative functions or pertaining to government.

         "Guarantor" means, with respect to Buyer, Tosco.

         "Hazardous Materials" means any substance or material defined as a
hazardous waste, material or substance or defined as a toxic waste, material or
substance under any federal or state statute or regulations promulgated
thereunder intended to provide protection for public health and the environment,
including, without limitation, the Clean Air Act, the Clean Water Act, CERCLA,
the Solid Waste Disposal Act (including the Resource Conservation and Recovery
Act), the Toxic Substances Control Act, and their state statutory and regulatory
counterparts. The term "Hazardous Materials" shall include, without limitation,

                                       22
<PAGE>   28
petroleum and petroleum byproducts, materials containing greater than one
percent (1%) asbestos and dielectric fluids containing greater than fifty parts
per million (50 ppm) polychlorinated biphenyls.

         "Heat Rate" means the rate of consumption of Fuel in the Facility for
the production of Electricity, expressed as Btu/kWh.

         "Heat Rate Credit" means, for any Month, (a) Fuel Costs Chargeable to
Third Party Sales calculated using the Average Heat Rate of the Facility less
(b) Fuel Costs Chargeable to Third Party Sales calculated using the Incremental
Heat Rate of the Facility.

         "Incremental Heat Rate" means, the incremental Heat Rate calculated
using Exhibit B.

         "Independent Party" has the meaning assigned to it in Section 8.2A.

         "Infineum" means Infineum USA L.P., a Delaware limited
partnership, and its successors and assigns.

         "Infineum Agreement" has the meaning assigned to it in Section 5.9C.

                                       23
<PAGE>   29
         "Infineum's Load" has the meaning assigned to it in Section 8.2C.

         "In-Service Date" has the meaning assigned to it in Section 4.2.

         "Interconnection Delay Costs" means the product of (a) the greatest
number of days by which completion and testing of any of the Interconnection
Facilities is later than the date designated by Buyer pursuant to Section
4.2A(i) for completion of any such Interconnection Facilities, but in no event
greater than ninety (90) days, and (b) $16,500.

         "Interconnection Facilities" has the meaning assigned to it in the
Interconnection Lease.

         "Interconnection Lease" means the Ground Lease Agreement for
Interconnection Facilities dated as of the date hereof between Bayway and
Seller.

         "Interest Rate" means two percent (2%) over the Prime Rate; provided,
however, in no event shall the Interest Rate exceed the maximum rate of interest
permissible under the laws of the State of New Jersey.

                                       24
<PAGE>   30
         "Interim Nominated Load" has the meaning assigned to it in Section
5.4A.

         "Interim Notice" has the meaning assigned to it in Section 5.4A.

         "ISRA" means the New Jersey Industrial Site Recovery Act, as amended,
previously known as the New Jersey Environmental Cleanup Responsibility Act,
referred to as ECRA.

         "kWh" means kilowatt hours.

         "Lender" means any Person designated from time to time by Seller in a
notice to Buyer as a "Lender."

         "Maximum Electricity Quantity" means the maximum hourly quantity of
Electricity (expressed in MW) that Buyer may receive for the Bayway Refinery at
the Delivery Point, which, pursuant to PJM Rules, is available from the Facility
to supply Buyer's Requirements, which quantity shall not exceed the lesser of
(i) the Nominated Load or the Interim Nominated Load, whichever is applicable,
or (ii) the Net Capability.

         "Metering Points" means the points described in Section 8.1.

                                       25
<PAGE>   31
         "Minimum Electricity Quantity" means a minimum hourly quantity of
Electricity of not less than ninety (90) MW or such lower quantity as Seller may
be able to generate at the Facility pursuant to all permits issued by any
Governmental Authority and in accord with Prudent Electric Industry Practice.

         "MMBtu" means millions of Btus.

         "Month" means a calendar month, except for the calendar month that
includes the Commercial Operations Date, in which case the term means the period
commencing on such date and ending on the last day of such calendar month.

         "MW" means millions of watts.

         "Natural Gas Pipeline Company" means any natural gas pipeline company.

         "Net Capability" means the sustained maximum output of the Facility
(exclusive of Power Augmentation), net of auxiliary Facility loads, as
determined by capability tests, where the net output of the Facility is
determined and the test results are adjusted for the probable ambient operating
conditions, pursuant to PJM Rules.

                                       26
<PAGE>   32
         "Net Revenues or Losses" has the meaning assigned to it in Section 7.1.

         "Nominated Back-up Demand" has the meaning assigned to it in Section
5.7A.

         "Nominated Load" means the load requirements nominated by Buyer in
accordance with Section 5.3.

         "O&M Contractor" has the meaning assigned to it in Section 4.1F.

         "On-Site Generation Facility" has the meaning provided in New Jersey
P.L. 1999 (The Electric Discount and Energy Competition Act), Chapter 23, Sec.
3, and as may be amended from time to time.

         "Operational Testing" means the testing of the Facility performed by
Seller, pursuant to Prudent Electric Industry Practice, prior to the Commercial
Operations Date pursuant to Section 4.6.

         "Parent Guaranty" means the guaranty by Tosco of all obligations of
Buyer under this Agreement, substantially in the

                                       27
<PAGE>   33
form of Exhibit C, executed prior to or concurrently with this Agreement.

         "Party" means Buyer or Seller, as the case may be, and its permitted
successors and assigns.

         "Person" means a natural person, corporation, limited liability
company, partnership, association, joint venture, real estate investment trust
or business trust (including any beneficiary thereof), unincorporated
association, and any other form of business, legal or governmental entity.

         "PJM" means the PJM Interconnection, L.L.C. or any successor
independent system operator performing substantially similar
functions.

         "PJM Rules" means all rules, regulations, requirements, procedures or
policies of PJM as in effect, from time to time.

         "PJM System" means those facilities of PJM used for the transmission of
Electricity.

         "PJM Tariff" means the open access transmission tariff filed by PJM
with the FERC, as modified from time to time.

                                       28
<PAGE>   34
         "Power Augmentation" means the additional generation of Electricity at
the Facility for sale to Third Parties as a result of the injection of low
pressure steam and incremental Fuel into the Facility.

         "Power Augmentation Cost of Steam" means, in any hour:

                  (a)      the product of:
                           (i)      the quantity of Electricity sold to Third
                                    Parties in such hour, in kWh, as a result of
                                    Power Augmentation,
                           (ii)     the incremental cost of fuel at the Existing
                                    Plant (in $/MMBtu), including the cost of
                                    transportation and related services
                                    necessary for the purchase of such fuel,
                                    inclusive of all Taxes, or, if the Existing
                                    Plant is not operating, the Cost of Fuel (in
                                    $/MMBtu) available to the Facility for Power
                                    Augmentation, and
                      (iii)         the Power Augmentation Steam Btu Rate
                                    applicable to such sales, which shall be
                                    3,527 Btu/kWh (until such time as it may be
                                    redetermined as contemplated below).

                  divided by

                                       29
<PAGE>   35
                  (b)      1,000,000

As soon as practicable after the Commercial Operations Date, Seller shall
demonstrate, and Buyer shall be allowed to witness and audit, the capability of
the Facility to generate Electricity by Power Augmentation, and such
demonstration shall determine the Power Augmentation Steam Btu Rate to be used
thereafter. Buyer may, from time to time, reasonably request that Seller, and
Seller on its own may, demonstrate the capability of the Facility to generate
Electricity by Power Augmentation and redetermine the Power Augmentation Steam
Btu Rate as may be appropriate.

         "Prime Rate" means the bank prime loan rate as reported in Federal
Reserve Statistical Release H.15 (or a successor publication of similar
authority, if Statistical Release H.15 is discontinued) for the day the payment
becomes due; provided, however, in no event shall this rate of interest exceed
the maximum rate of interest permissible under the laws of the State of New
Jersey.

         "Prudent Electric Industry Practice" means any of the practices,
methods or acts (i) required by the National Electric Safety Code, PJM, the
North American Electric Reliability Council, or the successors of any of them,
whether or not Seller is a member thereof, or (ii) otherwise engaged in or
approved by

                                       30
<PAGE>   36
a significant portion of the electric generation industry during the relevant
time period or any of the practices, methods and acts that in the exercise of
reasonable judgment in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a reasonable
cost consistent with good business practices, reliability, safety and
expedition. Prudent Electric Industry Practice is not intended to be limited to
the optimum practice, method or act to the exclusion of all others, but rather
to be acceptable practices, methods or acts generally accepted in the region.

         "PSE&G" means Public Service Electric & Gas Company and its successors.

         "PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.

         "Qualified Capital Cost Adjustments" means the sum of:

                           (i) fifty percent (50%) of the amount by which
                  actual Facility "Hard Costs" and "Project Soft Costs" exceed
                  or are less than the amounts for such categories of costs set
                  forth in Exhibit D,
                           (ii) all additional costs arising out of any
                  extension or delay in the In-Service Date pursuant to

                                       31
<PAGE>   37
                  Sections 4.1B, 4.1C, 4.1D and 4.2C(i), (iii), (iv) and
                  (v),
                           (iii) Interconnection Delay Costs,
                           (iv) all additional costs, including costs that
                  result from a change in or other adverse effects on the
                  design, construction, or the completion schedule for, or the
                  occurring of the In-Service Date of, the Facility, arising out
                  of the surface or subsurface presence of pollution, Hazardous
                  Materials or contamination at the site,
                           (v) all additional costs arising from changes or
                  additions to the Scope Description or other items requested by
                  Buyer (including the additional costs of a distillate day tank
                  with greater than twelve (12) hours usable capacity at base
                  load operation); provided, however, that any incentives Seller
                  pays to a contractor for timely completion pursuant to the
                  Construction Contract or delay payments received from such
                  contractor shall be excluded from the determination of
                  Qualified Capital Cost Adjustments and shall solely be paid or
                  retained by Seller,
                           (vi) any bonuses paid by Seller (or any funds
                  received by Seller) under the Construction Contract with
                  respect to any guarantee of the Facility's Heat Rate or
                  output, and

                                       32
<PAGE>   38
                           (vii) all additional costs incurred by Seller to
                  obtain a guarantee of the Facility's performance from the
                  construction contractor if such a guarantee is requested by
                  Buyer pursuant to Section 4.1B.
For purposes of this definition, "all additional costs" includes any increase in
"Interest During Construction" calculated in accordance with Exhibit D.

         "Qualifying Facility" means a facility that meets the requirements set
forth in the FERC Rules implementing PURPA for a qualifying cogeneration
facility.

         "Related Parties" has the meaning assigned to it in Section 13.1.

         "Scope Description" means the scope description attached as Exhibit E
hereto.

         "Seller" means East Coast Power L.L.C., a Delaware limited liability
company, and its permitted successors and assigns.

         "Steam" means steam produced by the Facility, routed consistent with
the Scope Description.

                                       33
<PAGE>   39
         "Steam Agreement" has the meaning assigned to it in the recitals
hereof.

         "Steam Btu Credit" means, for any month, an amount, in Btu, equal to
the sum of:

         (a) the product of:
                  (i)  S1, a constant,
                  (ii) the excess of (a) the average mass weighted enthalpy, in
         Btu/lb, of the high pressure Steam in each hour, less (b) the average
         mass weighted enthalpy, in Btu/lb, of demineralized boiler feed water,
         and
                  (iii) the quantity of high pressure Steam during such
         Month, in k-lbs.

         plus

         (b) the product of:
                  (i)  S2, a constant,
                  (ii) the excess of (a) the average mass weighted enthalpy, in
         Btu/lb, of the low pressure Steam in each hour, less (b) the average
         mass weighted enthalpy, in Btu/lb, of demineralized boiler feed water,
         and
                  (iii) the quantity of low pressure Steam during such
         Month, in k-lbs.

For the first Commercial Operations Year, the constant S1 shall be 0.77 and the
constant S2 shall be 0.77. Thereafter, the

                                       34
<PAGE>   40
constants S1 and S2 shall be determined based on Bayway's average annual hourly
purchases of high pressure and low pressure steam from Cogen pursuant to the
Steam Agreement for the Commercial Operations Year prior to the Commercial
Operations Year in which such Month occurs, or a good faith estimate thereof
provided by Buyer to Seller, as determined pursuant to Exhibit F. The enthalpies
of high pressure and low pressure Steam and demineralized boiler feed water
shall be determined for purposes hereof using the average temperatures and
pressure for high pressure and low pressure Steam and the average temperature of
demineralized boiler feed water and by reference to standard tables for
properties of steam and water as published by the American Society of Mechanical
Engineers ("ASME Steam Tables") or other commonly used reference work in the
electric industry.

         "Steam Credit" means, for any Month, an amount, in dollars
($), equal to

         (i)      the product of:
                  (a)      the Steam Btu Credit, and
                  (b)      the Avoided Cost of Fuel (in $/MMBtu),
         less
         (ii)     one-half (1/2) of any Steam Fuel Price Credit.

         "Steam Fuel Price Credit" means, for any Month, an amount, in dollars,
equal to the product of:

                                       35
<PAGE>   41
         (i)      the Steam Btu Credit, and;
         (ii)     if greater than zero, (a) the Avoided Cost of Fuel less (b)
                  the Cost of Fuel consumed at the Facility when Steam is
                  delivered to the Existing Plant.

         "Taxes" shall mean any or all ad valorem, property (including host
community benefit fees and payments in lieu of taxes), occupation, severance,
generation, first use, conservation, Btu or energy, transmission, utility, gross
receipts, privilege, sales, use, consumption, excise, lease, transaction, and
other taxes or, governmental charges, licenses, fees, permits and assessments,
or increases therein, other than taxes based on Seller's or its Affiliates net
income or net worth.

         "Term" has the meaning assigned to it in Section 2.1.

         "Third Party" means a Person other than a Party.

         "Tosco" means Tosco Corporation, a Nevada corporation, and its
permitted successors and assigns.

         "Variable O&M Component" means, in any Month, any expenses reasonably
incurred by Seller in the operation and maintenance of the Facility in such
Month (to the extent not included in the

                                       36
<PAGE>   42
Fixed O&M Charge or in the Fuel Component) that vary based upon the operation of
the Facility, including boiler feed water consumed (calculated based on boiler
feed water input less Steam delivered to the Existing Facility), parts,
expendables, maintenance items and labor, chemicals, catalyst, Taxes and similar
charges as set forth in Exhibit G. In calculating the Variable O&M Component,
any Variable O&M Costs Chargeable to Power Augmentation and any Variable O&M
Costs Chargeable to Third Party Sales described in (a) of the definition thereof
shall be deducted. In no event shall Buyer be liable for any cost of financing
the purchase of items or services that Buyer is otherwise liable to reimburse
Seller for as part of the Variable O&M Component. To the extent reasonable and
prudent, the costs incurred on behalf of the Facility will recognize the
incremental economies of scale and efficiencies (if any) made possible by virtue
of the location of the Facility adjacent to the Existing Plant, however, Seller
in no fashion guarantees nor warrants to Buyer that any such economies of scale
or efficiencies will in fact be realized. If and to the extent that the
construction, operation or maintenance of the Facility pursuant to this
Agreement causes the Existing Plant to incur costs (other than costs related to
the production and utilization of steam, including Steam, by the Existing Plant)
that would not have been incurred but for the construction, operation or
maintenance of the Facility and either (i) Seller is not specifically reimbursed

                                       37
<PAGE>   43
for such costs pursuant to any other provision of this Agreement or the specific
terms of any other agreement or (ii) there is not a quantifiable specific
benefit that Seller receives solely by reason of incurring such costs, then such
costs shall be included within the Variable O&M Component.

         "Variable O&M Costs Chargeable to Infineum Sales" means, in any Month,
the product of (a) the Variable O&M Component in such Month and (b) the quotient
of (i) the quantity of Electricity generated by the Facility to serve Infineum's
Load (in kWh), divided by (ii) the sum of (1) Buyer's actual load (in kWh), plus
(2) the quantity of Electricity generated by the Facility to serve Infineum's
Load (in kWh); provided, however that in the event Seller or its Affiliate has
not entered into an agreement with Infineum to sell Electricity from the
Facility to Infineum, Variable O&M Costs Chargeable to Infineum Sales shall be
zero.

         "Variable O&M Costs Chargeable to Power Augmentation" means, in any
Month, the product of (i) $1.00 per MWh (or such other amount as the Parties may
agree to based upon information provided by the turbine equipment supplier) and
(ii) the total quantity of Electricity (in MWh) generated by the Facility for
sale to Third Parties as a result of Power Augmentation.

                                       38
<PAGE>   44
         "Variable O&M Costs Chargeable to Third Party Sales" means, in any
Month, the sum of:
                  (a)      the product of (i) $1.00 per MWh and (ii) the total
                           quantity of Electricity (in MWh) generated by the
                           Facility for sale to Third Parties (excluding
                           Electricity generated at the Facility for sale to
                           Infineum and those Third Parties covered by (b)
                           below, and Electricity generated at the Facility
                           through Power Augmentation); and
                  (b)      a pro rata allocation of the items in the Variable
                           O&M Component that vary with output with respect to
                           Electricity generated by the Facility for sale to
                           Third Parties (excluding Infineum) having a load
                           factor of eighty-five percent (85%) or greater and
                           that purchase such Electricity under a binding
                           obligation of one (1) year or greater.

         1.2      Interpretation.
                  A. Each Party acknowledges that the other Party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.

                                       39
<PAGE>   45
                  B. Defined terms in this Agreement shall include in the
singular number the plural, and in the plural number the singular. Whenever the
context requires, any pronoun shall include the corresponding masculine,
feminine and neuter forms. Article, section and exhibit references are to
articles and sections of and exhibits to this Agreement, except as otherwise
indicated.

                  C. Unless otherwise stated, any reference in this Agreement to
any Governmental Authority or to any statutes and regulations shall include
reference to any successors to such Governmental Authority and to any successor
provisions to such statutes and regulations, respectively.

                  D. When used in this Agreement, the words "Btu" and "MMBtu"
when used to describe the energy equivalent of a quantity of Fuel shall, unless
otherwise expressly indicated, refer to the higher heating value ("HHV") of such
Fuel; the words "hereof," "herein," "hereunder" and words of similar import
shall, unless otherwise expressly indicated, refer to this Agreement as a whole
and not to any particular provision of this Agreement; the words "not
unreasonably withheld" and words of similar import shall, unless otherwise
expressly indicated, mean not unreasonably withheld, delayed or conditioned; the
words "include,"

                                       40
<PAGE>   46
"includes," and "including" shall be understood to mean inclusion without
limitation.

                  E. Exhibits G, M and N have been provided for clarification
only, and to the extent a conflict arises, if any, between such exhibits and the
language of this Agreement, the language of this Agreement without regard to
such exhibits shall control.

ARTICLE 2.    TERM OF THIS AGREEMENT

         2.1 Term. This Agreement shall be effective as of the Effective Date
and shall continue in effect until April 30, 2017 unless earlier terminated or
unless extended pursuant to Section 4.2D (the "Term").

         2.2 Early Termination by Seller. Not later than sixty-five (65) days
following the Effective Date, Seller, in its sole discretion and without cause,
may terminate this Agreement by providing notice to Buyer. In the event Seller
terminates this Agreement pursuant to this Section 2.2, all rights, obligations
and liabilities of both Parties under this Agreement shall immediately cease and
be of no further force and effect and neither Party shall be obligated to the
other Party for any costs, expenses, damages or other charges incurred prior to
or as

                                       41
<PAGE>   47
a result of such early termination, other than as may have been specifically
provided for in that certain Reimbursement Agreement between the Parties
attached hereto as Exhibit H, as may be amended from time to time.

ARTICLE 3.    REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS

         3.1      Representations and Warranties of the Parties.  As of
the Effective Date, each Party represents and warrants to the
other that:
                  A.       It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization
and is qualified to do business in the State of New Jersey.

                  B.       It has all requisite power and authority to
execute and deliver this Agreement.

                  C. Its execution and delivery of this Agreement have been duly
authorized by, or are in accordance with, its organizational instruments; this
Agreement has been duly executed and delivered for it by signatories so
authorized; and this Agreement constitutes a legal, valid and binding obligation
enforceable against it in accordance with its respective terms.

                                       42
<PAGE>   48
                  D. Neither the execution nor delivery by it of this Agreement
conflicts with, results in a breach of or constitutes a default under (i) any of
the terms, conditions or provisions of its certificate or articles of
incorporation, articles of association, limited liability company or partnership
agreement, by-laws or other constituent documents, (ii) any material, federal,
state or local law, or any order, rule or regulation of any Governmental
Authority having jurisdiction over it or its properties or by which it or its
properties may be bound, or (iii) any agreement or instrument to which it is a
Party or by which it or any of its properties may be bound, other than with
respect to any agreements or instruments for which consents or approvals are
required from any partner or member of Seller.

                  E. No suit, action or arbitration, or legal, administrative or
other proceeding is pending or threatened at law or in equity against it that
would affect the validity or enforceability of this Agreement, or the ability of
it to materially fulfill its obligations hereunder.

         3.2      Additional Representations and Warranties of Buyer. As
of the Effective Date, Buyer hereby represents and warrants to
Seller that:

                                       43
<PAGE>   49
                  A.       All information Buyer has provided to Seller,
pursuant to Seller's written request, for use in permitting
and/or financing is to the best of Buyer's knowledge true and
correct in all material respects.

                  B.       Buyer has no collective bargaining or other
employment-related restrictions that would impede Seller's right
or ability to operate the Facility or otherwise carry out its
obligations hereunder.

                  C.       Buyer has obtained all consents and approvals (if
any) required from Third Parties necessary for the execution and
delivery by Buyer of this Agreement.

                  D. Since December 31, 1998, there has not been a change in the
business, operations, properties, assets, condition (financial or otherwise),
prospects or results of operations of Buyer that would materially and adversely
affect the ability of Buyer to perform its obligations hereunder.

                  E. Buyer has relied upon independent engineers and attorneys
in negotiating the terms of this Agreement and has made an independent
investigation into, and has made its own independent judgment concerning, the
price for Electricity that Buyer will be obligated to pay pursuant to this
Agreement.

                                       44
<PAGE>   50
         3.3      Additional Representations and Warranties of Seller.
As of the Effective Date, Seller hereby represents and warrants
to Buyer that:

                  A.       All information Seller has provided to Buyer,
pursuant to Buyer's written request, for use in permitting is to
the best of Seller's knowledge true and correct in all material
respects.

                  B.       Seller has no collective bargaining or other
employment-related restrictions that would impede Seller's right
or ability to operate the Facility or otherwise carry out its
obligations hereunder.

                  C.       Seller has obtained all consents and approvals (if
any) required from Third Parties necessary for the execution and
delivery by Seller of this Agreement.

                  D. Seller shall have obtained, on or before sixty (60) days
after the Effective Date, a right satisfactory to Seller to a General Electric
Seven Series (7FA) Turbine for incorporation in the Facility so that Seller can
meet its obligations under this Agreement.

                                       45
<PAGE>   51
                  E. Since December 31, 1998, there has not been a change in the
business, operations, properties, assets, condition (financial or otherwise),
prospects or results of operations of Seller that would materially and adversely
affect the ability of Seller to perform its obligations hereunder.

         3.4 Buyer's Acknowledgment. Buyer hereby acknowledges that Seller has
not guaranteed, warranted or represented in any fashion, including pursuant to
Exhibit D, (i) any fixed or maximum price of Electricity to Buyer pursuant to
this Agreement nor (ii) the amount of Net Revenues or Losses, Infineum Net
Revenues or Losses, nor Power Augmentation Revenues which will or may be
realized pursuant to this Agreement. Buyer acknowledges that factors which may
vary and which may affect said price and revenues include the following, none of
which has been guaranteed or warranted in any fashion to Buyer by Seller:

         (i)        Cost of Fuel;
         (ii)       Heat Rate;
         (iii)      cost of Fixed O&M Component and Variable O&M
                    Component;
         (iv)       cost of fuel at the Existing Plant;
         (v)        dispatch levels and operation and maintenance
                    practices at the Existing Plant;
         (vi)       back-up demand or capacity costs;
         (vii)      back-up energy costs;

                                       46
<PAGE>   52
         (viii)     availability of the Facility after the Commercial
                    Operations Date;
         (ix)       the relationship between Buyer's average and peak
                    Electricity requirements;
         (x)        whether or not, and at what price, sales of
                    Electricity can be made to Third Parties, including
                    Infineum; and
         (xi)       Bayway's average annual hourly purchases of high
                    pressure and low pressure steam.

ARTICLE 4.    CONSTRUCTION AND OPERATION OF THE FACILITY

         4.1      Construction and Operation of the Facility.

                  A.
                           1.       Seller shall construct the Facility in
compliance with the Scope Description and the Appurtenant Systems on the
Existing Site in accord with Prudent Electric Industry Practice. Seller shall
keep Buyer reasonably informed and consult with Buyer with respect to, but shall
be solely responsible for the design, construction, start-up, operation and
maintenance of, the Facility and the Appurtenant Systems. Buyer shall cooperate
in good faith with Seller with respect to the provision of utility services and
other matters affecting the construction, operation and maintenance of the
Facility.

                                       47
<PAGE>   53
                           2.       Buyer, as an independent contractor to
Seller, shall construct, complete and pay for those facilities described as
"Buyer's Scope," as described in Exhibit E, which facilities are part of the
Facility and shall be owned by Seller, and Seller shall reimburse Buyer for
same, in an amount not to exceed two million eight hundred and fifty thousand
dollars ($2,850,000), which amount shall be included in the Facility "Hard
Costs" set forth in Exhibit D. Upon completion of such facilities, Buyer shall
invoice Seller and Seller shall pay Buyer such amount on or before fifteen (15)
days after receipt by Seller of Buyer's invoice therefor.

                           3.       Buyer and Seller agree (i) that Seller shall
implement the construction of the Facility and the Appurtenant Systems pursuant
to a construction contract (the "Construction Contract") to be entered into
between Seller and National Energy Production Corporation, or another contractor
reasonably acceptable to Buyer, (ii) that the Construction Contract shall
contain terms and conditions customary for the construction of facilities and
systems similar to the Facility and the Appurtenant Systems and Seller shall use
reasonable efforts to include in the Construction Contract those terms and
conditions set forth in Exhibit I and (iii) that the scope of work under the
Construction Contract shall be in compliance with the Scope Description.

                                       48
<PAGE>   54
                  B. Seller shall, in good faith, provide Buyer with a draft of
the Construction Contract as soon as reasonably possible in advance of its
execution and a copy of the final draft of the Construction Contract prior to
its execution. Buyer shall have five (5) Business Days to approve the final
draft of the Construction Contract or request reasonable changes in the
Construction Contract consistent with the requirements of Section 4.1A, which
approval shall not be unreasonably withheld. Buyer may request, at Buyer's sole
expense and provided that there is no adverse effect on Seller, that Seller
obtain from the construction contractor and include in the Construction Contract
a guarantee of the Facility's performance at new and clean condition upon
completion of construction and testing. Any additional costs of securing such
guarantee shall be recovered by Seller as a Qualified Capital Cost Adjustment.
In the event Buyer does not approve the Construction Contract within five (5)
Business Days, the In-Service Date shall be extended one day for each day
thereafter until (i) Buyer, Seller and the construction contractor agree upon
any changes Buyer requires in the Construction Contract, (ii) Buyer approves the
Construction Contract or (iii) Seller elects to proceed on its own pursuant to
Section 4.1E; provided, that the In-Service Date shall not be extended in the
event that Seller or the construction contractor unreasonably delays reviewing,
discussing or approving Buyer's proposed changes.

                                       49
<PAGE>   55
                  C. Seller shall provide Buyer with as much notice as is
reasonably possible with respect to any material change order, amendment or
modification or waiver of, to or under the Construction Contract. Buyer's prior
written consent shall be required for any material change order, amendment,
modification or waiver to or under the Construction Contract if such change
order, amendment, modification or waiver (i) would result in the Construction
Contract not being in compliance with the Scope Description, (ii) would
individually change the cost of constructing the Facility and the Appurtenant
Systems by more than $1,000,000 or (iii) together with all previous change
orders, amendments, modifications or waivers would change the cost of
constructing the Facility and the Appurtenant Systems by more than $4,600,000 in
the aggregate; provided that such consent shall not be unreasonably withheld and
that in the event Buyer's consent is not given within three (3) Business Days,
the In- Service Date shall be extended one day for each day thereafter until (i)
the Parties agree upon such changes as Buyer reasonably believes require its
consent or (ii) Buyer consents or (iii) Seller elects to proceed pursuant to
Section 4.1E; provided, that the In-Service Date shall not be extended in the
event that Seller or the construction contractor unreasonably delays reviewing,
discussing or approving Buyer's proposed changes.

                                       50
<PAGE>   56
                  D. Seller shall, in good faith, provide Buyer with a draft of
any other contract or amendment (other than the Construction Contract) relating
to the design, construction, or start-up of the Facility or the Appurtenant
Systems materially affecting the In-Service Date or having a value in excess of
one million dollars ($1,000,000), as soon as reasonably possible in advance of
its execution, and with a copy of any such contract or amendment prior to its
execution. Buyer shall have three (3) Business Days to consent to such contract
or amendment provided that such consent shall not be unreasonably withheld and
that in the event Buyer does not provide such consent within three (3) Business
Days, the In-Service Date shall be extended one day for each day until (i) the
Parties agree upon such changes as Buyer reasonably believes require its
consent, (ii) Buyer consents or (iii) Seller elects to proceed pursuant to
Section 4.1E; provided, that the In-Service Date shall not be extended in the
event that Seller or the construction contractor unreasonably delays reviewing,
discussing or approving Buyer's proposed changes.

                  E. In the event Seller believes Buyer's consent or approval
pursuant to this Section 4.1 has been unreasonably withheld, Seller may proceed
at its own risk to construct the Facility with such contracts, changes,
amendments or modifications as Seller believes are in accord with Prudent

                                       51
<PAGE>   57
Electric Industry Practice. If Seller proceeds pursuant to this Section 4.1E,
the dispute shall be resolved pursuant to the dispute resolution procedures set
forth in Article 14 of this Agreement. If Seller prevails, Seller shall be paid
the additional costs it incurred with interest calculated at the Interest Rate.

                  F. Seller may contract for the operation and maintenance of
the Facility with a Third Party experienced in the business of operating
facilities similar to the Facility, including the operation and maintenance
contractor of the Existing Plant (an "O&M Contractor"). Seller shall use
reasonable efforts to include the terms and conditions set forth in Exhibit J in
the contract with the O&M Contractor. If Seller determines to contract with a
Third Party to be the O&M Contractor for the Facility (other than with an entity
that is or will also be the O&M Contractor of the Existing Plant, with respect
to which entity no approval of the Buyer shall be required), Seller shall notify
Buyer and obtain Buyer's approval, which approval shall not be unreasonably
withheld. If Buyer does not deliver to Seller a written objection to such O&M
Contractor proposed by Seller within ten (10) Business Days after receipt of
Seller's notice, Buyer will be deemed to have approved such proposed O&M
Contractor. Buyer's unreasonable failure to consent

                                       52
<PAGE>   58
to Seller's proposed O&M Contractor shall be a breach of this Agreement.

         4.2      In-Service Date.

                  A.       Not later than forty-five (45) days following the
Effective Date:
                           (i) Buyer shall notify Seller of Buyer's reasonable
                  projection of the date of completion of construction and
                  testing of the Interconnection Facilities such that same may
                  be energized (or purged, for natural gas facilities) to the
                  Facility construction site for:

                                    (a) the 27 kV supply portion of the
                           Interconnection Facilities,
                                    (b) the 230 kV portion of the
                           Interconnection Facilities, based upon Buyer's
                           construction schedule and additional information
                           provided by PSE&G or PJM, and
                                    (c) the natural gas supply portion of the
                           Interconnection Facilities, based upon Buyer's
                           construction schedule and additional information
                           provided by the Natural Gas Pipeline Company.

                           (ii)     Seller shall notify Buyer of Seller's
                  reasonable projection of the date of delivery of the

                                       53
<PAGE>   59
                  heat recovery steam generator (the "HRSG") purchased for the
                  Facility, based upon commitments received from HRSG vendors.
                  Seller shall pursue with vendors, options to expedite the
                  delivery of such HRSG and present Buyer with an estimate of
                  the additional costs for such expedited delivery. If Buyer
                  accepts the additional costs to achieve such an expedited
                  delivery, these costs will be included as Qualified Capital
                  Cost Adjustments in (v) of the definition thereof.

                  B.  The "In-Service Date" shall be the later of:

                           (i) such date after the date specified in
                  Section 4.2A(i)(a) above as committed to by the construction
                  contractor for the Facility within forty-five (45) days of the
                  Effective Date, which date is currently estimated, but not
                  guaranteed, to be six (6) Months after the date specified in
                  Section 4.2A(i)(a); or

                           (ii) such date after the date specified in Section
                  4.2A(i)(b) above as committed to by the construction
                  contractor for the Facility within forty-five (45) days of the
                  Effective Date, which date is currently estimated, but not
                  guaranteed, to be four (4) Months after the date specified in
                  Section 4.2A(i)(b);

                                       54
<PAGE>   60
                         (iii) such date after the date specified in Section
                  4.2A(i)(c) above as committed to by the construction
                  contractor for the Facility within forty- five (45) days of
                  the Effective Date, which date is currently estimated, but not
                  guaranteed, to be four (4) Months after the date specified in
                  Section 4.2A(i)(c); or

                         (iv) ten (10) Months after the date specified in
                  Section 4.2A(ii) above.

                  C.  The In-Service Date shall be extended for a period
of time equal to the duration of any delay in the completion of
the Facility due to:

                         (i) Force Majeure,

                         (ii) Bayway's or PSE&G's or any Natural Gas Pipeline
                  Company's failure to timely complete construction and testing
                  of the Interconnection Facilities or other facilities such
                  that natural gas and distillate may be delivered to, and
                  Electricity delivered to Buyer and the PJM System from, the
                  Facility, as contemplated by the Interconnection Lease and
                  pursuant to the Fuel specifications set forth in

                                       55
<PAGE>   61
                  Section 6.3 and Exhibit L, by the dates reasonably
                  designated by Buyer pursuant to 4.2A(i) above,

                         (iii) changes or additions to the Scope Description
                  or other items requested by Buyer,

                         (iv) Buyer's or Buyer's Affiliate's failure to
                  otherwise fulfill its obligations under this Agreement, the
                  Interconnection Lease, the Existing Ground Lease Agreement or
                  the Steam Agreement, or

                         (v) a default under the Parent Guaranty.

                  D.  Fixed Charges.

                         (i) Buyer's obligation to pay the Fixed Charges shall
                  commence on the Commercial Operations Date, except if the
                  In-Service Date established pursuant to Section 4.2B has been
                  extended pursuant to Section 4.2C. In such case, Buyer's
                  obligation to pay the Fixed Charges shall commence on the
                  earliest to occur of:

                                    (a)     the Commercial Operations Date,
                                    (b)     the In-Service Date established
                         pursuant to Section 4.2B, as such date may have been
                         extended for any delay pursuant to Section 4.2C(ii)

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<PAGE>   62
                         (the "Extended In-Service Date"), but in no event later
                         than ninety (90) days after the In-Service Date
                         established pursuant to Section 4.2B, or
                                    (c)     March 1, 2002.

If Seller has not declared the Commercial Operations Date by the Extended
In-Service Date, and such failure is not a result of delays pursuant to Sections
4.2C(i), (iii), (iv) or (v), Buyer's obligation to pay the Fixed Charges shall
be suspended until Seller declares the Commercial Operations Date, at which time
Buyer's obligation to pay the Fixed Charges shall be reinstated.

                         (ii) Unless Buyer accepts Seller's proposal to continue
                  to supply Electricity, as provided in Sections 4.2D(iii) and
                  (iv), and if by April 30, 2017 Buyer has not paid Seller one
                  hundred and ninety two (192) Monthly Fixed Facility Charge
                  Component payments, then Buyer shall pay Seller on April 30,
                  2017 an amount equal to the product of (a) one hundred and
                  ninety two (192) (or, in the event the Fixed Facility Charge
                  Component is recalculated pursuant to Section 6.6C, such
                  lesser number of Months used for the period of such
                  recalculation) less the number of payments of Fixed Facility
                  Charge Components Buyer has paid Seller multiplied by (b) the
                  Fixed Facility Charge Component.

                                       57
<PAGE>   63
                         (iii) Not earlier than November 1, 2015 or later than
                  May 1, 2016, Seller shall notify Buyer, in Seller's sole
                  judgment, of the terms and conditions under which Seller would
                  be willing to continue to supply Electricity to Buyer during
                  the period subsequent to April 30, 2017 for a number of Months
                  equal to the number used in Section 4.2D(ii)(a) above in the
                  calculation of the payment pursuant to Section 4.2D(ii), but
                  not exceeding seven (7) Months.

                         (iv) No later than three (3) Months following receipt
                  of Seller's proposal pursuant to Section 4.2D(iii) above,
                  Buyer shall, in its sole judgment, notify Seller that it
                  either accepts or rejects Seller's proposal. If Buyer fails to
                  respond within three (3) Months, Buyer shall be deemed to have
                  rejected Seller's proposal.

                         (v) If Buyer accepts Seller's proposal to continue to
                  supply Electricity after April 30, 2017, Buyer shall agree to
                  provide Seller with a concurrent extension of all leases and
                  agreements between Buyer and Seller, and their respective
                  affiliates, as Seller may request.

                                       58
<PAGE>   64
         4.3 Incentives for Timely Completion. The Parties acknowledge the
importance to Buyer of timely completion of construction of the Facility and the
delivery of Electricity to Buyer pursuant to this Agreement. The following
monetary incentives or damages are intended to provide Seller appropriate
incentive for timely completion of the construction of the Facility and to
appropriately compensate Buyer for additional costs that it would incur if
delivery of Electricity pursuant to this Agreement is delayed. The payments set
forth herein are Buyer's sole remedy and damages if the Commercial Operations
Date is later than the In-Service Date.

                  A.     Safe Harbor.  There shall be neither an incentive
nor a delay payment due if the Commercial Operations Date is
declared either (i) fifteen (15) days or fewer than fifteen (15)
days before the In-Service Date or (ii) fifteen (15) days or
fewer than fifteen (15) days after the In-Service Date.

                  B. Incentive Payments. In addition to amounts otherwise due
pursuant to this Agreement, Buyer shall pay Seller the following incentive
payments. If the Commercial Operations Date occurs: (i) more than fifteen (15)
but less than seventy- six (76) days prior to the In-Service Date, eighteen
thousand dollars ($18,000) per day (not including the first fifteen (15) days
prior to the In-Service Date); or (ii) more than seventy-

                                       59
<PAGE>   65
five (75) days prior to the In-Service Date, one million eighty thousand dollars
($1,080,000) plus thirty-six thousand dollars ($36,000) per day for all such
days that are more than seventy- five (75) days prior to the In-Service Date.

                  C. Delay Payments. Subject to the provisions of Section 4.8,
if the Commercial Operations Date occurs: (i) more than fifteen (15) but less
than seventy-six (76) days after the In-Service Date, Seller shall pay Buyer
eighteen thousand dollars ($18,000) per day (not including the first fifteen
(15) days after to the In-Service Date); or (ii) more than seventy-five (75)
days after the Commercial Operations Date, one million eighty thousand dollars
($1,080,000) plus thirty-six thousand dollars ($36,000) per day for all such
days that are more than seventy-five (75) days after the In-Service Date.

         4.4 Ownership of Facility and Appurtenant Systems. Seller shall own,
operate and maintain the Facility and all Appurtenant Systems for the purposes
intended by this Agreement and in accord with Prudent Electric Industry
Practice.

         4.5 Information from Buyer. Upon the request of Seller, Buyer shall, at
no expense to Seller, in a reasonably expeditious fashion provide Seller with
all plans, specifications, drawings and other information that the Bayway
Refinery maintains in its

                                       60
<PAGE>   66
possession or is reasonably obtainable by Buyer in the ordinary course of
business and which are reasonably necessary for the design, construction,
installation, operation and maintenance of the Facility and the Appurtenant
Systems.

         4.6 Operational Testing and Purchase of Test Period Electricity. Prior
to the Commercial Operations Date, Seller shall conduct Operational Testing of
the Facility and, to the extent Buyer can safely do so and is not prohibited by
contract from doing so, Buyer shall accept such Electricity produced by Seller
as necessary to test the delivery of Electricity to Buyer in accord with Prudent
Electric Industry Practice or, if possible, Seller shall deliver such
Electricity to the PJM System through the Interconnection Facilities. Reasonably
in advance (but no less than ten (10) days) of commencement of such Operational
Testing, Seller shall provide Buyer with an anticipated daily testing schedule
indicating the quantities of Electricity Buyer shall accept. Buyer shall pay
Seller for any Electricity delivered to Buyer during Operational Testing at the
rate of $0.04 per kWh for such Electricity. Seller shall provide Buyer with
Seller's plans for Operational Testing of the Facility, which plans shall be
designed to minimize interference with or interruption of the supply of
Electricity to the Bayway Refinery in accordance with Prudent Electric Industry
Practice. Buyer may reasonably request additional protections against any

                                       61
<PAGE>   67
interference with or interruption of the supply of Electricity to the Bayway
Refinery. Seller shall provide same at Buyer's expense.

         4.7 Commercial Operation Notices. Buyer shall take such actions as are
reasonably necessary to accept delivery of Electricity from Seller on the
Commercial Operations Date. Seller shall provide Buyer with notice at least
fifteen (15) days in advance of the anticipated Commercial Operations Date, and
further notice at least two (2) days in advance of the actual Commercial
Operations Date.

         4.8 Termination on Account of Delay in Commercial Operations Date.
Except as provided in Section 2.2, if at any time prior to the Commercial
Operations Date Seller determines that it cannot, will not or may not achieve
the Commercial Operations Date, Seller shall have the right to provide a notice
of termination to Buyer and to pay Buyer a termination fee equal to thirteen
million one hundred forty thousand dollars $13,140,000). Seller shall not incur
any obligations to pay any delay amounts pursuant to Section 4.3 for any day
after the date of such termination notice and payment of the termination fee
pursuant to this Section 4.8, and Seller shall not be liable for any damages,
other than those specifically provided for in this Section 4.8. Upon the giving
of such notice and payment of the

                                       62
<PAGE>   68
termination fee, this Agreement shall be null and void and of no further force
or effect.

ARTICLE 5.    ELECTRICITY SUPPLY

         5.1 Electricity Quality. Seller shall deliver Electricity to Buyer at
230kV (nominal) and 60 Hertz (nominal) at the Delivery Point pursuant to the
specifications set forth in Exhibit K. To the extent that Buyer requests
modification to the specifications set forth in Exhibit K for the delivery of
Electricity, Seller will endeavor within the technical capability of the
Facility to provide same to the extent that Seller does not incur any costs or
losses (including loss of future sales) relating thereto that are not reimbursed
by Buyer and neither the performance nor the reliability or both of the Facility
are otherwise materially and adversely affected thereby. Except as specifically
provided for in this Section 5.1 or pursuant to the specifications for
Electricity set forth in Exhibit K, Seller shall have no obligation to provide
or pay the cost of VAR Support or any other ancillary service necessary for or
incidental to Buyer's use of Electricity at the Bayway Refinery. The cost of any
VAR Support or any other ancillary service provided by Third Parties necessary
or incidental to Buyer's use of Electricity at the Bayway Refinery shall be paid
by Buyer. The term "VAR Support" means the provision of reactive power and

                                       63
<PAGE>   69
voltage control as an ancillary service to the generation, transmission and
delivery of Electricity.

         5.2      Electricity Quantity.

                  A. Except as provided in Sections 5.4B, 6.4, 6.5 or 15.7A,
Seller shall provide Electricity up to the Maximum Electricity Quantity but in
no event less than the Minimum Electricity Quantity. Buyer shall nominate
pursuant to Section 5.3 (and may make changes to such nomination pursuant to
Section 5.4) and take all of Buyer's Requirements for Electricity up to the
Maximum Electricity Quantity as set forth in this Agreement. After the
Commercial Operations Date, and upon the request of Buyer and at Buyer's sole
expense, Seller shall use reasonable efforts to amend its permits from
Governmental Authorities to allow Seller to operate the Facility at an
electrical load below ninety (90) MW in accord with Prudent Electric Industry
Practice.

                  B.     If Buyer's Electricity load at the Bayway Refinery
falls below the Minimum Electricity Quantity at any time then:

                         (i) Seller shall use commercially reasonable efforts to
                  make sales of Electricity to Third Parties such that the
                  Facility can continue to operate at a combined load above the
                  Minimum Electricity Quantity in order to minimize the cost of
                  Electricity to Buyer, provided that, notwithstanding Section
                  7.2, Buyer shall

                                       64
<PAGE>   70
                  reimburse Seller for any and all losses incurred in
                  making such sales of Electricity to Third Parties, or

                         (ii) if Seller does not operate the Facility pursuant
                  to (i) above, (a) the Facility shall be deemed available
                  during such period for purposes of this Agreement and (b)
                  Buyer shall be responsible for all costs associated with the
                  purchase and delivery of back-up energy to Buyer during such
                  period of time.

                  C. Load Following. Seller shall use commercially reasonable
efforts to cause the Facility to follow Buyer's load and any changes in Buyer's
load, based upon the information or data provided to Seller by Buyer pursuant to
this Agreement and consistent with Prudent Electric Industry Practice. Buyer
shall be responsible for all costs associated with such efforts and shall be
entitled to all of the revenues derived each Month from the Facility that would
not have been obtained but for such efforts, to the extent that such revenues
are not greater than losses or costs (including fuel costs and $1.00 per MWh for
variable O&M) incurred with respect to such efforts in such Month and any net
revenues in excess thereof shall be shared in accordance with Section 7.2. Buyer
and Seller shall in good faith cooperate to identify Buyer's load and any
changes in Buyer's load that affect Buyer's Requirements and that affect the
quantity of Excess Energy available for sale to Third Parties.

                                       65
<PAGE>   71
         5.3 Nominated Load. Buyer shall in good faith provide Seller notice of
its estimated peak Electricity load (up to the Maximum Electricity Quantity) for
each Month of the summer period (April 1 through September 30) and for each
Month of the winter period (October 1 through March 31) to be delivered from the
Facility not less than six (6) Months prior to the start of each such period.
The Parties shall regularly review this nomination procedure and revise the
procedure to the extent such revisions are mutually agreeable or required
pursuant to PJM Rules.

         5.4      Interim Changes to Nominated Load.

                  A.     If after notice pursuant to Section 5.3, Buyer
desires to change its nomination, Buyer shall promptly provide to Seller notice
(the "Interim Notice") of such changes and shall therein (i) nominate an interim
Electricity quantity (the "Interim Nominated Load") up to the Net Capability,
and (ii) state the period for which the Interim Nominated Load quantity will be
applicable. The Interim Nominated Load shall reflect a quantity of Electricity
that Buyer in good faith expects that it may need during such period to be
delivered from the Facility to Buyer. The Interim Nominated Load shall become
effective as soon as practicable, but not more than twenty-four (24) hours after
receipt by Seller of the Interim Notice, provided, however Seller shall not be
obligated to provide Electricity under an Interim Nominated Load that is higher
than

                                       66
<PAGE>   72
the initial Nominated Load for such period if delivering such Electricity to
Buyer would materially and adversely affect Seller under any regulatory
obligation or contractual commitment or cause Seller to breach a then existing
contractual or other binding obligation related to the Facility. Seller shall
use commercially reasonable efforts to sell Excess Capacity and Excess Energy
made available due to a lower Interim Nominated Load under this Section 5.4A to
the extent reasonable and appropriate to maximize mutual benefits to Buyer and
Seller.

                  B. To the extent that Electricity to serve an increased
Interim Nominated Load is not available from the Facility due to a then existing
contractual or other binding obligation related to the Facility, Seller shall
endeavor to provide such additional Electricity from its back-up energy
arrangements or from other sources available to Seller on commercially
reasonable terms at Buyer's expense, provided that Seller shall have no
obligation to arrange or make such purchases if in Seller's discretion,
reasonably exercised, such purchase would or could have any material adverse
effect on (i) any of Seller's then existing contractual or other binding
obligations related to the Facility, (ii) Seller's ability to purchase back-up
energy at favorable rates or (iii) Seller's regulatory status. In such event
Buyer shall have the right to purchase such Electricity from any source at
Buyer's expense.

                                       67
<PAGE>   73
         5.5 Electricity Scheduling. By 10:00 a.m. EPT on the first (1st) day of
each Month beginning in the Month prior to the Month in which Buyer shall
commence taking Electricity, Buyer shall provide a schedule to Seller of its
daily expected peak Electricity requirements for the subsequent Month, provided
such schedule is for planning purposes only and the quantity of Electricity
scheduled for delivery to Buyer shall not exceed the Nominated Load or any
Interim Nominated Load, whichever is then in effect.

         5.6 Title; Risk of Loss. As between the Parties, Seller shall be deemed
to be in exclusive control (and responsible for any damages or injury caused
thereby) of the Electricity on Seller's side of the Delivery Point and Buyer
shall be deemed to be in exclusive control (and responsible for any damages or
injury caused thereby) of the Electricity at and from the Delivery Point. Seller
warrants that such Electricity delivered to Buyer will be free and clear of all
liens, claims and encumbrances arising prior to the Delivery Point. Title to and
risk of loss related to the Electricity shall transfer from Seller to Buyer at
the Delivery Point.

         5.7      Back-up Electricity Arrangements.  From and after the
Commercial Operations Date and until the end of the Term,
provided that Buyer has notified Seller of its Nominated Back-up

                                       68
<PAGE>   74
Demand pursuant to Section 5.7A below, Seller shall be responsible for arranging
the supply of back-up Electricity required by Buyer at the Bayway Refinery
unless prohibited by law or regulation. Such arrangements shall be on
commercially reasonable terms, which terms shall not unfairly disadvantage Buyer
with regard to Buyer's responsibilities to pay for back-up Electricity pursuant
to this Agreement.

                  A. Back-up Demand. Buyer shall establish and notify Seller of
the quantity of back-up Electricity to be reserved on behalf of Buyer not less
than ten (10) days (x) prior to the Commercial Operations Date or such earlier
date as may be necessary to reserve such service and (y) prior to any Month when
Buyer becomes aware of any increase or decrease in its requirements for back-up
Electricity ("Nominated Back-up Demand"). Seller shall not be liable for, and
Buyer shall reimburse Seller for, all costs incurred by Seller related to the
reservation of capacity (including any demand-related costs) associated with
sales by Third Parties of Electricity to Buyer at the Bayway Refinery and, in
the absence of an agreement between Seller and Infineum approved pursuant to
Section 5.9C, to Infineum.

                  B.        Back-up Energy.  Seller shall be responsible for
all costs of purchasing and delivering back-up energy to Buyer

                                       69
<PAGE>   75
after the Commercial Operations Date, except as otherwise allocated to Buyer
pursuant to Section 7.6 or as set forth below. Each Month, Buyer shall pay for
the following back-up energy:

                            (i) back-up energy delivered to Buyer when Buyer is
                  unable to or will not accept delivery of Electricity from the
                  Facility for any reason (including Buyer's Force Majeure) or
                  when Seller cannot deliver Electricity from the Facility
                  because of any failure of the Interconnection Facilities or
                  Buyer's failure upon Seller's request to furnish and deliver
                  Distillate pursuant to Section 6.3 or because of any Force
                  Majeure of Seller other than a Facility Force Majeure (and in
                  all such events the Facility shall be deemed available),
                            (ii) back-up energy delivered to Buyer when the
                  Facility is (a) available or (b) deemed available pursuant to
                  Sections 5.2B, 5.8, 6.3C, 6.4E or 6.5A of this Agreement,
                            (iii) back-up energy delivered to Buyer when Buyer
                  is not purchasing Electricity from the Facility pursuant to
                  Section 5.10A(ii),
                            (iv) back-up energy delivered to Buyer as a
                  result of Buyer's purchase of Electricity pursuant to
                  Section 5.4B,

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<PAGE>   76
                            (v) back-up energy delivered to Buyer in excess
                  of 134,500 kW in any hour, or
                            (vi) any back-up energy delivered to Buyer, to the
                  extent resulting from Seller's compliance with Section 5.2C.

                  C.        Buyer's Right to Make Arrangements for Back-up
Electricity.

                            (i) If the actual cost of the Back-up Demand Charge
                  Component for reserving back-up capacity is in excess of or is
                  reasonably anticipated to exceed $1.26 per kW per Month,
                  Buyer, upon at least thirty (30) days prior notice to Seller,
                  may make arrangements for back- up Electricity for the Bayway
                  Refinery, and Seller shall use reasonable commercial efforts
                  to terminate any arrangements Seller has made for back-up
                  Electricity as of the date specified by Buyer and Buyer shall
                  reimburse Seller for any costs incurred by Seller pursuant to
                  such arrangements until such arrangements are terminated and
                  for any costs Seller may incur to terminate such arrangements.
                  If Buyer makes arrangements for back-up Electricity pursuant
                  to this Section 5.7C, Seller shall not be responsible for and
                  Buyer shall pay for all demand-related charges for such
                  service and for the excess, if any, of (x) the actual

                                       71
<PAGE>   77
                  cost of back-up energy, in kWh, delivered to Buyer at the
                  Bayway Refinery less (y) the cost of an equivalent quantity of
                  back-up energy had it been purchased from PSE&G pursuant to
                  PSE&G's applicable tariff. Seller shall be responsible for (y)
                  above unless Buyer is otherwise responsible for back-up energy
                  costs pursuant to Sections 5.7B(i)-(vi) or 7.6.
                            (ii) If capacity from the Facility qualifies under
                  PJM Rules or otherwise such that arrangements with Third
                  Parties to reserve back-up Electricity are not required or can
                  be materially reduced, Seller shall, with Buyer's consent, use
                  commercially reasonable efforts to terminate or modify any
                  existing arrangements to receive back-up Electricity for the
                  Bayway Refinery to the extent necessary to achieve said
                  result, any costs or expenses of which shall be paid by Buyer.

                  D. Coordination of Scheduled Outages. Buyer and Seller shall
cooperate with each other to use commercially reasonable efforts to coordinate
the scheduled outages of the Facility and other major maintenance or overhaul
activities that may require a partial or complete reduction in the output of the
Facility with any scheduled temporary shut down or other anticipated reduction
in the operations of the Bayway Refinery so

                                       72
<PAGE>   78
as to minimize, to the extent reasonably practicable, the amount of back-up
Electricity that must be purchased to satisfy Buyer's Requirements during the
duration of such scheduled outage or major maintenance. Buyer and Seller shall,
not less than thirty (30) days prior to the beginning of each Annual Budget
Period, exchange a preliminary schedule of any scheduled outages of the Facility
and any scheduled temporary shutdown or other anticipated redirection in the
operations of the Bayway Refinery.

         5.8 Closure of Buyer's Facilities. In the event that Buyer closes or
otherwise shuts down the Bayway Refinery for any reason, including but not
limited to Force Majeure, (i) Buyer shall provide Seller with notice of such
closure or shutdown not less than three (3) days after Buyer obtains knowledge
that the Bayway Refinery will be closed or shut down, and (ii) Buyer shall
continue to pay to Seller all Fixed Charges in accordance with the terms of this
Agreement, in addition to any costs associated with the termination of or
rearrangement of any contractual obligations of Seller or any other unwind costs
caused by such closure or shutdown. To the extent practicable, and provided
Seller is not adversely affected thereby, Seller shall take such reasonable
action as would mitigate the Fixed Charges to be paid by Buyer in such event
(including the sale of Excess Capacity and Excess Energy). The Facility shall be
deemed available for the duration of any such closure.

                                       73
<PAGE>   79
         5.9      Sales of Electricity to Third Parties.

                  A. Purchases and Sales of Electricity; Affiliate Transactions.
Seller may sell Excess Capacity, Excess Energy and, except as provided in
Section 5.1 and Exhibit K, other products or services derived from the Facility
to Third Parties. Seller may also purchase capacity or energy from or sell
Excess Capacity or Excess Energy or both to any Affiliate of Seller, provided
that (i) such purchase or sale is on commercially reasonable terms and
conditions that are at least as favorable to Seller and to Buyer as would be
obtainable in an "arm's length" transaction and (ii) Seller notifies Buyer of
such purchase or sale as soon as reasonably practicable.

                  B. No Resales by Buyer. Buyer shall not be entitled to resell
Electricity delivered by Seller hereunder to any Third Party (including
Infineum); provided, however, that Buyer may redeliver or checkmeter Electricity
delivered by Seller hereunder to facilities within the Bayway Refinery (whether
or not owned or operated by Buyer or an Affiliate or a Third Party, but not
including those facilities and equipment currently or in the future owned or
operated by Infineum) in an amount (taken together with other purchases
hereunder) up to the Maximum Electricity Quantity, provided that any redelivery
or checkmetering of Electricity delivered by Seller hereunder to

                                       74
<PAGE>   80
such other facilities owned or operated by Third Parties, other than those
identified in the definition of Bayway Refinery, shall not have a material
adverse effect on Seller or any of its Affiliates or shall not otherwise be
precluded by law or regulation.

                  C.        Approval of Contract for Sales to Infineum.

                            (i) Seller or its Affiliate shall, in good faith,
                  provide Buyer with a draft of any agreement for the sale of
                  Electricity to Infineum (the "Infineum Agreement") as soon as
                  reasonably possible in advance of its execution and a copy of
                  the final draft of any such agreement prior to its execution.
                  Buyer shall have ten (10) Business Days to approve the final
                  draft of such agreement, which approval shall not be
                  unreasonably withheld. In the event Buyer does not approve
                  such agreement Buyer shall provide Seller or its Affiliate
                  with a written notice of disapproval detailing proposed
                  changes to such agreement that Buyer in good faith believes
                  are necessary to protect its interests pursuant to this
                  Agreement, and the Parties shall cooperate to resolve Buyer's
                  proposed changes. In the event Buyer fails to provide Seller
                  or its Affiliate either a notice of approval or disapproval

                                       75
<PAGE>   81
                  within such ten (10) Business Day period, Buyer shall be
                  deemed to have approved such agreement.

                            (ii) Concurrently with the negotiation by Seller or
                  Seller's Affiliate of the Infineum Agreement, Buyer and Seller
                  shall mutually agree upon an equitable allocation of back-up
                  energy and back-up demand costs attributable to Infineum Sales
                  and a method for determining Infineum's Load pursuant to
                  Section 8.2C. Such allocation shall be used in the
                  calculations set forth in Sections 6.1A and 7.1 (definition of
                  "Infineum Net Revenues or Losses").

                            (iii) In the event Seller has not entered into an
                  agreement with Infineum and Buyer has not provided Seller with
                  a means of disconnecting Infineum's electrical load from the
                  Electricity delivered to Buyer from the Facility, Buyer shall
                  be responsible for the entire quantity of Electricity
                  delivered from the Facility to Buyer (including Infineum's
                  Load when the Facility is not electrically interconnected with
                  the PJM System). In such event, Buyer shall be responsible for
                  all costs incurred to provide all such Electricity and shall
                  be solely responsible for the recovery of any

                                       76
<PAGE>   82
                  costs related to Electricity consumed by Infineum and for
                  recovering such costs from Infineum.

         5.10     Replacements, Improvements or Additions to the
Facility.
                  A.
                            (i) After the Commercial Operations Date, Buyer
                  shall be responsible for and shall pay, as and when incurred
                  by Seller, all costs with respect to replacements,
                  improvements or additions to the Facility necessary to
                  maintain and operate the Facility in good repair and condition
                  (pursuant to the maintenance and repair program recommended by
                  equipment vendors) and as contemplated by this Agreement to
                  meet Buyer's Requirements, except as provided in (ii) below.
                                      (ii)
                                          (1) With respect to any such

                            replacements, improvements or additions described in
                            (i) above that are estimated to exceed one million
                            dollars ($1,000,000) and are solely required by a
                            Change in Law applicable to the Facility after the
                            Commercial Operations Date, Buyer shall have the
                            option not to make such replacements, improvements
                            or additions and to cease or reduce purchasing
                            Electricity from the Facility pursuant

                                       77
<PAGE>   83
                            to this Agreement to the extent that such
                            replacements, improvements or additions were
                            necessary for that purpose.
                                    (2) In such event, until expiration of the
                            Term, Buyer shall continue to pay the Fixed Charges,
                            any Back-up Demand Charge Component and any back-up
                            Electricity charges incurred by Seller and any other
                            costs necessary to fully reimburse Seller for the
                            cost to terminate, complete or rearrange any
                            contractual or other binding obligations incurred by
                            Seller pursuant to Seller's obligations or rights
                            under this Agreement and for such other costs that
                            arise from Buyer's election to cease purchasing
                            Electricity from the Facility including all costs
                            related to the demobilizing, shutdown, mothballing
                            and protection of the Facility; provided, however,
                            that Buyer shall have no obligation to reimburse
                            Seller for any lost profits or foregone economic
                            benefits from sales of Excess Capacity or Excess
                            Energy or other products or services derived from
                            the Facility to Third Parties that Seller would have
                            received if the Facility had continued to operate.
                            To the extent practicable, and provided Seller is
                            not

                                       78
<PAGE>   84
                            adversely affected thereby, Seller shall take such
                            reasonable action as would mitigate the amounts to
                            be paid by Buyer pursuant to this Section 5.10A(ii).
                            To the extent that Buyer no longer purchases
                            Electricity from the Facility pursuant to this
                            Section 5.10A(ii), Seller shall have no further
                            obligation to supply or pay for any back-up
                            Electricity.

                            (iii) In the event Buyer elects not to make such
                  replacements, improvements or additions pursuant to (ii)
                  above, Seller may proceed with such replacements, improvements
                  or additions and, notwithstanding Section 7.2, shall be
                  entitled to all of the revenues derived from the Facility that
                  would not have been obtained but for such replacements,
                  improvements or additions, until the revenues less the costs
                  incurred by Seller to produce such revenues equal the costs
                  incurred by Seller for such replacements, improvements or
                  additions. In the event that Seller recovers all of the costs
                  incurred by Seller for such replacements, improvements or
                  additions (whether through net revenues or payment by Buyer or
                  both), as of the date of such recovery and thereafter Buyer
                  shall have the right to commence purchasing Electricity from
                  the Facility and

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<PAGE>   85
                  shall have all its other rights pursuant to this Agreement
                  restored in the same manner as if such replacements,
                  improvements or additions had not been necessary.

                  B. Either Party may propose replacements, improvements or
additions to the Facility that are not necessary to maintain and operate the
Facility in good repair and condition (pursuant to the maintenance and repair
program recommended by equipment vendors) and as contemplated by this Agreement
to meet Buyer's Requirements. If the Parties agree to make such replacements,
improvements or additions, Seller shall make same and the Parties shall share
equally both the costs with respect to such replacements, improvements or
additions and the revenues derived from the Facility that would not have been
obtained but for such replacements, improvements or additions. A Party shall
have a reasonable period of time, but in no event greater than forty-five (45)
days, to notify the other Party that it accepts the other Party's proposal for
such replacements, improvements or additions. If either Party fails to respond
or elects not to proceed with such replacements, improvements or additions: (i)
if Seller fails to respond or elects not to proceed with such replacements,
improvements or additions, Buyer may request Seller to proceed at Buyer's
expense (which costs shall be paid as and when incurred by Seller) and Buyer
shall be entitled to all of

                                       80
<PAGE>   86
the revenues derived from the Facility that would not have been obtained but for
such replacements, improvements, or additions, or (ii) if Buyer fails to respond
or elects not to proceed with such replacements, improvements, or additions,
Seller may proceed with such replacements, improvements or additions and shall
be entitled to all of the revenues derived from the Facility that would not have
been obtained but for such replacements, improvements or additions and Buyer
shall not be entitled to the capacity or energy derived from such replacements,
improvements or additions; provided, however, that any such replacements,
improvements or additions constructed pursuant to (i) or (ii) shall not
materially adversely affect the other Party (other than such Party not sharing
in the revenues derived therefrom), and in the case where Seller proceeds, Buyer
not having any rights to the capacity or energy derived therefrom.
Notwithstanding anything contained in this Section 5.10B to the contrary, if
Seller, in its sole discretion, concludes that any replacements, improvements or
additions to the Facility proposed by Buyer would have any detrimental effect
upon Seller's ability to meet its obligations under this Agreement or under any
other then existing contractual or other binding obligation of Seller relating
to the Facility or upon the value or salvage value of the Facility, Seller shall
notify Buyer of such position within forty-five (45) days of Buyer's proposal,
and Buyer shall have no right to proceed with such replacements, improvements or
additions.

                                       81
<PAGE>   87
         5.11 Qualifying Facility Status. Seller shall obtain and maintain the
status of the Facility as a Qualifying Facility or as part of a Qualifying
Facility; provided, however, that Seller shall have no obligation to maintain
such Qualifying Facility status in the event of Buyer's or Buyer's Affiliates
failure or inability to take and use steam pursuant to the Steam Agreement in
quantities sufficient to maintain the Qualifying Facility status of the Facility
and the Existing Plant. Seller shall have no further obligation to maintain
Qualifying Facility status (i) whenever it becomes possible for Seller to
fulfill its obligations pursuant to this Agreement without such status, (ii)
there is no material adverse effect on Buyer or no such effect that cannot be
compensated for by a payment from Seller to Buyer, and (iii) Seller pays Buyer
such compensation, if any.

         5.12 On-site Generation Facility Status. Buyer and Seller shall conduct
their operations and activities in such a manner that such operations and
activities do not prevent or otherwise adversely affect the qualification of the
Facility as an On-Site Generation Facility.

                                       82
<PAGE>   88
ARTICLE 6.    PRICE FOR ELECTRICITY

         6.1      Price.

                  A.        The price which Buyer hereby agrees to pay to
Seller on and after the Commercial Operations Date shall consist
of (to the extent that each component is applicable):

                  the sum of

                  (i)          the Fixed Facility Charge Component;
                  (ii)         the Fixed O&M Component;
                  (iii)        the Back-up Demand Charge Component;
                  (iv)         the Fuel Component;
                  (v)          the Variable O&M Component;
                  (vi)         the Back-up Energy Component;
                  (vii)        the Eight Percent Proxy Component; and
                  (viii)       the cost of all back-up energy purchased and
                               delivered for which Buyer is responsible
                               pursuant to Sections 5.7B(i)-(vi) and 7.6;

                  less

                  (ix)         any Fixed Costs Chargeable to Infineum Sales;
                  (x)          any Variable O&M Costs Chargeable to Infineum
                               Sales, if already paid by Buyer to Seller;
                  (xi)         any Variable O&M Costs Chargeable to Third
                               Party Sales as described in (b) of the
                               definition thereof; and

                                       83
<PAGE>   89
                  (xii)        any Back-up Energy Costs Chargeable to Infineum
                               Sales, if already paid by Buyer to Seller.

                  B. Buyer shall at all times (including during a Force Majeure
event) remain liable for and shall pay Seller the applicable Fixed Charges and
the Back-up Demand Charge Component (to the extent that such charges cannot
reasonably be mitigated by Seller).

         6.2      Annual Budget.

                  A. Submission. One hundred eighty (180) days prior to the
anticipated Commercial Operations Date as reasonably estimated by the Parties,
and one hundred eighty (180) days prior to the beginning of each Annual Period
thereafter, Seller shall prepare and submit to Buyer a proposed Budget Plan for
such Annual Period (the "Budget Plan") and a five-year projection of operating
and capital budgets (the "Five-Year Projection"). Thirty (30) days prior to the
anticipated Commercial Operations Date as reasonably estimated by the Parties,
and thirty (30) days prior to the beginning of each Annual Period thereafter,
Seller shall prepare and submit to Buyer a proposed budget (the "Annual Budget")
for such Annual Period, which shall include a separate operating budget and
capital budget and shall set forth, in

                                       84
<PAGE>   90
reasonable detail: (i) anticipated operations, repairs, replacements and
additions necessary to maintain the Facility in good repair and condition
(pursuant to the maintenance and repair program recommended by equipment
vendors), as contemplated by this Agreement, (ii) routine maintenance and
overhaul schedules (including major maintenance), (iii) procurement (including
equipment acquisitions and spare parts and consumable inventories indicating a
breakdown of capital items and expense items), (iv) staffing, personnel and
labor activities (including unit rates for labor and holidays to be observed),
(v) administrative activities, and (vi) data regarding other work proposed to be
undertaken by Seller, together with an itemized estimate, of all costs to be
incurred in connection therewith. Seller shall obtain commercially reasonable
prices for all goods and services.

                  B. Review. Buyer shall review Seller's proposed Annual Budget
prior to the Commercial Operations Date or the beginning of the relevant Annual
Period, as the case may be, and may, by written request, indicate Buyer's
proposed reasonable changes, additions, deletions and modifications. Seller
shall use commercially reasonable efforts to respond to Buyer's requests. If no
such request is received within twenty (20) days after Buyer receives such
proposed Annual Budget, such Annual Budget shall be deemed approved. If Buyer
timely delivers such a request, Buyer and Seller will then meet and use their
best

                                       85
<PAGE>   91
efforts to agree upon a final Annual Budget prior to the commencement of such
Annual Period.

                  C. Failure to Adopt. If, by the first day of any Annual
Period, the Parties are unable to reach agreement concerning any portion of the
Annual Budget for such Annual Period, the Annual Budget proposed by Seller shall
be in effect for such Annual Period. Those portions of such Annual Budget that
are in dispute shall be resolved in accordance with the dispute resolution
procedures set forth in Article 14 of this Agreement, and the losing Party with
respect to any such arbitration shall pay all reasonable costs of the winning
Party associated therewith, including interest at the Interest Rate on any
overpayment by Buyer and reasonable attorneys' and arbitration fees.

                  D.        Effectiveness.

                            (i)  The Annual Budget shall remain in effect
throughout the applicable Annual Period, subject to updates prepared by Seller
as necessary and such other updating, revision and amendment as may be proposed
by either Party and consented to in writing by the other Party.

                            (ii)  The final Annual Budget shall be used to
calculate the Fixed O&M Component.  Actual Fixed O&M expense for

                                       86
<PAGE>   92
each Annual Period shall be compared to the Fixed O&M Component billed and paid
by Buyer during such period within ninety (90) days following the conclusion of
each Annual Period, and Seller shall bill or credit Buyer, as the case may be,
and Buyer shall pay Seller, if applicable, for any difference including interest
(to either Buyer or Seller) at the Interest Rate from the date any such
difference in Fixed O&M Component charges would have been due or were paid
during the previous Annual Period. If disagreement arises between the Parties as
a result of such reconciliation of budgeted and actual Fixed O&M Component costs
and the Parties cannot resolve such dispute within thirty (30) days of receipt
by Seller of notice regarding such dispute from Buyer, the Parties shall resolve
such dispute in accordance with the dispute resolution procedures set forth in
Article 14 of this Agreement.

                  E.        General Limitation.  Unless contained in the
Annual Budget currently in effect, or otherwise approved in writing by Buyer,
which approvals shall not be unreasonably withheld, Seller shall not (and shall
not permit any of its agents or representatives to) take or agree to take any
actions that are not consistent with the Annual Budget plan and would have the
effect of increasing Buyer's responsibility for annual Fixed O&M Component costs
by more than two hundred fifty thousand dollars ($250,000) in the aggregate in
any Annual Period.

                                       87
<PAGE>   93
         6.3      Purchases of Fuel; Use of Distillate.

                  A. Right to Purchase. Seller shall purchase Fuel for the
Facility of a specification necessary for the efficient operation of the
Facility in compliance with any certification, approval or permit issued by any
Governmental Authority and any applicable environmental and other regulatory
standards from time to time and on commercially reasonable terms free and clear
of any liens and encumbrances. Seller shall not incur any contractual
arrangement or other binding obligations for the purchase of Fuel for the
Facility having a term greater than six (6) Months without Buyer's prior
approval which approval shall not be unreasonably withheld. On not less than
thirty (30) days notice to Seller prior to the beginning of any Month, Buyer may
purchase and Seller shall repurchase from Buyer natural gas (including
transportation and related services) as Fuel, for the Facility in order to
control the Cost of Fuel. Such purchases of natural gas shall be for a duration
of at least one (1) Month and shall be purchased by Buyer for its own account
and risk and not as agent for Seller. Buyer shall deliver any natural gas for
the Facility free and clear of any liens and encumbrances. Buyer may purchase
natural gas from an Affiliate of Buyer, provided that (i) such purchase is on
commercially reasonable terms and conditions that are at least as favorable as
would be obtainable

                                       88
<PAGE>   94
in an "arm's length" transaction and (ii) Buyer notifies Seller of such purchase
as soon as reasonably practicable. Buyer may not exercise this option if it
would cause Seller to breach any then existing contractual or other binding
obligations for the purchase or delivery of Fuel. If Buyer exercises this
option, Buyer shall reimburse Seller for any costs incurred by Seller in
terminating, completing or rearranging any existing contracts or other binding
obligations of Seller for the purchase or delivery of Fuel. The price paid by
Seller to Buyer for natural gas shall be Buyer's Cost of Fuel for natural gas.

                  B. Distillate. It is Seller's intention to install a
distillate day tank with usable storage capacity sufficient for twenty-four (24)
hours of base load operation. Upon and pursuant to Seller's request, within the
actual number of hours of usable storage capability, at base load operation, of
the distillate day tank as has actually been constructed plus such number of
hours of notice of an interruption of natural gas deliveries as may have been
provided to Seller by a Natural Gas Pipeline Company, Buyer shall furnish
distillate at the Distillate Interconnection Point in place of natural gas as
Fuel for use by the Facility. Buyer shall deliver any distillate for the
Facility free and clear of any liens and encumbrances. The price paid by Seller
for distillate purchased from Buyer pursuant to this Section 6.3 shall be the
weighted average of the daily mean wholesale price

                                       89
<PAGE>   95
for (i) "LS Jet" kerosene and (ii) "LS Diesel" kerosene, for deliveries in barge
load quantities in New York Harbor, as published by Standard & Poor's Platt's in
Platt's Oilgram Price Report plus transportation and related services (if
actually incurred) based on the actual blend of distillate delivered. If the
publication of prices for "LS Jet" kerosene or "LS Diesel" kerosene or both in
Platt's Oilgram Price Report are discontinued or reconstituted in such a manner
as to render them unusable for the purposes intended by the Parties, Buyer and
Seller agree to substitute a publication of petroleum prices commonly accepted
in the petroleum industry that most closely reflects the wholesale prices for
barge load quantities in New York Harbor of petroleum products comparable to
distillate conforming to the specifications contained in this Section 6.3 and
attached hereto as Exhibit L.

                  C.        Specifications.  Any natural gas or distillate
provided by Buyer shall conform to the specifications attached hereto as Exhibit
L and, in the case of natural gas, with the specifications of the applicable
Natural Gas Pipeline Company transporting such natural gas; provided that such
Fuel shall be of a specification necessary for the efficient operation of the
Facility in compliance with any certification, approval or permit issued by any
Governmental Authority and any environmental and other regulatory standards
applicable from time to time. Buyer

                                       90
<PAGE>   96
shall be responsible for any damages to Seller that result from any failure to
so supply Fuel for the Facility. Buyer shall indemnify Seller for any such
damages and for any additional costs incurred by Seller on account of Buyer's
non-compliance with this Section 6.3, including costs incurred by Seller for
back-up capacity and energy, as the result of the failure of Buyer or Buyer's
agents or vendors to deliver such purchased Fuel or distillate to the Facility
and, if the Facility does not operate because of such failure, the Facility
shall be deemed available for purposes of this Agreement.

         6.4      Optional Electricity Purchases from a Third Party.

                  A. Except as provided in this Section 6.4 and in Section 6.5,
Buyer shall not purchase Buyer's Requirements from Third Parties when
Electricity from the Facility is available.

                  B. In the event that Seller or Buyer becomes aware that the
costs of obtaining Electricity for Buyer's Requirements for a period of not less
than one (1) Month from a Third Party would be less than the Fuel Component and
Variable O&M Component that Buyer would be required to pay to Seller hereunder
for such Electricity if it had been generated by the Facility and taken by Buyer
(regardless of the Nominated Load) up to the Net Capability, the Parties shall
cooperate in good faith to

                                       91
<PAGE>   97
determine whether it would be in Buyer's best interest to purchase Buyer's
Requirements for a period of not less than one (1) Month from a Third Party. In
evaluating whether to operate the Facility to supply Buyer's Requirements, the
Parties shall consider whether a decision not to operate the Facility would
materially adversely affect Seller's ability to perform any then existing
contractual or other binding obligations related to the Facility or would cause
Seller to breach any such then existing contractual or other binding obligations
related to the Facility, and the costs necessary to reimburse Seller for any
costs that would be incurred by Seller in terminating, completing or rearranging
such existing contracts or other binding obligations related to the Facility;
provided, however, Buyer shall have no obligation to reimburse Seller for any
lost profits or foregone economic benefits from sales of Excess Capacity or
Excess Energy or other products or services derived from the Facility to Third
Parties that Seller would have received had the Facility continued to operate.

                  C. In the event that, as determined pursuant to Section 6.4B,
all of Buyer's Requirements for a period of not less than one (1) Month are
purchased by Seller from a Third Party (either as agent for Buyer or in such
other manner as would not cause Seller to be regulated as a reseller of
Electricity), except pursuant to an agreement subject to the terms described in

                                       92
<PAGE>   98
Section 6.5A, in any Month Buyer shall pay Seller (i) the costs of such
Electricity from a Third Party delivered to Buyer in such Month plus (ii) all
costs incurred by Seller in terminating, completing or rearranging any then
existing contractual or other binding obligations related to the Facility (which
costs Seller shall use reasonable efforts to mitigate) and for all costs
relating to the demobilizing, shutdown, mothballing and protection of the
Facility; provided, however, Buyer shall have no obligation to reimburse Seller
for any lost profits or foregone economic benefits from sales of Excess Capacity
or Excess Energy or other products or services derived from the Facility to
Third Parties that Seller would have received if the Facility had continued to
operate. In addition, Buyer shall pay Seller, as invoiced by Seller, the greater
of:

         (x) twenty percent (20%) of the difference between

                  (1) the ESA Price less
                  (2) the Third Party Price;
         or

         (y) fifty percent (50%) of the difference between

                  (1) the Industry Price less
                  (2) the Third Party Price,

             but not less than zero.

                  D.        For purposes of this Section 6.4: the "ESA Price"
means the amount that Buyer would be required to pay to Seller

                                       93
<PAGE>   99
under this Agreement for such Electricity if it had been generated by the
Facility; the "Third Party Price" means the cost of such Electricity from a
Third Party delivered to Buyer plus all other costs that Buyer is obligated to
continue to pay Seller pursuant to this Agreement, all costs incurred by Seller
and reimbursed by Buyer in terminating, completing or rearranging any then
existing contractual or other binding obligations related to the Facility, and
all costs relating to the demobilizing, shutdown, mothballing and protection of
the Facility; and the "Industry Price" means the available market price for
similar quantities of Electricity, delivered at the same transmission voltage
and degree of reliability (including the cost of reserving an equivalent
quantity of capacity).

                  E.        At any time when Buyer purchases Electricity from
Third Parties pursuant to this Section 6.4, the Facility shall be
deemed available.

         6.5      Optional Long Term Electricity Purchases from Third
Parties.
                  A. Upon not less than thirty (30) days notice to Seller, Buyer
may execute a written contract with any Third Party (including any party
producing electricity on the Bayway Property) for Buyer's Requirements that is
for a term of at least three (3) years, and pursuant to which neither party
either

                                       94
<PAGE>   100
acting alone or acting together has a right to terminate (other than for breach
or force majeure) within such period, and does not result from a proposal
brought to Buyer by Seller. In such event, upon not less than thirty (30) days
notice, Buyer shall have the right to direct Seller not to operate the Facility
to supply Buyer's Requirements for the term of such contract. In such event:

                            (i) Buyer shall have no right during the term of
                  such contract to request or require Seller to operate the
                  Facility to deliver Buyer's Requirements except as provided in
                  (ii) below;
                            (ii) Upon Buyer's request, and at Buyer's cost,
                  Seller shall continue to maintain and staff the Facility in
                  such a manner as to assist Buyer to rely upon such portion of
                  the capacity of the Facility as may be necessary for Buyer's
                  Requirements;
                            (iii) Seller shall use reasonable commercial efforts
                  to mitigate so much of the Fixed O&M Component, as well as any
                  other costs reimbursed to Seller by Buyer, as is consistent
                  with Prudent Electric Industry Practice, provided that Buyer
                  shall continue to pay the Back-up Demand Charge Component, if
                  any, and the Fixed O&M Component and other costs, as
                  mitigated;

                                       95
<PAGE>   101
                            (iv) Buyer shall continue to pay the Fixed
                  Facility Charge Component;
                            (v) Buyer shall reimburse Seller for any costs
                  incurred by Seller in terminating, completing or rearranging
                  any existing contracts or other binding obligations related to
                  the Facility, and for all costs relating to the demobilizing,
                  shutdown, mothballing and protection of the Facility;
                  provided, however, Buyer shall have no obligation to reimburse
                  Seller for any lost profits or foregone economic benefits from
                  sales of Excess Capacity or Excess Energy or other products or
                  services derived from the Facility to Third Parties that
                  Seller would have received if the Facility had continued to
                  operate; and
                            (vi) For the duration of the term of the contract
                  with the Third Party, Seller shall not have any obligations
                  for the supply of back-up Electricity to Buyer and the
                  Facility shall be deemed available.

                  B. Whenever Buyer shall give notice of its intent to purchase
Buyer's Requirements from a Third Party pursuant to Section 6.5A above, the
Parties shall consult with each other to determine whether it would be
economical to continue to operate the Facility for the sale of Excess Capacity
or Excess Energy or both to Third Parties. If the Parties agree that the
Facility

                                       96
<PAGE>   102
should be operated to sell Excess Capacity or Excess Energy or both to Third
Parties, all revenues arising therefrom and all costs that would not otherwise
be chargeable to Buyer and any losses shall be shared equally among the Parties
for the remainder of the term of Buyer's purchases of Buyer's Requirements from
such Third Party. If, after such consultation, only one of the Parties desires
to operate the Facility to make sales of Excess Capacity or Excess Energy or
both for the remainder of the term of Buyer's contract to purchase Buyer's
Requirements from a Third Party, Seller shall operate the Facility to make such
sales of Excess Capacity or Excess Energy or both for the account of such Party
and all the revenues and all costs that would not otherwise be chargeable to
such Party with respect to such sales and any and all losses arising therefrom
shall be the sole responsibility of and shall be paid by such Party.

         6.6      Adjustments to Fixed Facility Charge Component.

                  A. Not later than eighty (80) days after the Effective Date,
the "Cost of Debt" in the category "Control Variables" set forth in the Pro
Forma Analysis attached hereto as Exhibit D shall be increased or decreased, as
the case may be, for the amount, if any, by which the average of the interest
rate on the ten (10) year U.S. Treasury Note for the first five (5)

                                       97
<PAGE>   103
Business Days after the sixty-fifth (65th) day after the Effective Date was
either greater or less than 6.65 percent. The Fixed Facility Charge Component
shall thereupon be increased or decreased as a result thereof in order that the
"IRR" and "Coverage" in the category "Control Variables" set forth in the Pro
Forma Analysis attached hereto as Exhibit D shall remain the same. Seller shall
promptly notify Buyer of any such recalculation of the Fixed Facility Charge
Component and Exhibit D shall be restated to reflect such recalculation.

                  B. Seller shall furnish to Buyer in writing, on the date on
which Buyer's obligation to pay the Fixed Charges commences, documentation
setting forth in reasonable detail the actual amounts of all Facility "Hard
Costs" and "Project Soft Costs," as set forth in Exhibit D, and all Qualified
Capital Cost Adjustments, and the Fixed Facility Charge Component shall
thereupon be recalculated to reflect all Qualified Capital Cost Adjustments and
shall be increased or decreased as a result thereof. In addition, if at any time
any additional Qualified Capital Cost Adjustments have been identified and
determined, a subsequent recalculation in the Fixed Facility Charge Component
shall be made and Seller shall furnish to Buyer in writing additional
documentation setting forth in reasonable detail the amount of such adjustment.

                                       98
<PAGE>   104
                  C. If the date on which Buyer commences payment of the Fixed
Charges pursuant to 4.2D(i) is later than December 1, 2001, the Fixed Facility
Charge Component shall be recalculated based on a period commencing on such date
and ending on November 30, 2017 and Buyer shall pay Seller each Month an amount
calculated to recover the Fixed Facility Charge Component over the number of
Months in such period and taking into account any increase in "Interest During
Construction."

                  D. Any adjustments to the Fixed Facility Charge Component
pursuant to Sections 6.6A, 6.6B and 6.6C shall be determined using the Pro Forma
Analysis set forth in Exhibit D. Buyer and Seller agree that the Fixed Facility
Charge Component shall not be adjusted for any other reason, including if the
actual "IRR" exceeds or is less than the "IRR" stated in the Pro Forma Analysis
set forth in Exhibit D, whether due to any error, inaccuracy, misstatement,
omission or variance of any factor in the Pro Forma Analysis set forth in
Exhibit D, or otherwise.

                  E. Any increases in or reductions to the Fixed Facility Charge
Component pursuant to this Section 6.6 shall be effective retroactive to the
date on which Buyer's obligation to pay the Fixed Charges begins together with
interest accrued thereon from the date such costs are paid by Seller, which
interest shall accrue at the Prime Rate, and which interest shall

                                       99
<PAGE>   105
apply only to the extent such interest is not included in the adjustment made
pursuant to Section 6.6D.

                  F. Within thirty (30) days after any adjustments in the Fixed
Facility Charge Component pursuant to this Section 6.6, Seller shall prepare and
deliver to Buyer an invoice setting forth any charges or credits due as a result
of the adjustments made pursuant to this Section 6.6.

         6.7      Insurance.

                  A. Seller shall maintain, at Buyer's expense, liability and
property damage insurance coverage for the Facility (including boiler and
machinery coverage) equivalent to that maintained for Cogen's electric
generation facilities, so long as such coverage is from internationally
recognized insurance markets (the "Required Insurance").

                  B. At least thirty (30) days prior to the expiration of the
policies of Required Insurance to be maintained by Seller hereunder, Seller
agrees to provide Buyer with preliminary indications of its insurance proposal
for the renewal term. Buyer may accept Seller's proposal or alternatively shall
have the right to procure such coverage at Buyer's sole cost and expense.

                                      100
<PAGE>   106
                  C. If Buyer elects to procure Required Insurance coverage for
the renewal term, Buyer shall so inform Seller in writing not less than
twenty-one (21) days prior to the expiration of the existing policies, and the
parties shall obtain endorsements to their respective policies of insurance to
specify (i) the agreement of all insurers to the appointment of a common loss
adjustment firm in the event of any claims and (ii) the agreement of all
insurers to abide by such common adjustment firms's recommendation for sharing
of claims costs and expenses.

                  D. Any Required Insurance procured by Buyer pursuant to
Section 6.7C shall contain coverage terms and conditions substantially similar
to those of Seller's policies of insurance for Cogen's other electic generation
facilities, and:

                            (i)          such insurance policy shall name Seller
                                         and any Lender as the named insured and
                                         loss payee;
                            (ii)         such insurance policy shall be issued
                                         by an insurance carrier having a rating
                                         issued by A.M. Best Company equal to or
                                         better than that of the insurance
                                         carrier providing equivalent coverage
                                         for Cogen's other electric generation
                                         facilities;

                                      101
<PAGE>   107
                            (iii)        the purchase of such insurance policy
                                         by Buyer shall have no adverse effect
                                         on the cost of insurance maintained by
                                         Cogen for Cogen's other electric
                                         generation facilities;
                            (iv)         Buyer shall promptly pay Seller for any
                                         and all costs incurred by Seller in
                                         terminating, completing or rearranging
                                         Seller's then existing policy for
                                         Required Insurance;
                            (v)          Buyer shall immediately provide Seller
                                         with a copy of such insurance policy;
                            (vi)         such insurance policy shall provide
                                         that it may not be canceled or
                                         terminated without providing no less
                                         than thirty (30) days prior notice to
                                         all named insureds and loss payees; and
                            (vii)        Not less than thirty (30) days prior to
                                         the expiration of such insurance
                                         policy, Buyer shall notify Seller as
                                         to whether or not Buyer intends to
                                         renew such insurance policy and, upon
                                         notice that Buyer does not intend to
                                         renew such insurance policy (or in the
                                         event that Buyer fails to provide
                                         Seller with such notice), Seller

                                      102
<PAGE>   108
                                         shall proceed to purchase the Required
                                         Insurance as provided in Section 6.7A.

                  E. Seller shall propose additional insurance coverage
(including business interruption coverage) as Seller believes appropriately
addresses the commercial risks of this Agreement (including reasonable
deductibles and other expenses) for Buyer's review and acceptance. Seller shall
maintain, at Buyer's expense, any such additional insurance coverage accepted by
Buyer in writing. Seller shall make available to Buyer for inspection a copy of
such insurance policy or policies.

                  F.        If requested by Buyer, Seller shall name Buyer as
an additional insured on any of such policies, to the extent
Buyer has an insurable interest covered by same.

ARTICLE 7.    ALLOCATION OF NET REVENUES OR LOSSES AND BACK-UP ENERGY COSTS

         7.1      Defined Terms. For purposes of this Article 7, the
following terms shall have the following meanings:

         "Bayway Refinery Outage" means an event in any Month whenever the
average load for the Bayway Refinery for that Month is more than twenty (20) MW
less than the average Monthly load for the Bayway Refinery for the last prior
Month during which its

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operations were unaffected by an outage (the "Base Month"), either

                  (i) due to an unscheduled outage of all or a portion of
         the facilities comprising the Bayway Refinery or
                  (ii) due to a scheduled outage (which shall not include a
         permanent shutdown) of all or a portion of the facilities comprising
         the Bayway Refinery where Buyer (a) has provided Seller with not less
         than six (6) Months notice in advance of any such scheduled outage or
         such lesser notice where either (1) Seller is able to coordinate its
         outages with Buyer's outage, or (2) Seller has no scheduled outage, and
         (b) such scheduled outage does not occur between June 1 and September
         30 of any Annual Period (a "Noticed Scheduled Outage").

A Bayway Refinery Outage shall be deemed to have ended in any Month whenever the
average load for that Month is (or would have been but for the occurrence of a
scheduled outage which is not a Noticed Scheduled Outage) within twenty (20) MW
of the actual average load for the Base Month. Buyer shall provide Seller with
notice at the commencement and conclusion of any Bayway Refinery Outage.

         "Eight Percent Component" means, for any Reconciliation
Period, the product of (a) the sum of all Net Back-up Energy

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Costs incurred during such Reconciliation Period, and (b) the quotient of (i)
eight percent divided by (ii) one hundred percent (100%) minus the Unit
Availability (provided that such quotient shall never be greater than 1.0).

         "Infineum Net Revenues or Losses" means, for any Month, the revenues or
losses attributable to sales of Excess Capacity or Excess Energy or other
products or services derived from the Facility (except Steam) to Infineum, net
of any expenses incurred in making such sales, including:

         (i)        Fuel Costs Chargeable to Infineum Sales,
         (ii)       Fixed Costs Chargeable to Infineum Sales,
         (iii)      Variable O&M Costs Chargeable to Infineum Sales,
         (iv)       Back-up Demand Costs Chargeable to Infineum Sales,
         (v)        Back-up Energy Costs Chargeable to Infineum Sales,
         (vi)       applicable Taxes, and
         (vii)      all other costs and expenses reasonably attributable
                    to such sales.

         "Net Back-up Energy Cost" means, for each Month in which back-up energy
is delivered to Buyer, the difference between:

         (i)      the total charge paid by Seller for the quantity of back-up
                  energy (in kWh) delivered during such Month, less the cost of
                  any back-up energy for which Buyer is

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                  responsible to pay pursuant to Section 5.7B(i)-(vi),
                  and
         (ii)     the Back-up Energy Component for such Month,
but not less than zero.

         "Net Revenues or Losses" means, for any Month, the revenues
attributable to sales of Excess Capacity or Excess Energy or other products or
services derived from the Facility (except Steam) to Third Parties (not
including any Infineum Net Revenues or Losses or Power Augmentation Revenues),
net of any expenses incurred in making such sales, including:

         (i)   Fuel Costs Chargeable to Third Party Sales,
         (ii)  Variable O&M Costs Chargeable to Third Party Sales,
         (iii) applicable Taxes, and
         (iv)  all other costs and expenses reasonably attributable to such
               sales.

         "Power Augmentation Revenues" means, for any Month, the sum of the
revenues attributable to sales of Excess Capacity or Excess Energy or other
products or services derived from the Facility to Third Parties as a result of
Power Augmentation for each hour in such Month, to the extent such revenues
exceed in each such hour the expenses incurred in making such sales, including:

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         (i)      Fuel Costs Chargeable to Power Augmentation,
         (ii)     Variable O&M Costs Chargeable to Power Augmentation;
         (iii)    the Power Augmentation Cost of Steam,
         (iv)     the cost of demineralized water used in Power
                  Augmentation (calculated based upon steam delivered for
                  Power Augmentation),
         (v)      applicable Taxes, and
         (vi)     all other costs and expenses reasonably attributable to
                  such sales.

Any losses in any hour as a result of Power Augmentation shall be borne by
Seller.

         "Reconciliation Period" means either (i) a period comprising the prior
six (6) Commercial Operations Years (or such lesser number of Commercial
Operations Years if six (6) Commercial Operations Years have not yet occurred)
or (ii) following the Commercial Operations Year ending on April 30, 2017, a
period comprising the prior seventy-two (72) Months.

         "Unit Availability" means one hundred percent (100%) multiplied by the
quotient of (i) Available Hours divided by (ii) Period Hours, where

                  Available Hours              means the difference between
                                               (i) the Period Hours and
                                               (ii) the sum of Forced Outage
                                               Hours and Scheduled Outage
                                               Hours during any period.
                                               Available Hours include all

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                                               hours when the Facility is deemed
                                               available pursuant to this
                                               Agreement that are not Forced
                                               Outage Hours or Scheduled Outage
                                               Hours (other than Forced Outage
                                               Hours caused by Buyer).

                  Forced Outage Hours          means the number of hours in
                                               any period that the Facility
                                               is not available as a result
                                               of a Facility failure or as a
                                               result of being removed from
                                               service for unplanned
                                               maintenance.

                  Scheduled Outage Hours       means the number of hours in
                                               any period that the Facility
                                               is (i) not available as a
                                               result of being removed from
                                               service for planned
                                               maintenance or, (ii) if the
                                               Facility was not operating and
                                               is deemed available pursuant
                                               to this Agreement, for planned
                                               maintenance scheduled pursuant
                                               to Section 5.7D.

                  Period                       Hours means the
                                               number of hours in
                                               the period
                                               specified below.

For purposes of this Article 7, Unit Availability shall be computed at the end
of each Commercial Operations Year on the basis of the applicable Reconciliation
Period.

         7.2      Allocation of Net Revenues or Losses.

                  A.        Except as otherwise provided for in
Section 5.2B(i), Section 5.10A(iii) or Section 5.10B, each Month, the Net
Revenues or Losses shall be allocated in the following order:

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                            (i) First, Seller shall be allocated one hundred
                  percent (100%) of all Net Revenues or Losses until Seller has
                  recovered all unreimbursed costs for Environmental Remediation
                  and Relocation Costs; then

                            (ii) Second, in the event a Bayway Refinery Outage
                  has occurred or continues during such Month, Buyer shall be
                  allocated one hundred percent (100%) of all Net Revenues or
                  Losses received by Seller from the sale of Excess Capacity or
                  Excess Energy directly resulting from such Bayway Refinery
                  Outage, up to the amount of such Net Revenues or Losses
                  attributable to a quantity of Electricity, in kWh, equal to
                  the difference between (x) Buyer's actual average load, in
                  kWh, during the Base Month and (y) Buyer's actual average
                  load, in kWh, during such Month, until Buyer has been credited
                  with an amount sufficient to reduce Buyer's average cost per
                  kWh of the Fixed Charges plus the Back-up Demand Charge
                  Component to the average cost per kWh of such charges during
                  the Base Month; then

                            (iii) Third, each Month Seller shall be allocated
                  twenty percent (20%) and Buyer shall be allocated eighty
                  percent (80%) of all Net Revenues or Losses until Buyer has
                  been credited with an amount equal to

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                  the increase in the Fixed Facility Charge Component for that
                  Month arising out of an extension or delay set forth in
                  Section 4.2C(i).

                            (iv) Fourth, Seller shall be allocated twenty
                  percent (20%) and Buyer shall be allocated eighty percent
                  (80%) of all Net Revenues or Losses until Buyer has been
                  credited with an amount equal to the Heat Rate Credit; then

                            (v) Fifth, any remaining Net Revenues or Losses
                  shall be allocated for the following events, in the order in
                  which such events occurred, beginning with the earliest event:

                                    (1) In the event the Facility continues to
                            operate and sell Electricity after a closure of the
                            Bayway Refinery pursuant to Section 5.8, Seller
                            shall be allocated twenty percent (20%) and Buyer
                            shall be allocated eighty percent (80%) of all Net
                            Revenues or Losses arising from the sale of
                            Electricity to Third Parties in an amount up to the
                            Fixed Charges, and any Back-up Demand Charge
                            Component (to the extent remaining after any
                            mitigation of such component by Seller);

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<PAGE>   116
                                    (2) In the event Buyer has paid for
                            replacements, improvements or additions required
                            solely due to a Change in Law pursuant to Section
                            5.10A(i), Seller shall be allocated twenty percent
                            (20%) and Buyer shall be allocated eighty percent
                            (80%) of Net Revenues or Losses until such time that
                            Buyer has recovered the amount of such payments
                            (without interest);

                  then

                            (vi) All Net Revenues or Losses remaining after any
                  such allocations pursuant to Section 7.2A(i), 7.2A(ii),
                  7.2A(iii), 7.2A(iv) or 7.2A(v) shall be shared equally by the
                  Parties.

                            (vii) To the extent in any Month aggregate Net
                  Revenues or Losses are negative, such aggregate Net Revenues
                  or Losses shall be an additional cost to be shared equally by
                  Buyer and Seller.

         7.3 Minimum Allocation to Seller. Notwithstanding any allocations made
pursuant to Section 7.2, except with respect to the allocation made pursuant to
Section 7.2A(ii), in no event shall Seller receive less than twenty percent
(20%) of the sum in any Month of all Net Revenues or Losses.

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         7.4 Allocation of Infineum Net Revenues or Losses and Power
Augmentation Revenues. In each Month, all Infineum Net Revenues or Losses and
all Power Augmentation Revenues shall be shared equally among Buyer and Seller.

         7.5 Distribution of Buyer's Share of Net Revenues or Losses, Infineum
Net Revenues or Losses and Power Augmentation Revenues. Buyer's share of any
allocation of Net Revenues or Losses, Infineum Net Revenues or Losses and Power
Augmentation Revenues shall be distributed to Buyer as a credit to the amounts
due on Seller's invoice for such Month, or in the event Buyer does not owe
Seller an equivalent or greater amount under this Agreement, as a payment to
Buyer for such Month.

         7.6      Allocation and Reconciliation of Net Back-up Energy
Costs.

         A. Not later than the first Month after the end of a Commercial
Operations Year, Buyer's portion of any Net Back-up Energy Costs during the
applicable Reconciliation Period shall be determined and reconciled to the
amounts that Buyer has paid Seller during such Reconciliation Period as the
Eight Percent Proxy Component, such that Buyer shall pay the Eight Percent
Component for such Reconciliation Period and Seller shall pay for all other Net
Back-up Energy Costs during such Reconciliation

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Period. An example of such reconciliation, using a pro forma estimate of the
performance of the Facility, is attached hereto as Exhibit M.

                  B. Seller shall make an appropriate adjustment on its invoice
to Buyer for the first Month after the end of each Commercial Operation Year
reflecting either a credit to the amounts due on Seller's invoice for such
Month, or an additional charge (as the case may be) sufficient to reflect the
reconciliation and allocation pursuant to Section 7.6A, without interest. In the
event Buyer does not owe Seller an equivalent or greater amount under this
Agreement in such Month, Seller shall make a payment to Buyer.

ARTICLE 8.                          METERING

         8.1      Measurement Location.  The Metering Points for
Electricity shall be as set forth in Exhibit A.

         8.2      Electricity Measuring Equipment and Stations.

                  A.        Seller.  Seller shall (i) install, own, operate
and maintain Electricity measuring and metering stations and all measuring
equipment sufficient to permit an accurate determination of the quantity,
quality and time of day of

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delivery of Electricity to Buyer; and (ii) exercise reasonable care in the
maintenance and operation of metering equipment so as to assure an accurate
determination of the quantity and quality of Electricity delivered to Buyer.
Seller's metering equipment shall be used to determine the billing hereunder and
shall be sealed. Such seals shall be broken only by Seller, in the presence of a
representative of Buyer, or by an independent party unrelated, directly or
indirectly, to either Party and mutually agreeable to the Parties (the
"Independent Party") and only when the metering equipment is to be inspected,
tested or adjusted as described in Section 8.4. Buyer shall provide Seller or
the Independent Party, as the case may be, access to the metering equipment at
all reasonable times for the purposes of inspecting, testing and adjusting the
same, provided that such access shall not interfere with Buyer's normal business
operations. In the event that Seller's metering equipment fails to register
during any period of time, and except as provided in Section 8.5, Seller shall
determine the Electricity quantities from Buyer's metering equipment as set
forth in Section 8.2B or from production records if no such metering equipment
is available. If an improved method or technique is developed for the
measurement of Electricity, such new method or technique shall be substituted at
Buyer's expense when in the reasonable opinion of Buyer, employing such new
method or technique is more reliable and accurate.

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                  B. Buyer. Buyer may own, operate and maintain metering
equipment at its sole expense, provided that such metering equipment shall be
operated and maintained in a manner that does not interfere with the Facility or
Seller's Electricity metering equipment. Should Buyer so elect and should any
metering equipment installed by Seller fail to register during any period of
time, Buyer's metering equipment shall be used to determine the amount of
Electricity delivered to Buyer during such period in lieu of Seller's estimates
thereof to the extent Buyer's meters have been tested and maintained in
accordance with Section 8.4. Buyer shall provide access for Seller and, if
applicable, the Independent Party, to the metering equipment at all reasonable
times for the purposes of witnessing, testing and adjusting the same, provided
that such access shall not interfere with Buyer's normal business operations.

                  C.        Metering Infineum's Use of Electricity.

                            (i)            Not later than 5:00 p.m. on the first
Business Day following the conclusion of any Month during the Term, Buyer shall
in good faith provide Seller with Infineum's consumption of Electricity during
the immediately preceding Month ("Infineum's Load"). Buyer shall use its
reasonable commercial efforts to ensure an accurate determination of Infineum's
Load. Buyer's existing meters shall be used for all quantity

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measurements with respect to Infineum's Load for purposes of this Agreement.
Seller shall have the right to witness and audit any measuring of or testing
performed on Buyer's meters used to determine Infineum's Load.

                            (ii) Buyer shall indemnify and hold Seller
harmless from any claim that Infineum has or may make or have in the future
against Seller to the extent that such claim arises from a dispute as to the
accurate determination of the quantity of Electricity, back-up capacity or
back-up energy delivered or provided to Buyer or Infineum, unless otherwise
specifically provided for in an agreement between Seller and Infineum.

         8.3 Fuel Measuring Equipment and Stations. Seller shall (i) install,
own, operate and maintain Fuel measuring and metering stations and all measuring
equipment sufficient to permit an accurate determination of the Fuel Component;
and (ii) exercise reasonable care in the maintenance and operation of such
metering equipment so as to assure an accurate determination of the Fuel
Component, including a separate determination of the quantity of distillate used
by the Facility. Seller's metering equipment shall be used to determine the
billing hereunder and shall be sealed. Such seals shall be broken only by
Seller, in the presence of a representative of Buyer, or by an Independent Party
selected by Seller and Buyer and only when the metering

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equipment is to be inspected, tested or adjusted as described in Section 8.4.
Buyer shall provide Seller or the Independent Party, as the case may be, access
to the metering equipment at all reasonable times for the purposes of
inspecting, testing and adjusting the same, provided that such access shall not
interfere with Buyer's normal business operations. In the event that Seller's
metering equipment fails to register during any period of time, and except as
provided in Section 8.5, Seller shall seek to determine the Fuel quantities from
the production records. Buyer may own, operate and maintain metering equipment
at its sole expense, provided that such metering equipment shall be operated and
maintained in a manner that does not interfere with the Facility or Seller's
Fuel metering equipment.

         8.4      Testing.

                  A. General. The accuracy of any metering equipment to be used
for purposes of measuring Electricity or Fuel shall be tested and verified at
least annually. If the Party not responsible for maintaining such metering
equipment requests a verification test to be made, such test shall be at such
Party's expense if the metering equipment proves to be accurate within a
tolerance of one percent (1%). If errors greater than such tolerances are
discovered, the test shall be at the expense of the Party responsible for
maintaining such metering equipment.

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                  B. Cooperation. If either Party notifies the other Party that
it desires a test of its own or of the other Party's metering equipment, the
Parties shall cooperate to secure a prompt verification of the accuracy of such
equipment.

                  C. Notice and Right to Witness. Each Party shall be given at
least five (5) days notice prior to the test of any metering equipment. Each
Party shall have the right to have a representative present at any time that any
metering equipment is to be tested; provided, however, that a Party's failure to
have a representative present at the test shall not affect the validity of the
test so long as the notice required under the preceding sentence shall have been
given.

         8.5 Corrections. If, upon testing, any metering equipment is found to
be in error by not more than one percent (1)% tolerance when reading the average
operating range over the past year, then previous recordings of such equipment
shall be considered accurate, but such equipment shall be promptly adjusted by
the Independent Party to record correctly. If, upon testing, any metering
equipment shall be found to be inaccurate by more than such tolerance, then such
equipment shall be promptly adjusted and retroactive billing adjustments for
such errors shall be made for (i) the actual period during which inaccurate
measurements were made, if that period can be

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reasonably determined; or (ii) if the period cannot be reasonably determined,
one-half (1/2) of the period from the date of the last previous test of the
metering equipment, but not to exceed six (6) Months.

         8.6      Maintenance and Records.

                  A. Maintenance. Each Party shall have the right to have a
representative present whenever the other Party or the Independent Party, as
applicable, cleans, changes, repairs, inspects, tests, calibrates, or adjusts
any metering equipment or any equipment used in checking measurements. Each
Party shall give not less than five (5) days notice to the other Party in
advance of taking any of such actions, unless providing such notice is not
feasible as a result of the need for immediate repairs in which case prompt
notice shall be given.

                  B. Records. The records from the test of any metering
equipment shall remain the property of the Party at whose expense the testing
occurred, but, upon request, each Party shall submit to the other its records
and charts (or, at its option, copies thereof), together with calculations
therefrom, for inspection and copying, subject to return within ten (10) days
after receipt thereof.

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ARTICLE 9.    INVOICES AND PAYMENT

         9.1 Billing. There shall be a single Monthly invoice. The Fixed Charges
and Back-up Demand Charge Component shall be paid in advance on the third (3rd)
Business Day of each Month during the Term. Seller shall render to Buyer (by
regular mail, facsimile or other acceptable means pursuant to Section 16.1) for
each Month during the Term, an invoice setting forth the total amount due Seller
for the Fixed Charges, Back-up Demand Charge Component, Fuel Component, Variable
O&M Component, Eight Percent Proxy Component, the Back-up Energy Component and
any other charges due Seller or credits due Buyer pursuant to this Agreement as
well as a summary of the allocation of any Net Revenues or Losses, Infineum Net
Revenues or Losses, Power Augmentation Revenues and back-up Electricity costs
and credits pursuant to Article 7, and for any other amounts due under this
Agreement. If Seller from time to time does not know the actual amount of the
Fuel Component, Back-up Energy Component, Variable O&M Component or any other
charge due for a particular Month when Seller prepares an invoice pursuant to
this Section 9.1, Seller may estimate such cost using all available data. To the
extent that an estimate is provided and used for purposes of determining the
Fuel Component, Variable O&M Component, Back-up Energy Component or any other
charge, Seller shall provide Buyer a statement of the actual amount of such
charge as soon as

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available to Seller, and Seller shall make the appropriate adjustment in the
following Month's invoice. A sample invoice is attached as Exhibit N.

         9.2 Payment. On or before fifteen (15) days after receipt of Seller's
invoice, or if such day is not a Business Day, the immediately following
Business Day, Buyer shall render by wire transfer the amount set forth on such
invoice to the payment address provided in Section 16.1. Overdue payments shall
accrue interest from and including the due date to, but excluding, the date of
payment at the Interest Rate. If Buyer in good faith disputes an invoice, Buyer
shall provide a written explanation of Buyer's good faith basis for the dispute
not later than thirty (30) days of the due date for amounts, and Buyer shall pay
the entire invoice no later than the due date. Notwithstanding the foregoing,
however, Buyer shall retain the right to dispute invoices after payment thereof
for a period of three (3) years after the date on which the invoice was paid. If
any amount disputed by Buyer is determined to be due to Buyer, it shall be paid
to Buyer by Seller within ten (10) days of such determination, along with
interest accrued at the Interest Rate from the date initial payment of such
disputed amount was received by Seller until the date paid to Buyer.

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         9.3 Annual Reconciliation of Steam Btu Credit and Related Calculations.
Not later than the first Month after the end of a Commercial Operations Year,
the Steam Btu Credit used in the calculation of the Steam Credit, Steam Fuel
Price Credit and thereby the Fuel Component each Month during such Commercial
Operations Year shall be recalculated taking into account the actual average
annual hourly steam purchases by Bayway from Cogen for such Commercial
Operations Year. Seller shall make an appropriate adjustment on its invoice to
Buyer for the first Month after the end of each Commercial Operations Year
reflecting either a credit to the amounts due on Seller's invoice for such
Month, or an additional charge (as the case may be) sufficient to reflect the
difference between (i) the sum of the amounts paid by Buyer for the Fuel
Component during the prior Commercial Operations Year and (ii) the Fuel
Component for the prior Commercial Operations Year recalculated (without
interest) to take into account the recalculation of the Steam Btu Credit as
contemplated above. In the event Buyer does not owe Seller an equivalent or
greater amount under this Agreement in such Month, Seller shall make a payment
to Buyer.

         9.4 Adjustments. Seller shall promptly prepare and deliver to Buyer an
invoice setting forth any adjustments for discrepancies in billing identified
through meter verifications pursuant to Article 8 or for any other reason that
would require

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immediate reimbursement of billed amounts to Buyer or additional payments by
Buyer to Seller hereunder, along with interest accrued at the Interest Rate from
the date such payments or reimbursements should have been paid in ordinary
course to Buyer or Seller, as the case may be.

         9.5 Audit Rights. For a period of three (3) years after the rendering
of any invoice furnished to Buyer pursuant to this Article 9, Buyer may obtain
reasonable access to the books, records, files and other data in the possession
of Seller of (i) the Facility (including matters relating to Sections 4.1 and
6.6) and (ii) the Existing Plant (whether kept by Seller or its Affiliates) and
(iii) the Additional Generation Facility, to the extent necessary to determine,
verify, analyze or confirm the reasonableness and necessity of the amounts
charged and credited pursuant to this Agreement, or to compare the costs
incurred by the Existing Plant or the Additional Generation Facility to those
incurred by the Facility. Seller shall make reasonable efforts to include in all
cost-plus or cost pass-through type agreements having an aggregate value in
excess of one hundred thousand ($100,000) between Seller and Seller's
contractors or subcontractors a provision providing for Buyer's right to audit
such contractors or subcontractors with respect to their charges to Seller that
are paid by Buyer.

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         9.6 Books and Records. Each Party shall maintain complete and accurate
records concerning the amounts charged and credited pursuant to this Agreement
for a period of three (3) years from the invoices therefrom and shall make such
records available to the other Party in accordance with the provisions of
Section 9.5.

ARTICLE 10.   TAXES

         Included in the payments by Buyer pursuant to Section 6.1, Buyer shall
pay Seller for all Taxes arising with respect to the Facility, Fuel and the sale
of Electricity to Buyer pursuant to this Agreement. Buyer shall indemnify,
defend and hold harmless Seller from any Claims for such Taxes. Each Party shall
use reasonable efforts to administer this Agreement and implement the provisions
in accordance with the intent to minimize Taxes, and shall use reasonable
efforts to obtain and cooperate with the other Party in obtaining any exemption
from or reduction of any Tax.

ARTICLE 11.   DEFAULT AND REMEDIES

         11.1     Seller Default.  The occurrence of any of the following
events shall constitute a "Default" by Seller (it being understood by the
Parties that a Default by Seller hereunder shall not constitute a default under
the Existing Ground Lease

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<PAGE>   130
Agreement or the Steam Agreement unless the facts constituting a Default
hereunder separately constitute a default thereunder):

                  A. Seller fails to pay any amounts due to Buyer hereunder and
such breach continues for a period of fifteen (15) days after notice thereof
shall have been received by Seller from Buyer.

                  B. Seller fails to materially perform any obligation to Buyer,
or breaches a material term or condition of this Agreement, including a breach
of its representations and warranties or covenants hereunder, and such breach
continues for a period of sixty (60) days after notice thereof has been received
by Seller from Buyer; provided that if such breach is not reasonably capable of
being cured within such sixty (60) day period and provided that Seller
reasonably commences to cure such breach within such sixty (60) day period, such
sixty (60) day period shall be extended for such additional period, but in no
event longer than eighteen (18) Months, as is reasonably necessary to remedy
such failure if and for so long as Seller is diligently continuing efforts to
pursue a cure for such breach.

                  C. Seller or Seller's Guarantor, if any: (i) makes an
assignment or any general arrangement for the benefit of creditors; (ii) files a
petition or otherwise commences,

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authorizes or acquiesces in the commencement of a proceeding or case under any
bankruptcy or similar law for the protection of creditors, or such petition is
filed against it and such proceeding remains undismissed for ninety (90) days;
(iii) otherwise becomes bankrupt or insolvent (however evidenced); or (iv)
becomes unable to pay its debts as they fall due.

                  D. Seller's Guarantee, if any, ceases to be in full force and
effect in accordance with its terms.

                  E. Any sale, assignment or other transfer in violation of
Article 15.

                  11.2 Buyer Default. The occurrence of any of the following
events shall constitute a "Default" by Buyer (it being understood by the Parties
that a Default by Buyer hereunder shall not constitute a default under the
Existing Ground Lease Agreement or the Steam Agreement unless the facts
constituting a Default hereunder separately constitute a default thereunder):

                  A. Buyer fails to pay any amounts due to Seller hereunder and
such breach continues for a period of fifteen (15) days after written notice
thereof has been received by Buyer from Seller.

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                  B. Buyer fails to materially perform any obligation to Seller,
or breaches a material term or condition of this Agreement, including a breach
of its representations and warranties or covenants hereunder, and such breach
continues for a period of sixty (60) days after notice thereof has been received
by Buyer from Seller; provided that if such breach is not reasonably capable of
being cured within such sixty (60) day period and provided that Buyer reasonably
commences to cure such breach within such sixty (60) day period, such sixty (60)
day period shall be extended for such additional period, but in no event longer
than eighteen (18) Months, as is reasonably necessary to remedy such failure if
and for so long as Buyer is diligently continuing efforts to pursue a cure for
such breach.

                  C. Buyer or Buyer's Guarantor: (i) makes an assignment or any
general arrangement for the benefit of creditors; (ii) files a petition or
otherwise commences, authorizes or acquiesces in the commencement of a
proceeding or case under any bankruptcy or similar law for the protection of
creditors, or such petition is filed against it and such proceeding remains
undismissed for ninety (90) days; (iii) otherwise becomes bankrupt or insolvent
(however evidenced); or (iv) becomes unable to pay its debts as they fall due.

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                  D. The Parent Guaranty ceases to be in full force and effect
in accordance with its terms.

                  E. A default by Bayway pursuant to the Existing Ground Lease
Agreement that in any way materially affects Seller's ability to perform its
obligations under this Agreement.

         11.3 Remedies. If a Default has occurred and is continuing, the Party,
if any, that is not in Default may, subject to Article 14, take any action at
law or in equity that may be available to it to enforce the payment of any
damages or the performance of all obligations of the Party in Default hereunder.
Notwithstanding the foregoing, Buyer shall have no right to terminate this
Agreement unless Buyer shall have provided all Lenders and Existing Plant
Lenders notice of a breach pursuant to Section 11.1. Seller and any Lender or
Existing Plant Lender shall each have no less than the specified amount of time
to cure such breach, which time shall expire on the later of the dates available
for such cure to Seller, any Lender or any Existing Plant Lender.

         11.4 Damages. Upon the occurrence of a Default hereunder, the aggrieved
Party may elect to terminate this Agreement by providing notice thereof to the
defaulting Party and shall be

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entitled to seek damages as available at law except as may be limited pursuant
to Section 11.5.

         11.5 Limitation on Liability for Damages. The Parties confirm that the
express remedies and measures of damages provided in this Agreement satisfy the
essential purposes hereof. For breach of any provision for which an express
remedy or measure of damages is provided, such express remedy or measure of
damages shall be the sole and exclusive remedy, the obligor's liability shall be
limited as set forth in such provision and all other remedies or damages at law
or in equity are waived. If no remedy or measure of damages is expressly herein
provided, the obligor's liability shall be limited to direct actual damages
only, such direct actual damages shall be the sole and exclusive remedy and all
other remedies or damages at law or in equity are waived, except that either
Party may seek specific performance of any provision of this Agreement,
including such temporary injunctive relief as may be available at law or equity.
Neither Party shall be liable for consequential, incidental, punitive, exemplary
or indirect damages, lost profits or other business interruption damages, by
statute, in tort or contract, under any indemnity provision or otherwise. It is
the intent of the Parties that the limitations herein imposed on remedies and
the measure of damages be without regard to the cause or causes related thereto,
including the negligence of any Party, whether

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such negligence be sole, joint or concurrent, or active or passive. To the
extent any damages required to be paid hereunder are liquidated, the Parties
acknowledge that the damages are difficult or impossible to determine, that
otherwise obtaining an adequate remedy is inconvenient and that the liquidated
damages constitute a reasonable approximation of the harm or loss.

         11.6 Duty to Mitigate. Each Party shall use commercially reasonable
efforts to mitigate the incurrence of damages.

ARTICLE 12.   FORCE MAJEURE

         12.1 Force Majeure. If a Claiming Party is rendered wholly or partly
unable to perform its obligations under this Agreement because of a Force
Majeure event, that Party shall be excused from whatever performance is affected
by such Force Majeure event but only to the extent so affected, provided that:
(i) the Claiming Party, within two (2) days after the occurrence of the Force
Majeure event, gives the other Party notice describing the particulars of the
occurrence and its estimated duration; (ii) the suspension of performance is of
no greater scope and of no longer duration than is required by the Force Majeure
event; and (iii) the Claiming Party uses commercially reasonable efforts to
remedy its inability to perform, to secure substitute suppliers or services and
to resume its full performance under

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this Agreement; provided, however, that the Claiming Party's obligation to
remedy its inability to perform shall not require the settlement of any strike,
walkout, lockout or other labor dispute on terms that, in the sole judgment of
the Party involved in said dispute, are contrary to its best interest.
Notwithstanding anything to the contrary contained in this Agreement, (i) in no
event shall Buyer be excused by reason of Force Majeure from its obligation to
pay any amounts due under this Agreement, including all Fixed Charges and the
Back-up Demand Charge Component, the Eight Percent Proxy Component, any back-up
energy expenses that are the responsibility of Buyer and any costs incurred by
Seller pursuant to any then existing contractual or other binding obligation
related to the Facility that would otherwise be the responsibility of Buyer
pursuant to this Agreement and (ii) in no event shall Seller be excused by
reason of Facility Force Majeure from its obligation to purchase back-up energy
pursuant to this Agreement.

         12.2 Force Majeure Defined. "Force Majeure" means any event beyond the
reasonable control of the Party affected thereby that adversely affects the
ability of such Party to perform any obligation hereunder (other than failure to
pay money when due), including but not limited to the following: acts of God,
war or foreign enemy; unusually severe weather conditions; flood; earthquake;
storm; hurricane; epidemics; lightning; fire;

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drought; explosion; riot; civil disturbance; strikes, lockouts or similar labor
interruptions or labor disputes; sabotage; an event of force majeure occurring
with respect to, or a suspension, curtailment or service interruption of, any
Third Party supplier of Electricity, gas, water or waste water, or any Third
Party Electricity, gas, water or waste water transmission or distribution
provider (including any independent system operator or equivalent, and any
interstate natural gas pipeline or any local Electricity, gas or water
distribution company or provider of waste water); arrests and restraints of
rules and people; any action of a court or a binding order of any Governmental
Authority; inability after diligent application to obtain or maintain required
permits, zoning or other required approvals from any Governmental Authority or
other Third Party whose consent is required as a condition to a Party's
performance hereunder; the surface or subsurface presence at the site of
pollution, Hazardous Materials or contamination, which shall prevent, require a
change in, increase the cost of or otherwise adversely affect the design,
construction or operation and maintenance of, or the completion schedule for, or
the occurring of the In-Service Date of, the Facility; failure of Third Party
facilities or Third Party major equipment breakdown; failure of any contractor,
subcontractor or supplier to furnish labor, services, materials or equipment on
the dates agreed to if such failure is caused by a Force Majeure; a change in
applicable law;

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the failure of any public agency or Governmental Authority or any utility having
jurisdiction of the Existing Site to maintain utilities, services, water and
sewer lines and power transmission lines; and any circumstance that would in the
reasonable opinion of such Party endanger persons or property. A failure of
equipment or machinery controlled or operated by a Party (whether leased or
owned) shall not be considered Force Majeure irrespective of whether such
equipment or machinery has been designed, manufactured, installed, or maintained
by the Party or a Third Party unless such failure was due to a Force Majeure.

ARTICLE 13.   INDEMNIFICATION

         13.1 Indemnification for Claims. Each Party shall defend, indemnify and
hold harmless the other Party and its officers, directors, employees,
contractors, subcontractors, Affiliates and agents ("Related Parties") from and
against any and all Third Party liabilities, claims, injuries (including death
resulting therefrom), property damage, fines, penalties or assessments by any
public agency, insofar as not prohibited by law, costs or expenses (including
costs of defense, settlement and reasonable attorneys' fees) (collectively,
"Claims") to the extent caused by the negligence or willful misconduct of the
indemnifying Party or its Related Parties in connection with performance under
this Agreement. The term "liabilities" in the preceding sentence, and

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the indemnification obligation, include any strict liability and other liability
without fault, however named, asserted against the Party indemnified.

         13.2 Notice. Each Party hereto shall promptly furnish the other Party
with notification (but in no event later than ten (10) days prior to the time
any response is required by law) after such Party becomes aware of any event or
circumstance which might give rise to such indemnification.

         13.3 Defense. The indemnifying Party shall have the right to defend any
suit asserting a Claim covered by this indemnity and shall pay all costs and
expenses (including reasonable attorney's fees and expenses) that may be
incurred in enforcing this indemnity. The indemnified Party may, at its own
expense, retain separate counsel and participate in the defense of any such suit
or action. The indemnifying Party shall not compromise or settle a Claim
hereunder without the prior written consent of the indemnified Party; provided,
however, that in the event such consent shall be withheld, then the liability of
the indemnifying Party shall be limited to the aggregate of the amount of the
proposed compromise or settlement, the amount of counsel fees and expenses
outstanding at the time such consent shall have been withheld, and the amount of
any outstanding claim against which indemnification applies and which is not
covered by the proposed

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compromise or settlement (together with all costs and expenses associated with
such outstanding Claim). Thereafter, the Party withholding such consent shall
hold harmless and reimburse the indemnifying Party, upon demand, for the amount
of any additional liability, counsel fees and expenses incurred by the
indemnifying Party over and above the amounts described above after the time
such consent shall have been withheld. To the extent one Party disputes its
obligation to indemnify the other Party, it shall not be considered a breach of
this Agreement for such Party to fail to perform under this Section 13.3 until
such time as such Party is determined to have the obligation to indemnify under
Section 13.1.

         13.4     Survival of Indemnifications.  The provisions of this
Article shall survive the expiration or earlier termination of
this Agreement.

ARTICLE 14.   DISPUTE RESOLUTION

         14.1     Dispute Resolution.

                  A.        The Parties agree to work in good faith to resolve
any claim, demand, cause of action, dispute or controversy arising out of or
relating to this Agreement. The Parties shall

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refer any such dispute to representatives of each Party's senior management for
resolution.

                  B. If the representatives of each Party's senior management
are unable to resolve such dispute within ten (10) Business Days after such
referral, the Parties shall have the right to exercise any and all remedies
available to them at law or in equity, except with respect to those disputes
subject to Section 14.2 below.

         14.2 Binding Arbitration. Any dispute not resolved pursuant to Section
14.1A above that arises out of or relates to Sections 4.1 or 6.2 of this
Agreement shall be subject to binding arbitration in accordance with the terms
of this Section 14.2.

         A. Notice; Selection of Arbitrators. Within thirty (30) days after the
delivery by a Party to the other Party of any notice of a dispute under Sections
4.1 or 6.2, Seller and Buyer shall endeavor to agree upon an appropriately
qualified, neutral Third Party arbitrator to resolve such dispute. If Seller and
Buyer cannot agree upon a single arbitrator within such thirty (30) day period,
then within fifteen (15) days after the occurrence of the Parties' failure to
agree, each shall appoint an arbitrator, and the two arbitrators shall, within
fifteen (15) days after both have been appointed, designate a third

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appropriately qualified neutral arbitrator. While the third arbitrator shall be
neutral, the two Party-appointed arbitrators are not required to be neutral, and
it shall not be grounds for removal of either of the two Party-appointed
arbitrators or for vacating the arbitrators' award that either of such
arbitrators has past or present relationships with the Party that appointed such
arbitrator. Either Party may seek enforcement in any court of competent
jurisdiction in New York, New York of the obligation of the other Party to
appoint an arbitrator and otherwise facilitate the resolution of disputes in
accordance with this Article 14. In addition, in the event the Party-appointed
arbitrators cannot agree upon a third arbitrator, either Party may seek judicial
appointment of such arbitrator in any such court of competent jurisdiction.

                  B. Qualifications of Arbitrators. Each arbitrator appointed
under this Article 14 shall be a business person with expertise in the electric
generation industry. The single appropriately qualified, neutral Third Party
arbitrator or the third appropriately qualified neutral arbitrator referred to
Section 14.2A above shall be a person who has over eight years professional
experience in electric industry related matters and who has not previously been
employed by either Party and does not have a direct or indirect interest in
either Party or the subject matter of the arbitration.

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                  C. Procedures. Arbitration shall be conducted in accordance
with the rules of arbitration of the Federal Arbitration Act and, to the extent
an issue is not addressed by the federal law on arbitration, by the Commercial
Arbitration Rules of the American Arbitration Association. The validity,
construction, and interpretation of this agreement to arbitrate, and all
procedural aspects of the arbitration conducted pursuant hereto shall be decided
by the arbitrators. In deciding the substance of the Parties' disputes, the
arbitrators shall refer to the governing law. The arbitration proceeding shall
be conducted in New York, New York. To the fullest extent permitted by law, any
arbitration proceeding and the arbitrators award shall be maintained in
confidence by the Parties. Each Party shall pay its own costs and expenses with
respect to any arbitration hereunder and the Parties shall share equally in the
costs of the third arbitrator.

                  D. Award. Within thirty (30) days after the arbitrator(s) have
been selected, each Party shall submit to the arbitrator(s) its arguments with
respect to, and a proposal for the resolution of, the matter in dispute. The
arbitrator(s) shall then select as an appropriate resolution, given the nature
and circumstances of the dispute, the most reasonable of either (x) Seller's
proposed resolution or (y) Buyer's proposed resolution; the arbitrator(s) shall
have no authority to

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establish or impose any resolution other than those proposed by Seller or Buyer.
The arbitrators shall have no authority to award treble, consequential,
exemplary or punitive damages of any type under any circumstances whether or not
such damages may be available under state or federal law, or under the Federal
Arbitration Act, or under the Commercial Arbitration Rules of the American
Arbitration Association, and the Parties hereby waive any right they might
otherwise have to recover any such damages. The arbitrator(s) shall endeavor to
complete any arbitration within ninety (90) days after the matter has first been
submitted to it or them under this Section 14.2.

                  E. Determinations Binding. Judgment may be entered on any
determination by the arbitrator(s) as to an appropriate resolution that is
within the authority of the arbitrator(s), and such determination shall be
binding on Seller and Buyer and shall be enforceable in any court of law having
jurisdiction over Seller and Buyer, as appropriate. Any resolution determined by
the arbitrator(s) shall be the exclusive remedy available to each Party with
respect to the matter submitted to arbitration.

         14.3 Burden of Proof. In the event that Seller commences any litigation
or arbitration between Buyer and Seller regarding the costs and expenses
incurred by Seller in constructing, operating, and maintaining the Facility
which have been paid or

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are due and payable to Third Parties by Seller and have not been reimbursed to
Seller by Buyer pursuant to this Agreement, Buyer shall bear the burden of
establishing that Seller is not entitled to reimbursement of such costs and
expenses by Buyer in accordance with the terms and conditions of this Agreement.

ARTICLE 15.   ASSIGNMENT

         15.1 General. Except as provided in this Article 15, neither Party may
assign or otherwise transfer this Agreement or any of its rights hereunder to
any other Person without the express written consent of the other Party, which
consent shall not be unreasonably withheld. Consent shall be deemed given if the
other Party does not respond within five (5) Business Days of being notified of
a Party's intention to make such an assignment.

         15.2 Permitted Assignments. Either Party may assign this Agreement to
an Affiliate.

         15.3 Sale of Bayway Refinery. If the Bayway Refinery is sold, assigned
or otherwise transferred in whole or in part to any other Person, simultaneously
with such sale, Buyer shall assign this Agreement to such other Person.

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         15.4 Assignment Conditions. In the event of an assignment pursuant to
Section 15.1, 15.2, or 15.3 of this Agreement,

         (a) the assigning Party and the assignee shall execute and deliver to
the other Party an assignment and assumption agreement, in the form attached
hereto as Exhibit O, whereby:

                  (i) such assigning Party shall unconditionally assign this
         Agreement to the assignee, accompanied by an opinion of counsel to such
         assigning Party addressed and reasonably acceptable to such other Party
         to the effect that such assignment has been duly authorized by such
         assigning Party and constitutes the legal, valid and binding obligation
         of such assigning Party, enforceable against such assigning Party in
         accordance with its terms; and

                  (ii) the assignee shall unconditionally assume all of the
         assigning Party's obligations under this Agreement and agree to be
         bound by all terms and conditions of this Agreement, accompanied by an
         opinion of counsel to such assignee addressed and reasonably acceptable
         to the non-assigning Party to the effect that such assignment and
         assumption agreement has been duly authorized by such assignee and
         constitutes the legal, valid and binding obligation of such assignee,
         enforceable against such assignee in accordance with its terms,

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         (b)      except as provided for in section 15.5 of this
Agreement,
                  (i) the assigning Party shall remain and continue to be liable
         to the non assigning Party for all obligations of the Seller or Buyer
         (as the case may be) arising pursuant to this Agreement before the date
         of such assignment,
                  (ii) the assigning Party shall remain and be jointly and
         severally liable, along with the assignee, for all obligations of the
         Seller or Buyer (as the case may be) arising pursuant to this Agreement
         on and after the date of such assignment, and
                  (iii) any Guarantor of the obligations of the Seller or Buyer
         (as the case may be) shall continue to guarantee all obligations of the
         Seller or Buyer (as the case may be) arising pursuant to this Agreement
         before, on, and after the date of such assignment, and

         (c) the assigning Party shall furnish to the non-assigning Party as
soon as practicable, but in no event later than ten (10) days after the
effective date of such assignment, all information necessary for the
non-assigning Party to make payments and furnish notice to the assignee
following the effective date of the assignment.

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         15.5 Survival of Guarantees; Substitute Guarantors.

                  A. If this Agreement is assigned by Buyer pursuant to the
terms and conditions of this Article 15, including if the Bayway Refinery is
sold or otherwise transferred in whole or in part to any other Person, the
Parent Guaranty shall remain in full force and effect with regard to all
obligations of Buyer arising under this Agreement before, on and after such
assignment, sale or transfer unless and until Guarantor provides for a
substitute Guarantor (the "Substitute Guarantor") with respect to its guaranty
of the obligations of Buyer hereunder, which Substitute Guarantor must meet all
of the following conditions, namely that such Substitute Guarantor shall:

                            (i) execute and deliver to Seller a new guaranty
                  guaranteeing the obligations of the assignee (the "Substitute
                  Guaranty") substantially in the form of the Parent Guaranty,
                  accompanied by an opinion of counsel to the Substitute
                  Guarantor addressed and reasonably acceptable to Seller to the
                  effect that the Substitute Guaranty has been duly authorized
                  by such Substitute Guarantor and constitutes the legal, valid
                  and binding obligation of such Substitute Guarantor,
                  enforceable against such Substitute Guarantor in accordance
                  with its terms (subject to limitations on the enforcement
                  thereof by bankruptcy, insolvency and other similar

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                  laws affecting the rights of creditors generally and to
                  the application of principles of equity), and

                            (ii) provide evidence satisfactory to Seller that
                  the Substitute Guarantor's then (x) long-term debt is rated by
                  Standard & Poor's Corporation at BBB or above or by Moody's
                  Investors Services at Baa2 or above, and (y) net assets,
                  determined in accordance with Generally Accepted Accounting
                  Principles, is not less than two billion dollars
                  ($2,000,000,000).

Guarantor shall be released of its Parent Guaranty with regard to obligations
arising after the effective date of the Substitute Guaranty and the assigning
Party shall be released of its obligations under this Agreement arising after
the effective date of the Substitute Guaranty upon full compliance with the
provisions of Section 15.4, and this Section 15.5A. In the case in which an
assignee of Buyer meets the requirements of Section 15.5A(ii) to be a Substitute
Guarantor, and the provisions of Section 15.4 have been fully complied with, any
Guarantor or Substitute Guarantor and the assigning Party shall be released with
regard to their respective obligations under this Agreement or any Parent
Guaranty or Substitute Guaranty arising after the date of full compliance with
the provisions of Section 15.4.

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                  B. If this Agreement is assigned by the Seller pursuant to the
terms and conditions of this Section 15, such assigning Party shall remain
liable to the Buyer as provided for in Section 15.4 of this Agreement unless and
until either of the two following conditions occurs:

                            (i) Such assigning Party and assignee have fully
                  complied with the provisions of Section 15.4 of this
                  Agreement, and the assigning Party has provided evidence
                  satisfactory to Buyer that the assignee's then (x) long-term
                  debt is rated by Standard & Poor's Corporation at BBB or above
                  or by Moody's Investors Services at Baa2 or above, and (y) net
                  assets, determined in accordance with Generally Accepted
                  Accounting Principles, is not less than two billion dollars
                  ($2,000,000,000); or
                            (ii) such assigning Party and assignee have fully
                  complied with the provisions of Section 15.4 of this
                  Agreement, and the assigning Party provides for a guarantor of
                  the obligations of Seller hereunder (the "Seller Guarantor"),
                  which Seller Guarantor must meet all of the following
                  conditions: (a) the Seller Guarantor shall execute and deliver
                  to Buyer a guaranty guaranteeing the obligations of the
                  assignee (the "Seller Guaranty") substantially in the form of
                  the Parent Guaranty, accompanied by an opinion of counsel

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                  to the Seller Guarantor addressed and reasonably acceptable to
                  Buyer to the effect that the Seller Guaranty has been duly
                  authorized by the Seller Guarantor and constitutes the legal,
                  valid and binding obligation of the Seller Guarantor,
                  enforceable against the Seller Guarantor in accordance with
                  its terms (subject to limitations on the enforcement thereof
                  by bankruptcy, insolvency and other similar laws affecting the
                  rights of creditors generally and to the application of
                  principles of equity), and (b) evidence satisfactory to Buyer
                  that the Seller Guarantor's then (x) long-term debt is rated
                  by Standard & Poor's Corporation at BBB or above or by Moody's
                  Investors Services at Baa2 or above, and (y) net assets,
                  determined in accordance with Generally Accepted Accounting
                  Principles, is not less than two billion dollars
                  ($2,000,000,000).

The assigning Party shall be released of its obligations arising after the date
of any assignment pursuant to Section 15.5B(i) or after the effective date of
the Seller Guaranty upon full compliance with the provisions of Section 15.4 and
this Section 15.5B.

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                  C. If a Seller Guaranty is in effect and this Agreement is
thereafter assigned by Seller pursuant to the terms and conditions of this
Article 15, the Seller Guaranty shall remain in full force and effect with
regard to all obligations of Seller arising under this Agreement after the
effective date of such Seller Guaranty, including during any such time that is
before, on and after such assignment, until Seller provides for a substitute
Seller Guarantor (the "Substitute Seller Guarantor") with respect to its
guaranty of the obligations of Seller hereunder, which Substitute Seller
Guarantor must meet all of the conditions specified in Section 15.5B(ii) for the
Seller Guarantor. The Seller Guarantor shall be released of its Seller Guaranty
with regard to obligations arising after the effective date of the Substitute
Seller Guaranty and the assigning Party shall be released of its obligations
arising after the effective date of the Substitute Seller Guaranty upon full
compliance with the provisions of Section 15.4, and this Section 15.5C. In the
case in which a Seller Guaranty is in effect and this Agreement is thereafter
assigned by Seller to an assignee that also meets the requirements of this
Section 15.5C to be a Substitute Seller Guarantor, and the provisions of Section
15.4 have been fully complied with, any Seller Guarantor or Substitute Seller
Guarantor, as the case may be, and the assigning Party shall be released with
regard to their respective obligations under this

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Agreement or any Seller Guaranty arising after the date of full compliance with
the provisions of Section 15.4.

         15.6 Further Assurances. If reasonably requested by a Party proposing
to effect an assignment pursuant to this Article 15, the other Party shall
reasonably cooperate to facilitate such proposed assignment, including without
limitation by agreeing to furnish an estoppel certificate if and to the extent
appropriate with respect to the assigning Party's compliance under this
Agreement.

         15.7 Violations a Default; Further Remedies. Any sale, assignment or
other transfer by Seller or Buyer in violation of this Article 15 shall
constitute a Default hereunder at the option of the other Party (an "Article 15
Default"). In addition, in the event of an Article 15 Default, such other Party
shall be entitled to the following relief, in addition to any other remedies
available at law or equity:

                  A. Until Buyer's non-compliance is cured, Seller shall (i) be
relieved of all obligations to deliver Electricity to Buyer or Buyer's proposed
assignee and to purchase or pay for any back-up Electricity for Buyer or Buyer's
proposed assignee hereunder and (ii) be entitled to operate the Facility to sell
all of the capacity or energy or other products or services

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derived from the Facility and shall retain all of the revenues derived
therefrom, or

                  B. Until Seller's non-compliance is cured, Buyer shall be
entitled to, and Seller, in addition to any other obligations Seller may have
under this Agreement, shall pay Buyer, one (1) cent per kWh for each kWh of
Electricity produced by the Facility.

ARTICLE 16.   NOTICES

         16.1 General. All notices, notifications, invoices, payments, consents
or other communications between the Parties shall be given in writing and shall
either be delivered by hand or sent by certified or registered mail, return
receipt requested, or by facsimile followed immediately by certified or
registered mail, return receipt requested, as follows:

                  If to Buyer, to:

                            Tosco Refining, L.P.
                            1400 Park Avenue
                            Linden, New Jersey  07036
                            Attn:  Catherine Pihokken
                            Facsimile:  (908) 523-5258

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<PAGE>   155
                  with a copy to:

                            Tosco Refining, L.P.
                            1400 Park Avenue
                            Linden, New Jersey  07036
                            Attn:  Refinery Manager
                            Facsimile:  (908) 523-5900

                  If to Bayway, to:

                            Bayway Refining Company
                            1400 Park Avenue
                            Linden, New Jersey  07036
                            Attn:  Catherine Pihokken
                            Facsimile:  (908) 523-5258

                  with a copy to:

                            Bayway Refining Company
                            1400 Park Avenue
                            Linden, New Jersey  07036
                            Attn:  Refinery Manager
                            Facsimile:  (908) 523-5900

                  If to Seller, to:

                            East Coast Power L.L.C.
                            Pennzoil Building - South Tower
                            711 Louisiana Street
                            32nd Floor
                            Houston, Texas  77002
                            Attn:  Mr. Robert J. Licato
                            Facsimile:  (713) 345-9705

                  with a copy to:

                            East Coast Power, L.L.C.
                            1095 Cranbury South River Rd.
                            Suite 10
                            Jamesburg, New Jersey  08831
                            Attn:           Director of Operations
                            Facsimile:  (609) 409-9404

Notices shall be deemed received when delivered by hand, upon receipt (as
indicated on a return certificate), or when sent by facsimile.

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         16.2 Changes. Either Party may change this address for notice
hereunder, or provide for additional Persons to be noticed, by giving the other
Party notice as provided above.

         16.3 Holidays. If the date on which a notice is due, or a prescribed
action is necessary falls on a day that is not a Business Day, the date on which
such notice or action shall be due shall be extended until the next succeeding
Business Day.

ARTICLE 17.   CONFIDENTIALITY

         The Parties agree that all information (including
information concerning Buyer's or Seller's operations such as information
relating to nominations, scheduling and maintenance at the Bayway Refinery or
the Existing Plant, the Facility or the Additional Generating Facility) relating
to this Agreement and the terms or conditions of this Agreement or disclosed
pursuant to any term or provision of this Agreement shall be kept confidential
and shall not be disclosed or used for any purpose other than matters related to
this Agreement. Such obligations of confidentiality shall extend to all such
information, whether exchanged orally or in written or electronic forms, and
whether or not designated at the time exchanged as confidential and shall
survive the termination of this Agreement by three (3) years. Each Party shall
be permitted to disclose confidential information to such Party's and its
Affiliates' officers,

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directors, employees, agents, counsel, accountants, consultants, contractors or
advisors who need to know such information for the purpose of implementing this
Agreement or the transactions contemplated hereby, and agrees to notify such
Persons of the confidential nature of such information, and to be responsible
for any unauthorized disclosure of such information by such Persons. Seller
shall be permitted to disclose confidential information to those of its Lenders
and prospective Lenders or prospective purchasers who agree to keep information
confidential by executing a confidentiality agreement in form and substance
which reasonably satisfies the provisions of this Article. Information shall not
be deemed to be confidential if it (i) was in the public domain prior to the
date hereof, (ii) becomes publicly available after the date hereof other than as
a result of the unauthorized disclosure thereof by a Party or by an officer,
director, employee, agent or Affiliate of a Party, or (iii) is required to be
disclosed pursuant to applicable laws or regulations or pursuant to
administrative or judicial process; provided, however, that the disclosing Party
provides the non- disclosing Party with written notice of the information to be
disclosed as far in advance of its disclosure as is practicable and that, except
with regard to disclosures to the Securities and Exchange Commission, the
disclosing Party uses its best efforts to obtain assurances that confidential
treatment will be accorded to such information. The Parties shall be entitled to
all

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remedies available at law or in equity to enforce or seek relief in connection
with this confidentiality obligation.

ARTICLE 18.   FURTHER ASSURANCES; OTHER FACILITIES

         18.1 General. Each Party agrees to execute and deliver all further
instruments and documents, and take any further action that may be reasonably
necessary to effectuate the purpose and intent of this Agreement.

         18.2 First Amendment to the Steam Agreement. Buyer, Bayway and Seller
have agreed to the form of an amendment to the Steam Agreement, attached hereto
as Exhibit P. Buyer and Bayway agree to deliver to Seller such amendment,
executed by Bayway, not later than ten (10) days after presentation to Buyer and
Bayway by Seller of an original of such amendment, executed by Seller's
Affiliate, Cogen Technologies Linden Venture, L.P., in the form attached hereto
as Exhibit P, and Seller agrees to present such executed amendment to Buyer and
Bayway prior to the Commercial Operations Date. Any Party's failure to deliver
an executed amendment as provided herein shall be a default under this Agreement
and shall not relieve or otherwise excuse such Party from its obligations under
this Agreement.

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         18.3 Permits and Governmental Approvals. Buyer and Seller will
cooperate with each other and shall use reasonable efforts to assist the other
Party in obtaining all permits and approvals from any Governmental Authority
required for the construction and operation of the Facility, Appurtenant Systems
and interconnections and for favorable Tax treatments. At Buyer's request after
the Commercial Operations Date, Seller shall use commercially reasonable
efforts, at Buyer's expense, to modify or amend any such permits or approvals,
provided that such modifications or amendments shall have no material adverse
effect on Seller.

         18.4 Financing. Buyer understands that Seller or its Affiliates may
from time to time arrange financing relating to the Facility, and Buyer agrees
to cooperate with Seller's or its Affiliates' financing efforts. If any Lender
requires any consents to this Agreement, Buyer agrees to enter into good faith
negotiations with Seller with respect to such Lender's or investor's requested
consents and will provide, at Seller's request, opinions of counsel or estoppel
certificates reasonably related thereto.

         18.5 Additional Consideration. Buyer, Bayway and Seller hereby agree
that the Facility is intended to perform the functions of the Exxon System and
that any and all obligations of

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Cogen under Article 7 of the Existing Ground Lease Agreement are hereby deemed
satisfied in full; provided, however, that in the event Seller fails to achieve
the Commercial Operations Date, unless such failure is solely due to a breach by
Buyer or Bayway of its obligations under this Agreement, the Existing Ground
Lease Agreement, the Interconnection Lease or the Steam Agreement, this Section
18.5 shall have no effect on any obligations of Cogen pursuant to Article 7 of
the Existing Ground Lease Agreement, which such obligations of Cogen shall not
be deemed satisfied.

ARTICLE 19.   MISCELLANEOUS

         19.1 Severability. If any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, then such
holding shall not invalidate or render unenforceable any other provision hereof
and the Parties shall immediately renegotiate in good faith such provision to
eliminate such invalidity or unenforceability, consistent with the intent of
this Agreement.

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         19.2 Captions, Titles and Headings. The captions, titles, and headings
used in this Agreement are for convenience only and shall not affect the
construction of any terms of this Agreement.

         19.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of New Jersey, without regard to principles
of conflict of laws thereof.

         19.4 Non-Waiver. Except as may be expressly provided in this Agreement
or in a writing signed by the Party against whom a waiver is claimed, the
failure of either Party to insist in any instance on strict performance of any
provision of this Agreement shall not be construed as a waiver of any such
provision or the relinquishment of any rights thereunder in the future, but the
same shall continue and remain in full force and effect.

         19.5 Relationship of the Parties. The Parties are and intend to be
independent contractors with respect to each other. THIS AGREEMENT SHALL NOT BE
INTERPRETED OR CONSTRUED TO CREATE AN ASSOCIATION, TRUST, PRINCIPAL--AGENT
RELATIONSHIP, JOINT VENTURE OR PARTNERSHIP BETWEEN THE PARTIES OR TO IMPOSE ANY
PARTNERSHIP, AGENCY OR FIDUCIARY OBLIGATION OR LIABILITY UPON EITHER PARTY.
Neither Party shall have any right, power or authority to enter into any
agreement or undertaking for, or act on behalf of, or to act as or be an agent
or representative of, or to otherwise bind

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the other Party, except as may be expressly provided herein to perform a duty or
obligation specifically set forth herein, and then only to the extent reasonably
necessary to perform such duty or obligation.

         19.6 Existing Plant. Notwithstanding any reference herein to the
Existing Plant, nothing in this Agreement shall be deemed or construed to create
an obligation of Seller or any Affiliate of Seller:

                  (i) to operate the Existing Plant; or

                  (ii) if operated, to operate the Existing Plant for the
                  benefit of Buyer or in any manner except as may be in the sole
                  discretion of and for the sole benefit of Seller or its
                  Affiliates.

         19.7 Parties in Interest. This Agreement shall inure only to the
benefit of Buyer and Seller and their permitted successors and assigns. Nothing
contained in this Agreement, whether express or implied, is intended to confer
upon any Third Party any benefits, rights or remedies.

         19.8 Non-Dedication of Facility. Seller and Buyer agree that no part of
the Facility shall be dedicated for the sale of

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electrical or thermal energy to the public generally and indiscriminately, for
the exercise of a public franchise, or in the exercise of a public utility
function.

         19.9 Modification. The provisions of this Agreement, including any
exhibits, may be modified only by written agreement duly executed by each Party.

         19.10 Entire Agreement. This Agreement shall constitute the entire
Agreement between the Parties and cancels and supersedes all previous agreements
and understandings between the Parties with respect to the subject matter
hereof.

         19.11 Attorneys' Fees. If any lawsuit or other action or proceeding
relating to this Agreement is brought by either Party against the other Party
hereto, the prevailing Party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing Party may be entitled).

         19.12 Costs and Expenses. In any dispute where any Party is entitled to
reimbursement of costs, "costs" shall include interest on any judgment, court
costs, and reasonable legal fees and expenses (including allocated fees of
in-house counsel).

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         19.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument.

         19.14 Survival of Obligations. Except as may be expressly provided in
this Agreement, termination of this Agreement for any reason shall not relieve
either Party of any obligation accruing or arising prior to such termination.

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         IN WITNESS WHEREOF, the Parties have hereto executed this Agreement on
the dates shown beneath their respective signatures, intending the rights and
obligations of the Parties to become effective on the day and year first written
above.

                                    EAST COAST POWER, L.L.C.

                                    By: /s/ ROBERT J. LICATO
                                       ------------------------------

                                    Printed Name: Robert J. Licato
                                                 --------------------
                                    Title: President
                                          ---------------------------

                                    TOSCO REFINING, L.P.

                                    By:   Tosco Corporation, its sole
                                             general partner

                                    By: /s/ DWIGHT H. WIGGINS
                                       ------------------------------

                                    Printed Name: Dwight H. Wiggins
                                                 --------------------

                                    Title: President
                                          ---------------------------

         SOLELY FOR PURPOSES OF SECTIONS 3.1, 18.2 AND 18.5 OF THIS AGREEMENT,
AND FOR GOOD AND VALID CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS
HEREBY ACKNOWLEDGED, BAYWAY REFINING COMPANY SHALL BE DEEMED A PARTY HERETO AND
HEREBY AGREES TO THE TERMS AND CONDITIONS OF THE ABOVE REFERENCED SECTIONS.

                                    BAYWAY REFINING COMPANY

                                    By: /s/ DWIGHT H. WIGGINS
                                       ------------------------------

                                    Printed Name: Dwight H. Wiggins
                                                 --------------------

                                    Title: President
                                          ---------------------------

                                      160

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